Norwegian Court of Appeal rules in favour of Posten in landmark follow-on damages case against truck manufacturers

Background

The Truck Cartel and Posten’s Claim

On 19 July 2016, the European Commission fined truck manufacturers Volvo/Renault, Daimler, Iveco, and DAF a combined fine of EUR 2.9 billion for infringing TFEU Article 101 and the EEA Agreement Article 53 by coordinating on the setting of “gross list” prices for medium and heavy trucks in the EEA, the timing for introduction of emission technologies and passing on the cost for such technologies to the customers. MAN was granted full leniency for revealing the cartel to the Commission. The other manufacturers’ fines were reduced under the settlement procedure. Scania chose not to settle and was later fined EUR 880 million. On 2 February 2022, the General Court dismissed Scania’s appeal and upheld the fine imposed by the Commission. A further appeal to the European Court of Justice was dismissed on 1 February 2024.

The “gross list” prices that the manufacturers had coordinated related to the factory price of trucks and was the basis for price negotiations with buyers. The infringement was ongoing from 1997 to 2011.

In the UK, in “first wave” of proceedings the Competition Appeal Tribunal (“CAT”) issued a decision on 7 February 2023 in follow-on claims from Royal Mail and three companies in the BT Group against the truck manufacturer DAF. The CAT awarded damages of GBP 17.5 million in total. This judgment is being appealed. A “second wave” of proceedings in the UK involving many other claimants is still before the CAT.

In Norway, Posten is the incumbent postal operator and a provider of logistics services under the brand Bring. On 18 July 2017, Posten filed a claim to the Oslo District Court against the truck manufacturers, arguing that it, and its subsidiaries in Sweden and Slovakia, had been overcharged when purchasing trucks from the defendants during the infringement period. Posten claimed total damages of EUR 47 million plus interest, based on a 17% overcharge. Posten also claimed that each defendant was jointly and severally liable for the entire overcharge, including for trucks produced by other cartel participants. The claim against Iveco, Stellantis and CNH Industrial was subsequently settled out of court.

In its ruling on 28 February 2023, the Oslo District Court dismissed Posten’s claim. While the District Court concluded that it is likely that the infringement could have affected transaction prices paid by truck customers, it found this insufficient for imposing liability on the defendants. The District Court found that it was necessary to do an empirical analysis proving a quantifiable loss for any loss to be considered sufficiently proven. The District Court assessed the econometric evidence presented by the parties but explicitly highlighted the difficulties it faced evaluating the presented evidence. In particular, it noted that the respective experts’ reluctance to accept criticism from their fellow economists did not induce confidence in the evidence, especially considering the complexity of the subject matter. While the District Court dismissed the estimates presented by the truck manufacturers’ experts, the Court also dismissed the evidence presented by Posten’s experts, finding that the experts lacked robustness and that their conclusions were unreliable. Thus, based on methodological issues, it found Posten’s claim unfounded. For a closer review of the District Court ruling, please see our newsletter covering the ruling from 2023.

The Norwegian dairy producer Tine has also launched a separate claims case against the truck manufacturers on similar grounds. This case has been put on hold awaiting the outcome of other cases in the truck cartel complex.

The Court of Appeal’s Judgment – Key Takeaways

Recognition of the Cartel’s Impact on Purchasing Prices

The truck manufacturers argued that the coordination on gross list prices did not influence the actual transaction prices paid by end customers. They contended that various factors determined the final prices, including negotiations and market conditions, and that gross list prices were not relevant.

Contrary to the District Court, the Court of Appeal found that the illegal price collaboration had a broader scope and more severe character than what the truck manufacturers had admitted. The Court of Appeal concluded that the cartel activities did indeed affect end-user prices. It recognized that the collaboration involved not just the exchange of existing and future gross list prices but also coordination of future pricing behaviour aimed at achieving higher net prices in the end market.

“Specific link” present between AB Volvo and its Norwegian subsidiary

One of the defendants, Volvo Norge AS, claimed that it could not be held liable for its parent company’s (AB Volvo) participation in the cartel. Despite Volvo Norge AS being unaware of the cartel until it was uncovered by the EU Commission, the Court of Appeal concluded that the company could still be held liable under EEA law. In line with jurisprudence from the European Court of Justice in case C-882/19 (Sumal), it found that there was a “specific link” between Volvo Norge AS and the infringement of AB Volvo as the former sold the products of the latter.

The Court of Appeal furthermore dismissed claims from Volvo Norge AS that Norwegian law generally does not hold a company liable for actions of others in the same group, emphasizing the goal of legal homogeneity within the EEA.

Establishment of Causation and Economic Loss

The Court of Appeal disagreed with the District Court’s assessment concerning the liability of the defendants. It found that the District Court had erred in disregarding all the regression analyses due to perceived methodological issues. Instead, the Court of Appeal evaluated the evidence in its entirety and gave weight to the empirical analyses conducted by Posten’s experts, despite acknowledging some limitations.

The Court determined that Posten most likely paid an overcharge due to the cartel’s activities in the period 1997 to 2011. It agreed with Posten that there was a causal link between the manufacturers’ illegal conduct and the overcharge paid by Posten. The Court relied on various forms of evidence, including the European Commission’s findings, economic theories on coordinated effects in cartels, as well as empirical analyses presented by Posten’s experts.

Assessment of Overcharge Percentage

Before the Court of Appeal, Posten claimed damages of up to approx. NOK 604 million (approx. EUR 52 million) plus interest, based on that it had paid an overcharge of 20% on all trucks purchased and as compensation for its consequential loss (see below). Most of the trucks were purchased in Norway, but some also in Sweden and in Slovakia. The Court concluded that an overcharge of 10% on trucks purchased in Norway was most likely, based on the evidence presented. For trucks acquired in Sweden and Slovakia, the Court found a lower overcharge of 5%, noting that Posten had provided less evidence regarding these markets.

No Passing-On

The Court rejected claims from the truck manufacturers that Posten had passed-on the overcharge to later purchasers of the trucks. It considered that general assumptions about passing-on were inadequate without specific analysis of the individual resales, especially since there was a relatively low percentage overcharge, and that most trucks were sold years later and at lower prices. In the absence of a detailed review of the various resales to Posten, the Court found that the economic effect of passing-on through resale most likely was so small that it completely disregarded it when concluding on the award of damages.

Assessment of Consequential Loss

Posten had also claimed compensation for consequential loss of not being able to utilize the overcharge paid to the truck manufacturers. It argued that this compensation should be calculated based on the return on its own invested capital (ROIC). The Court of Appeal rejected this. In line with previous case law concerning such loss and reviewing the average deposit rate for the banks in the relevant period, it calculated the compensation based on an annual 4% rate. For Slovakia, Posten had argued that the Court on a discretionary basis should apply an annual rate of 6%, but the Court rejected this and used the average EURIBOR annual rate in the period of approx. 2%. The Court rejected an argument from the truck manufacturers that the compensation should be reduced based on a notion that Posten would have paid parts of the overcharge in taxes or as dividend to its owners.

Compensation

The Court of Appeal awarded Posten damages of approx. NOK 83.5 million in total from the various truck manufacturers. In addition, the Court awarded compensation for consequential loss, of approx. NOK 34 million. The total amount awarded was thus approx. NOK 117 million. The Court further decided that the truck manufacturers had to cover two-thirds of Posten’s legal fees for both the District Court and the Court of Appeal, a total of approx. NOK 53 million. The Court set the award lower than 100% due to the fact that Posten had claimed a significantly higher amount of damages and compensation for consequential loss.

BAHR’s opinion

The Borgarting Court of Appeal’s judgment is a landmark decision in Norwegian competition law enforcement. It sets a precedent for the assessment of causation and quantification of damages in follow-on cartel damages claims. The Court’s willingness to thoroughly evaluate both economic theories and empirical analyses signals a more claimant-friendly approach in such cases.

For businesses affected by cartel activities, this judgment reinforces the viability of pursuing damages claims in Norway and may encourage more companies to seek compensation for losses incurred due to anti-competitive conduct.

The judgment underscores the importance of presenting comprehensive economic evidence to establish both causation and the extent of overcharges, and provides clarity on how Norwegian courts may handle complex economic evidence and causation in competition cases. In contrast to the proceedings before the District Court, in the Court of Appeal the members of the Court included two expert lay judges in its panel of five judges. Considering that the complexity of the empirical analyses underpinned the District Court’s dismissal of Posten’s claim, it appears the expert lay judges may have had an impact on the outcome in the Court of Appeal.

Companies should be aware of the increased risks associated with participating in illegal collaborations, not only from potential fines imposed by competition authorities but also from substantial civil liability in follow-on damages claims from affected parties. This judgment highlights the Norwegian courts’ commitment to enforcing competition laws and ensuring that victims of anti-competitive conduct are compensated. It should be noted that the Court of Appeal’s ruling is not yet legally binding as the time to appeal to the Supreme Court has not expired.