EU and UK Penalize Auto Manufacturers for Recycling Cartel

For over 15 years, leading automobile manufacturers formed a recycling cartel across the European Economic Area (EEA), engaging in anti-competitive practices that benefited their operations at the expense of recycling firms. This cartel, which existed from 2002 to 2017, involved 16 major car companies. As a result of their confessions, these manufacturers received significant reductions in penalties imposed by the EU and the UK.

On Tuesday, the European Union announced fines totaling approximately 550 million euros for the involved companies, with discounts applied for those who cooperated. For instance, Volkswagen is still liable for around 128 million euros in fines from the EU and an additional 18 million euros in the UK. In contrast, Mercedes-Benz, which reported the cartel's activities in 2019, avoided any penalties.

The cartel was characterized by two main illegal agreements. The first involved a refusal to compensate recycling companies for the costs associated with processing vehicles at the end of their life cycle. The EU mandates that automobile manufacturers cover these expenses to encourage them to design vehicles that are easier to recycle. However, the manufacturers resisted this obligation, leading to the formation of the cartel.

The second agreement targeted advertising practices. The participating companies colluded to suppress information regarding the percentage of vehicles that could be recycled or reused at the end of their lifecycle. They also withheld data about the proportion of recycled materials used in new vehicles. This strategy aimed to keep potential customers uninformed about recycling options, thereby minimizing pressure on manufacturers to adopt more sustainable practices.

The cartel was organized by the European automobile manufacturers' association, ACEA. The involved companies included BMW, Ford, General Motors, Honda, Hyundai, Kia, Jaguar Land Rover, Mazda, Mercedes-Benz, Mitsubishi, Opel, Renault (and Nissan), Stellantis (Peugeot, Citroën), Suzuki, Volkswagen, and Volvo. Notably, Hyundai, Kia, and Mazda joined the EEA only in 2006. In the UK, the cartel operated from 2004 to 2018, originally involving companies like BMW, Ford, Mercedes-Benz, and Volkswagen.

Companies that assisted in the investigation received additional leniency in their penalties. Stellantis, for example, received a 50% discount on its fine for cooperating with the authorities, resulting in a total penalty of just under 100 million euros. Mitsubishi benefitted from a 30% reduction, while Ford received a 20% discount.

Companies have the right to appeal the EU fines, and they reached settlements regarding the UK penalties with the Competition and Markets Authority (CMA).