Car sales through financing | ICA sanctions cartel among leading operators, imposing fines of over 670 million euros

The ICA has imposed fines of over 670 million euros on members of a long running cartel in the car financing industry, in a judgement which has important implications for the liability of parent companies of joint ventures, but also serves as a reminder of the benefits for businesses to have robust compliance procedures.

What happened?

In its decision dated 20 December 2018, the Italian Competition Authority (ICA) concluded an investigation into the car industry, which was initiated following the submission of a request for leniency by Daimler (and its subsidiary Mercedes Benz Financial Services Italia). The ICA decision found a single, complex, continuous cartel involving the (bilateral and multilateral) exchange of sensitive information on individualised current and (in some cases) future prices and quantities.

The agreement was between the leading captive banks, their related automotive groups operating in Italy in the sale of vehicles by means of financial products and two trade associations. In view of the seriousness and duration (2003-2017) of the infringement, the ICA fined the parties a total of approximately €678 million. The cartel members included leading operators such as Daimler, FCA, Ford, General Motors, Renault, Toyota, Volkswagen (to name a few), as well as the trade associations Assofin and Assilea.

The liability of parent companies for the conduct of their joint ventures

The decision is notable due to the responsibility that was attributed to the parent companies of two joint ventures that were part of the cartel (FCA Bank and Banca PSA). This is a new element in the decisions of the ICA, which, until now, had never attributed the liability for an infringement to parent companies that were not majority shareholders in the subsidiary directly liable for the violation.

In this case, the Authority considered that the conduct of FCA Bank could be attributed to FCA Italy and CA Consumer Finance (which each held 50% of FCA Bank’s share capital), due to the role played by them in the adoption of the strategic decisions of FCA Bank (a similar finding was made in respect of another joint venture).

In its analysis of the liability of FCA Italy, the decision noted that: i) FCA Bank carries out its activities only in relation to the products of the FCA Group, basing its budget on the forecast of volumes indicated by FCA Italy; ii) FCA Bank used to send to FCA Italy the information exchanged with the other captive banks; and iii) FCA Italy communicated to FCA Bank the antitrust compliance measures that were to be followed in the context of information exchanges with competitors.

It is interesting to note that, in view of the novelty in the approach, the ICA decided not to make the parent companies jointly liable for the payment of the fine applied to the joint ventures and not to consider the mother companies’ turnover when calculating the 10% turnover ceiling of the fine.

Compliance programmes as a tool to reduce fines

Another notable aspect of this decision concerns the reductions of the fines granted to the companies that had developed and implemented effective antitrust compliance programmes.

In this respect, it is worth noting that, back in October 2018, the ICA issued detailed Guidelines on Antitrust Compliance in which it specified, amongst other things: i) how compliance programmes should be structured, i.e. the "ingredients" that make them truly effective; and ii) the benefits that companies may obtain from such programmes, not only in terms of avoiding/managing risks, but also by way of a reduction of the fines (in case of infringement).

In the Guidelines, the ICA strongly pushes for the adoption of compliance programmes outside the context of investigative proceedings, as this is seen as the only way to promote competition culture and prevent infringements.

The decision now confirms the increasing interest of the Authority in compliance: a number of the companies found to have committed infringements and the association Assilea - which had adopted compliance programmes before the investigation and integrated them following the start of the proceedings - were granted a reduction due to mitigating factors equal to 10% (higher than the one applied by the ICA in other previous cases, generally equal to 5%).

Osborne Clarke comment

What can we learn from the decision?

• First of all, from now on parent companies should be aware that they might be found liable – and fined – for the behaviour of their joint ventures even if they are not majority shareholders.
• Secondly, all companies should consider adopting a specific and tailor-made compliance programme, so as to be able to manage competition risks and – in case a risk materializes – to benefit from a reduction of the applicable fine of up to 15%.