EU Commission Fines Car Manufacturers €458 Million for Recycling Cartel

The EU’s European Commission has imposed fines totaling approximately €458 million on 15 major car manufacturers and the European Automobile Manufacturers’ Association (ACEA) for their participation in a long-standing cartel concerning the recycling of end-of-life vehicles (ELVs). According to a statement from the Commission, Mercedes-Benz, while involved in the cartel, was not fined as it disclosed the arrangement under the leniency program. All companies implicated acknowledged their participation and agreed to a settlement.

Unveiling the Cartel

End-of-Life Vehicles (ELVs) are cars that are no longer suitable for use due to age, wear, or damage. These vehicles undergo dismantling and recycling processes aimed at recovering valuable materials such as metal, plastic, and glass while minimizing waste. Per a statement from the Commission, its investigation uncovered anticompetitive agreements and coordinated practices among 16 car manufacturers (including Mercedes-Benz) and ACEA, spanning over 15 years from May 29, 2002, to September 4, 2017.

The investigation found that cartel members engaged in two main forms of collusion:

1. Zero-Treatment-Cost Strategy: The companies agreed not to compensate car dismantlers for processing ELVs, asserting that recycling was already a sufficiently profitable business. This agreement prevented dismantlers from receiving payments for their services.
2. Limiting Consumer Awareness: The manufacturers colluded to avoid promoting how much of an ELV could be recycled, recovered, or reused, and how much recycled material was incorporated into new vehicles. This deliberate lack of transparency prevented consumers from factoring recycling performance into their purchasing decisions, reducing pressure on companies to exceed regulatory requirements.

Under Directive 2000/53/EC on ELVs, vehicle owners must be able to dispose of ELVs free of charge, with car manufacturers bearing the cost if necessary. Additionally, manufacturers are obligated to inform consumers about the recycling performance of new vehicles. According to the Commission’s findings, ACEA played a key role in facilitating the cartel, organizing multiple meetings and communications between the involved companies.

Regulatory Response and Future Measures

The European Commission conducted its investigation in coordination with the UK Competition and Markets Authority (CMA), which also issued a decision on the case in relation to UK competition law violations. To support the EU’s decarbonization and recycling objectives, the Commission has proposed additional measures, including flexibility provisions to help manufacturers comply with CO2 emission targets for new cars and vans between 2025 and 2027. Moreover, as part of the EU’s cohesion policy mid-term review, new funding incentives have been proposed to facilitate the deployment of recharging infrastructure.

Additionally, the Commission has launched a fact-finding initiative to examine how European industries procure and recycle certain critical raw materials. This effort aims to enhance industry collaboration within the framework of EU competition regulations.

Conclusion

The €458 million fine serves as a stern warning to corporations engaging in anti-competitive behavior within the EU. The Commission’s enforcement underscores the importance of transparency in recycling practices and consumer rights, reinforcing its commitment to sustainability and fair market practices.

Source: EC Europa