LEGAL
With the Securities and Exchange Commission (SEC) continuing to pay whistleblower awards since its eponymous program began five years ago, there are seemingly greater incentives than ever for insiders to report wrongdoing within their organizations.
This also holds true abroad, specifically in the EU, where, in July, regulators levied a record €2.9 billion fine (US$3.2 billion) against Europe's biggest truck makers for engaging in a 14-year-long illegal cartel. The company that blew the whistle on this activity in 2011, MAN SE, escaped from the action penalty-free – despite having fully participated in the cartel since 1997.
The cartel, which involved collusion between MAN, Volvo/Renault, Daimler, Iveco, and DAF, operated from 1997 until 2011. The cartel’s activities centered on fixing the prices of vehicles and planning the timing of the implementation of said technologies. Furthermore, the cartel is alleged to have passed “on the costs for meeting environmental standards to customers.”
These activities continued until the European Commission conducted unannounced inspections of the companies – inspections which were prompted by MAN’s reporting of the cartel’s existence and activities in January 2011. After a four-year investigation, the Commission concluded that these activities violated both Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the EEU Agreement.
The investigation did not, however, find any connection between this cartel and the so-called “defeat devices” – software that was designed and installed in cars to cheat nitrogen oxide emissions tests, an investigation with which Volkswagen is currently dealing. Interestingly enough, MAN is a subsidiary of Volkswagen.
As noted above, the fines leveled against the members of the cartel were the largest ever imposed by the Commission. The breakdown is as follows:
As mentioned earlier, MAN evaded any imposition of fines by revealing the existence of the cartel. The Commission noted, however, that, had MAN not done so, it would have faced a fine of around €1.2 billion. Although it’s certainly true that the Commission only learned of the cartel’s existence because of MAN’s disclosure, there’s no guarantee that another member of the cartel wouldn’t have come forward if MAN hadn’t, so the avoidance of the €1.2 billion fine is certainly a relevant figure.
In fact, despite the size of these fines, they could have been much larger if not for the cooperation of many of the parties besides MAN. For example, even though Daimler’s fine was a whopping €1 billion (and change), this number is the result of a 30% reduction in its fine for its cooperation with the investigation, and another 10% reduction for its acknowledgment of its participation in the cartel and its liability associated therewith.
Indeed, the Commission’s own press release uses a table that lays out the stark contrast between MAN’s “€0” fine, and its co-conspirators’ fines, which ranged from nearly €500 million to over €1 billion. Furthermore, the same table also furnishes each party’s respective reduction for its level of cooperation in the investigation.
Thus, while the press release certainly underscores the egregiousness of the cartel’s actions, as a reader, one cannot help but focus more on how MAN came out of the action scot-free, and how nearly all of the other parties received some kind of leniency for their cooperation.
In other words, the Commission is sending a message: There are great rewards for those who voluntarily report wrongful activity and for those who cooperate with enforcement agencies.
-->
