Is this the largest advertising related fine in British legal history?

CMA Investigation Uncovers Collusion in the Automotive Industry

The United Kingdom's Competition and Markets Authority (CMA) has recently concluded an extensive investigation into collusion within the automotive industry, revealing illegal agreements among several major car manufacturers and trade bodies.  This investigation has led to fines totalling over £77 million for 10 manufacturers and 2 trade associations.  One manufacturer, however, has been exempted from financial penalties due to its cooperation with the CMA under the authority's leniency policy. 

Background of the Investigation

The CMA's investigation, which ran parallel to a probe by the European Commission (EC) launched in March 2022, uncovered two primary areas of collusion: advertising claims and recycling services.  The EC has also issued its decision, imposing fines for breaches of EU law. 

Advertising Claims Collusion

One of the key findings of the investigation was that car manufacturers had illegally agreed not to advertise if their vehicles exceeded the minimum recyclability requirement of 85%, even if the actual percentage was higher.  This agreement, which was in place for more than 15 years from May 2002 to September 2017, prevented customers from fully understanding the green credentials of the vehicles they were considering.

The agreement was documented in a paper known as the 'ELV Charta' or "gentleman's agreement" and was referenced in emails, internal documents, and meeting minutes. Manufacturers even challenged each other when breaches of this agreement occurred.  This collusion not only restricted competition but also potentially reduced the incentive for companies to invest in green initiatives, a kind of self-imposed 'green hushing'.  (And in case you were wondering, there is no suggestion that the fine was increased due to the dodgy spelling of 'Charta'.)

Buyers' Cartel in Recycling Services

The investigation also revealed a 'buyers' cartel' among certain manufacturers regarding the recycling of end-of-life vehicles (ELVs). From April 2004 to May 2018, several manufacturers agreed not to pay companies to handle the recycling of their customers' ELVs.  This agreement meant that companies providing recycling services were unable to negotiate prices with the manufacturers, impacting their profitability and potentially their ability to invest in better and greener technologies. 

Other companies and bodies, such as the European Automobile Manufacturers' Association (ACEA), the Society of Motor Manufacturers & Traders (SMMT), later joined this unlawful agreement.  The collusion in this area further restricted competition and innovation within the industry. 

The Role of Trade Associations

The ACEA and SMMT played significant roles in facilitating these illegal agreements. ACEA meetings were used to coordinate the collusion, with the association itself chairing meetings and intervening when manufacturers acted outside the agreed terms.  The SMMT also attended these meetings and became involved by settling disputes among the manufacturers. 

Settlement and Fines

All the car manufacturers and industry bodies involved, except for the one that tipped off the authorities, have now settled with the CMA.  They have admitted to their illegal behaviour and agreed to pay fines totalling more than £77 million. Following the launch of the CMA's investigation, the SMMT, and some of the manufacturers approached the CMA for leniency and received a percentage reduction in their fines.  The manufacturers and industry bodies have until 2 June 2025 to pay their fines. 

CMA's Commitment to Fair Competition

Lucilia Falsarella Pereira, Senior Director of Competition Enforcement at the CMA, emphasised the importance of fair competition and the impact of collusion on consumers and innovation.  She stated, "Agreeing with competitors the prices you'll pay for a service or colluding to restrict competition is illegal and this can extend to how you advertise your products. This kind of collusion can limit consumers' ability to make informed choices and lower the incentive for companies to invest in new initiatives. Today's fines show our commitment to taking action when competition law is broken." 

The CMA's leniency policy has played a crucial role in this investigation, offering discounts to those who came forward with information and cooperated at an early stage.  This approach helps achieve swift outcomes and reinforces the CMA's dedication to maintaining fair competition in the market. 

Conclusion

The CMA's investigation into the automotive industry has highlighted significant issues of collusion that have impacted both consumers and the industry's ability to innovate. The substantial fines imposed serve as a reminder of the importance of adhering to competition laws and the consequences of illegal behaviour.

Is this the worst 'car crash' in UK advertising regulation?

In the UK, most advertising regulation is conducted by the Advertising Standards Authority, which has no power to issue fines and relies on reputational damage as its primary sanction. Occasionally, very occasionally, an advertiser will be caught out by a breach of consumer protection law, which can give rise to substantial fines, such as when Tesco was fined £300,000 for misleading savings claims on its 'half-price' strawberries by Birmingham Crown Court in 2013.  But this fine is of a completely different magnitude because of the anti-competitive, collusive behaviors, including in relation to the manufacturers' advertising. As the CMA is about to gain substantial new consumer law powers under the Digital Markets, Competition and Consumers Act from 6th April 2025, it's also a reminder that while there is not necessarily a new sheriff in town, the old sheriff now has a much larger gun!