The Swedish company, currently the second-largest truckmaker and in no relation with Volvo Cars, has set aside a provision of 400 million euros ($497 million) after seeing a European Commission statement on potential antitrust violations.
According to the Gothenburg, Sweden-based manufacturer, which has no relation today to Geely-owned Volvo Cars other than the same name (they were historically the same company), the provision will take its toll on the fourth-quarter operating income at the trucks unit. The EU probe has also targeted Volkswagen AG’s heavy unit MAN SE; DAF Trucks NV, which is part of Paccar Inc., and Daimler AG. With penalties that can go up as much as 10% of annual revenue, the EU has been investigating makers of heavy and medium-duty trucks for alleged price rigging since 2011.
According to new Competition Commissioner Margrethe Vestager, “Fighting cartels will be one of the priorities” and as recently as March producers of ball bearings for car and truckmakers were imposed joint penalties worth 953 million euros. With Volvo AB ready to re-assess the size of the provisions regularly and saying it’s “probable that the group’s financial result and cash flow may be materially adversely affected”, the situation is mirrored at the competitors. For example, Stuttgart, Germany-based Daimler did the same and set aside money as far back as 2011 and is now currently evaluating the EU statement of objection, according to Ute Wueest von Vellberg, a company spokesperson.