Information exchanges. The carmakers cartel Javier García-Verdugo Chief Economic Advisor, CNMC ACE Annual Conference, 16 November 2017

Case S/0482/13 - Carmakers Infringement of article 1 of the Spanish Competition Act (SCA) and article 101 of the TFEU, consisting in exchanges of strategic and confidential information regarding business management, aftermarkets and marketing Reduction of competitive pressure with the ultimate goal of achieving homogeneity of market offers and mutual control Very serious infringement (art. 63.1.c SCA)  Fine: up to 10% of total turnover (art. 64 SCA). 25 June 2013 Leniency application by SEAT 23 July 2013 Conditional exemption from payment of the fine granted to SEAT and its subsidiaries (VOLKSWAGEN AUDI E. and PORSCHE I.) 23-26 July 2013 Dawn raids carried out at headqquarters of TOYOTA, NISSAN, SNAP-ON, and RENAULT 30 August 2013 Start of proceedings 27 January 2015 Statement of objections 23 July 2015 Prohibition decision with fines

Undertakings involved Companies CITROËN ESPAÑA B&M ESPAÑA (MITSUBISHI) BMW IBÉRICA CHEVROLET ESPAÑA. CHRYSLER ESPAÑA FIAT SPAIN FORD ESPAÑA GENERAL MOTORS ESPAÑA HONDA MOTOR EUROPE (Opel) HYUNDAI MOTOR ESPAÑA KIA MOTORS IBERIA MAZDA AUTOMÓVILES ESPAÑA MERCEDES BENZ ESPAÑA NISSAN IBERIA PEUGEOT ESPAÑA PORSCHE IBÉRICA RENAULT ESPAÑA SEAT TOYOTA ESPAÑA VOLKSWAGEN AUDI ESPAÑA (AUDI, SKODA and VW) VOLVO CAR ESPAÑA Cartel facilitators SNAP-ON BUSINESS SOLUTIONS URBAN SCIENCE ESPAÑA 22 car distribution companies (*), 29 brands and 2 cartel facilitators (consulting firms) involved Product market: Distribution and marketing of new and used vehicles, automotive spare parts, accessories and aftersales activities 90% market share in car distribution in Spain (*) Note: only 21 companies listed because ORIO SPAIN (Saab) was included in the investigation, but the infringement could not be proved.

Categories of information exchanges Forums for IE Time period Companies involved Information common to all forums Forum-specific information Secrecy, frequency and means of exchanges “Brands Club” Origin of information exchanges Feb 2006 -July 2013 20 + SNAP-ON (from 2009) Profitability and sales of dealer networks (total and by automobiles sales and aftermarkets activities) Commercial margins and remuneration policy offered by brands to dealer networks (disaggregated) Structure, characteristics and organisation of dealer networks Conditions of current and future policies, and commercial strategies of aftermarkets marketing Marketing campaigns Customer loyalty programs Policies regarding external sales channel and best practices of networks’ management Monthly sales by car model Distribution and sales of participating brands’ vehicles Twice a year (aprox. 16 meetings) Formal mechanisms to ensure secrecy “Exchange of aftermarkets indicators Project” Growing importance of aftermarkets March 2010 - August 2013 17 + URBAN Reports and forum meetings regarding aftermarkets Sales of spare parts, accessories and motor oil by brand Disaggregated billing, number and reason of visits to repair shops, and tire sales Number of dealer shops with aftermarkets services and external sales Quarterly meetings Monthly, quarterly and yearly reports Confidential and non-publicly available information “Builders’ Workshops” April 2010 -March 2011 14 Conditions and commercial policies of aftermarkets marketing Evolution of turnover Aftermarkets marketing campaigns Future commercial strategies Meetings of aftermarkets marketing managers

Highlights of the conduct Exchanges of confidential information Huge level of detail and disaggregation Current and updated information related to sales and aftermarkets The information was shared periodically plus regular meetings Exchanges by senior managers of the relevant areas, who reported to the senior managers of the companies. Formal mechanisms to guarantee secrecy: use of codes, bcc recipients… Instrumental services by SNAP-ON and URBAN (arranging and participation in meetings, gathering and circulating data)

Expert reports Commissioned by Date Prepared by Title 12 Companies: BMW, Chevrolet, Fiat, Ford, Honda, Hyundai, Kia, Nissan, Opel, Peugeot, Renault y Toyota 19 May 2015 Compass Lexecon “Economic analysis of the exchange of information between brands in the motor vehicles sector” Nissan 25 Feb. 2015 RBB Economics “Analysis of information exchanged by Nissan and other automobile brands and assessment of its effects on the market” Urban Science 20 Feb. 2015 Charles River Associates “Economic Assessment of the Statement of Objections”

Allegations On affected market definition: there are two markets, sales and after- sales, not only differentiated, but disconnected; and in the aftermarket there is no competition between brands On the qualification of the conduct as a cartel, i.e. an infringement by object. Both the leniency applicant and the Competition Authority were biased towards the classification of the conduct as a cartel. On the nature of the information exchanged and on the nature of the agreements. It is alleged that the information exchanged was not strategic, since it was aggregated, of public nature, and not updated; furthermore, the data were exchanged on an occasional and intermittent basis. On the anti-competitive effects of conduct. It was alleged that the exchange of information did not have anticompetitive effects due to the characteristics of the affected markets and of the information exchanged.

Total turnover 2014 (million €) Fine as % of total turnover Fines Company Total turnover 2014 (million €) Fine as % of total turnover Total fine (million €) CITROËN ESPAÑA 1,136.08 1.30% 14.77 B&M ESPAÑA (MITSUBISHI) 119.39 0.65% 0.78 BMW IBÉRICA 1,147.40 0.70% 8.03 CHEVROLET ESPAÑA. 13.86 1.00% 0.14 CHRYSLER ESPAÑA 0.04 0.25 FIAT SPAIN 580.69 1.20% 6.97 FORD ESPAÑA 6,744.94 0.30% 20.23 GENERAL MOTORS ESPAÑA 967.25 0.60% 22.83 HONDA MOTOR EUROPE (Opel) 203.11 0.61 HYUNDAI MOTOR ESPAÑA 464.75 0.95% 4.42 KIA MOTORS IBERIA 414.84 0.50% 2.07 MAZDA AUTOMÓVILES ESPAÑA 218.80 0.66 MERCEDES BENZ ESPAÑA 2,379.33 0.10% 2.38 NISSAN IBERIA 287.06 1.10% 3.16 PEUGEOT ESPAÑA 1,209.43 15.72 RENAULT ESPAÑA 1,516.95 18.20 TOYOTA ESPAÑA 824.48 1.05% 8.66 VOLVO CAR ESPAÑA 213.26 0.80% 1.71 TOTAL 22,430.60   131.45

Fines Facilitators: fines imposed given the characteristics of their active participation and key role in the cartel Company Total turnover 2014 (million €) Fine as % of total turnover Total fine (million €) SNAP-ON BUSINESS SOLUTIONS 2.64 2% 0.05 URBAN SCIENCE ESPAÑA 3.50 0.07 SEAT and subsidiaries exempt from payment of the fine that would have been applied to them as members of the cartel (art. 65 SCA) Company Total turnover 2014 (million €) Fine PORSCHE IBÉRICA 122.60 Exempt SEAT 1,334.21 VOLKSWAGEN AUDI ESPAÑA (AUDI, SKODA and VW) 2,526.00

Confidential/Private Information exchanges: likelihood of collusive outcomes Past Current Future Timeliness Collusive outcome Aggregated Disaggregated Aggregation Infrequent Frequent Frequency Public Restricted Confidential/Private Access to data Diapositiva Vera Sopeña + Inmaculada Third parties Third related parties Direct Through