Parker ITR has reached a settlement agreement regarding its alleged involvement in the international marine hose cartel. This is the first private resolution of a company's global cartel liability without the involvement of courts or alternative methods of dispute resolution such as arbitration or mediation. It is a private opt-in contractual agreement that does not require court approval and means that claimants can remain anonymous.
Under the settlement, Parker ITR has created a fund which contains an amount representing 16% of its revenues from non-US sales of marine hose between 31 January 2002 and 2 May 2007. Purchasers of marine hose from Parker ITR (except direct purchasers in the US) can claim against the fund created by them but, in return, will have to relinquish their right to sue Parker ITR and its parents or affiliates.The amount received by the purchaser will be determined by an independent expert and claims will be administered by an independent claims adminsitrator. Administration costs and legal fees incurred by claimants will be paid by Parker ITR separately from the fund.
For all those purchasers that settle, Parker ITR will guarantee against the payment of adverse costs judgments associated with subsequently initiated non-US litigation against any of the other cartel members and has agreed to provide documents, interviews and testimony at trial. Direct marine hose purchasers in the US from Parker ITR or any other cartel member will be able to seek a recovery under settlements reached with US class counsel, of which preliminary approval has been sought.
The settlement agreement is suitable for Parker ITR but the unique characteristics of the case, including the limited number of customers and the ongoing needs of the marine hose purchasers, mean that this kind of arrangement may not be straightforward to replicate in other such cases. However, the principles behind the agreement and elements of it are likely to help private settlements in the future.
In January 2009, the European Commission imposed a total fine of €131.5 million on five groups – Bridgestone, Dunlop Oil & Marine/Continental, Trelleborg, Parker ITR and Manuli – for participating in a cartel for marine hoses between 1986 and 2007 in violation of the ban on cartels and restrictive business practices in the EC Treaty (Article 81). The investigation by the European Commission was prompted by an application for immunity lodged by Yokohama under the 2006 Leniency Notice, who also participated in the cartel but was not fined due to its cooperation with the Commission. The Commission conducted surprise inspections coordinated with several other jurisdictions in May 2007 which, for the first time, included an inspection of a private home.
The Commission concluded that the cartel members regularly met to fix prices, allocate bids and exchange sensitive market information for marine hoses. These meetings took place in several locations in Europe, East Asia and the US. The fines for Bridgestone and Parker ITR were increased by 30% because of their leadership of the cartel; while the fine for Manuli was reduced by 30% for its cooperation with the investigation under the Commission's leniency programme. As well as the fine by the European Commission, criminal charges have been brought by the United States Department of Justice and the Office of Fair Trading in the UK against Parker ITR and the other alleged members of the cartel. These have resulted in the imprisonment of three executives in the UK for periods ranging from 20 to 30 months together with substantial individual fines. In addition, Parker ITR, along with Bridgestone, Dunlop Oil & Marine/Continental, Trelleborg and Manuli reached a settlement of $21.7 million in December 2008 in a consolidated class action in the United States.
If a company suffers loss as a result of a breach of competition law by another, there are several options available to it. Where the OFT or the European Commission have established an infringement decision, litigation can be brought in the Competition Appeal Tribunal in the UK, or can be brought in the High Court whether or not such a decision exists. Compensatory damages are available where the claimant can prove and quantify the loss caused by the defendant's breach of competition law. Considerations such as jurisdiction of the court; the limitation period in which to bring a claim; remedies available to the court such as injunctions; and timescales will impact on the decision as to where the claim is brought.
Alternatively, such claims are frequently settled through methods of alternative dispute resolution such as negotiation, conciliation and mediation or through arbitration.