Mercedes has set aside reserves of more than €1 billion in preparation for litigation and legal risks


Although truck manufacturers are extremely low-key (for understandable reasons) about the ongoing claims for damages by the truck cartel, in the background they have already had to reckon with the probably inevitable consequences.

At least, this is indicated by the Mercedes Benz Group’s financial statements, in which it has already set aside a substantial reserve (more than 1 billion euros) for litigation and legal risks, which it has had to back up (although it has tried to be cryptic) with detailed explanations in accordance with accounting regulations. Their motivation is understandable, because if they had not done so, they might have been sued in the future for misleading their shareholders.

Mercedes-Benz Group AG (formerly Daimler AG) still resorts to the accounting rule IAS 37 (hiding what exactly they made reserves for) and discloses €1.070 billion in reserves.

The following is the information contained in the Daimler Truck Annual Report

Antitrust proceedings (including actions for damages)

Mercedes-Benz Group AG (formerly Daimler AG), as the former parent company of Daimler Truck AG, was the addressee of antitrust proceedings initiated by the European Commission. In July 2016, the European Commission issued a settlement decision against the former Daimler AG and four other European truck manufacturers for their involvement in anticompetitive behaviour that constituted a violation of European antitrust rules with regard to pricing and the passing-on of the costs of complying with stricter emissions regulations for trucks.

The European Commission found that Daimler AG participated in the agreements in question from January 17, 1997 to January 18, 2011.

The fine imposed on Daimler AG in the European Commission’s settlement decision amounted to roughly €1.09 billion and was paid in full in 2016.

Daimler itself writes in its annual report:

“Following the settlement decision of the European Commission, lawsuits, class actions and other legal actions were filed or initiated in several jurisdictions to claim damages from direct and indirect truck customers. Claims for damages filed could result in significant liability for the Daimler Truck Group as well as significant costs for necessary defence measures. This could have a material adverse effect on the Group’s business and financial condition.

In connection with the antitrust violations described above, the principal lawsuits (including certain types of class or collective actions) are pending or have been instituted in Germany, the United Kingdom, the Netherlands and Spain. Lawsuits are also pending in some other European countries and in Israel (approximately 20 countries in total).

The Daimler Truck Group is taking appropriate legal action to defend itself against the lawsuits.

As legal proceedings are subject to considerable uncertainties, it is possible that the reserves established for them may prove to be insufficient in some cases following final decisions in the proceedings. As a result, significant additional expenses may be incurred. This also applies to legal proceedings for which, from the Group’s perspective, no provisions had to be recognized.

It cannot be ruled out that the aforementioned risks from settlement and legal proceedings, individually or in their entirety, could have a material adverse effect on the results of operations, financial position and net assets of the Group or the segments.

Although the respective final outcome of individual legal proceedings may affect the Group’s earnings and cash flow in a given reporting period, the Group believes that any resulting liabilities will not have a lasting impact on the Daimler Truck Group’s financial position.”

Other truck manufacturers have come to a similar conclusion, according to their annual reports.

In view of three rulings at the Federal Court of Justice, the assessment is abundantly optimistic and not supported by facts, our experts believe.

Do you have a question?
Ask our experts!

Recent developments