By Kirstin Ridley
LONDON (Reuters) - Litigation management company Bentham Europe plans to fund a potential 100 billion euro (87.50 billion pounds) damages claim against Europe's biggest truck makers after they admitted to operating a 14-year price cartel.
Bentham said on Monday it intends to back a group action on behalf of truck buyers who fell victim to the cartel involving Volvo (ST:VOLVb), Daimler (DE:DAIGn), Paccar's (O:PCAR) DAF, CNH Industrial's (MI:CNHI) Iveco and Volkswagen's (DE:VOWG_p) MAN.
Four truck makers were fined a record 2.9 billion euros by EU regulators in July for price fixing and passing on to customers the costs of complying with stricter emission rules.
Volkswagen's MAN escaped a fine after it blew the whistle, but all five conceded that they had operated a cartel between 1997 and 2011 apart from VW stablemate Scania, which remains under investigation.
Bentham Europe, a joint venture between Australian-listed IMF Bentham (AX:IMF) and U.S. hedge fund Elliott Management, estimates that 10 million trucks were sold across the EU in the period and that each one was overpriced by about 10,500 euros.
Bentham, which is also funding shareholder lawsuits against British supermarket chain Tesco and VW, said that it is too soon to announce which law firm would bring its proposed claim or in which European jurisdiction it would be filed.
Third-party litigation funding has become increasingly mainstream in the UK over the past seven years. Funders offer to pay for lawsuits in exchange for a share of any payout and returns can be sizeable, but it is a high-risk business and payments for successful claims can take years to materialise.
Critics say that litigation funding operators can bully smaller companies by threatening class actions. But Bentham Europe, whose competitors include the likes of Burford Capital (L:BURF) and United States-based Gerchen Keller Capital, says it only takes on sizeable claims where it scents proper misconduct.
"Bentham is determined to bring the opportunity to recover the overcharges to the attention of as many truck purchasers as it can and enable these victims of the cartel collectively to seek redress," said Bentham Europe's Chief Investment Officer Jeremy Marshall.
"Claims against the truck cartel are expected to be one of the largest-ever compensation claims resulting from a cartel ruling."
Bentham is also funding a 100 million pound ($125 million) investor damages claim against Tesco (L:TSCO) after an accounting scandal and part of a multibillion-euro case against VW after the company admitted cheating U.S. emissions tests, sending its share price tumbling.