Volvo 2012 Annual Report Download - page 139

VCE from January 1, 2005. The Consent Decree was later transferred from
VTC and VCE to Volvo Powertrain Corporation. During 2008, the EPA
demanded stipulated penalties from Volvo Powertrain Corporation in the
amount, including interest, of USD 72 M, alleging that the stricter standards
under the Consent Decree should have been applied to engines manufac-
tured by Volvo Penta during 2005. Volvo Powertrain disagrees with EPA’s
interpretation and is defending the case vigorously based on, among other
grounds, the fact that the Volvo Penta engines were not subject to the
Consent Decree. The dispute was referred to a U.S. court. On April 13,
2012, The United District Court of the District of Colombia handed down a
decision in favor of EPA, and ordered Volvo Powertrain to pay penalties and
interest of approximatley USD 72 M. Volvo Powertrain has appealed the
decision. As of December 31, 2012, an amount of SEK 65 M has been set
as a provision and SEK 404 M has been retained as a contingent liability.
Volvo Group is subject to investigations by competition authorities.
Volvo Group is cooperating fully with the respective authority.
In September 2010, Volvo Trucks’ and Renault Trucks’ UK subsidiaries
have, together with a number of other international truck companies,
become the subject of an investigation initiated by the Office of Fair Trad-
ing (OFT), the British competition authority. In June 2012, OFT decided to
close its investigation on the grounds that it considers the European
Commission to be best placed to act in the matter. The OFT has reserved
its right to reopen the investigation.
In January 2011, the Volvo Group and a number of other companies in
the truck industry became part of an investigation by the European Com-
mission regarding a possible violation of EU antitrust rules.
In April 2011, the Volvo Group’s truck business in Korea and a number
of other truck companies became the subject of an investigation by the
Korean Fair Trade Commission.
Given the nature of the ongoing investigations initiated by competition
authorities, the Volvo Group cannot exclude that they may affect the Group’s
result and cash flow with an amount that may be material. However, as
regards the investigation initiated in Europe, it is too early to assess whether
and when such effect may occur and hence if and when it could be accounted
for. The Volvo Group has therefore not reported any contingent liability or any
provision for the investigation initiated in Europe. Concerning the investiga-
tion initiated in Korea, a contingent liability has however been recongnized.
In May 2011 Volvo Penta became part of an investigation by the European
Commission regarding a possible violation of EU antitrust rules. In June 2012,
the European Commission closed the investigation without further actions.
Global companies such as the Volvo Group are occasionally involved in
tax processes of varying scope and in various stages. Volvo Group regularly
assesses these tax processes. When it is probable that additional taxes
must be paid and the outcome can be reasonably estimated, the required
provision is made.
Volvo Group is also involved in a number of other legal proceedings.
Volvo Group does not believe that any liabilities related to such proceed-
ings are likely to entail any risk, in the aggregate, of having a material
effect on the financial position of the Volvo Group.
Transactions between AB Volvo and its subsidiaries and joint ventures,
which are related parties to AB Volvo, have been eliminated in the group
and are not disclosed in this note.
The Volvo Group engages in transactions with some of its associated
companies. The transactions consist mainly of sales of vehicles to dealers
and purchases of engines.
2012 2 011
Sales to associated companies 1,670 1,296
Purchase from associated companies 702 60
Receivables from associated companies,
Dec 31 242 186
Liabilities to associated companies,
Dec 31 632 129
The increase in purchases and liabilities is explained by Deutz AG, which is
an associated company from September 2012. Commercial terms and mar-
ket prices apply for the supply of goods and services to/from associated
companies.
Until December 2012 Renault s.a.s was a related party to the Volvo Group
due to its holding in AB Volvo. In December 2012 Renault s.a.s sold their
Volvo shares. Sales to and purchases from Renault s.a.s. and its subsidiaries
amounted to 29 (53) and 1,719 (2,321). Receivables from and liabilities to
Renault s.a.s. is not included for 2012 and totalled 11 and 372, respectively,
as of December 31, 2011. Sales were mainly from Renault Trucks to Renault
s.a.s. and comprised components and spare parts. Purchases were mainly
made by Renault Trucks from Renault s.a.s. and primarily comprised light
trucks. Renault Trucks has a license from Renault s.a.s. for the use of the
trademark Renault.
During the year AB Volvo divested an apartment to a former member of
Group management to market value for 10.
Refer to Note 5 regarding the Volvo Group’s share in associated companies.
NOTE 25
TRANSACTIONS WITH RELATED PARTIES
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