It is unlikely that a major global legal threat could emerge out of the Allegations of industry collusion between Germany’s car manufacturing industry, Arndt Ellinghorst, head of global automotive research at Evercore ISI, said on Tuesday during a television interview.
The possibility of being engaged in an illegal cooperation by German car companies, including Volkswagen, Audi, BMW, Porsche and Daimler, was reported by German news magazine, Der Spiegel, on Friday. In order to agree on costs, suppliers, technologies and even the prices of diesel emission treatment systems, the major German carmakers are making use of industry committee, is the allegation.
“This is potentially being dragged into the U.S. because some of the accounts were sold to American customers and also the Chinese as they were exported … But I still don’t see a major global legal threat here,” Ellinghorst said.
According to a Bloomberg report which cites an unnamed source, U.S. department officials are believed to be looking into allegations of industry collusion between major German carmakers. However, on the possibility that the Justice Department is poised to open a formal investigation, there has been no indication.
While other carmakers have reportedly refused to comment on the claims, BMW rejected reports of emissions collusion.
In order to discuss allegations of industry collusion, Volkswagen said it would hold a special supervisory board meeting on Wednesday, said reports citing sources.
Evercore’s Ellinghorst said, “Well, the line is when you breach antitrust rules”, when asked at which point Volkswagen and other major German carmakers could be adjudged to have crossed the line on alleged industrial collusion.
It is “normal practice” for major business and original equipment manufacturers (OEMs) meeting to agree on technology practices as well as regulatory standards by industry groups, he explained.
“What is not normal practice is if a group of these OEMs (including) VW, BMW and Daimler meet outside of normal industry standards where there are no lawyers involved overseeing the whole thing,” Ellinghorst added.
Amid a possible breach of regulatory standards, shares of the top three German carmakers dropped sharply in the previous session. While Daimler was trading close to the flatline in afternoon deals, BMW and Volkswagen extended losses on Tuesday.
They had started investigating allegations of a cartel among a group of German carmakers, EU antitrust officials confirmed on Saturday.
Ensuring fair business dealings in the European market, the commission is the EU’s top antitrust agency in the EU. While antitrust officials can fine companies as much as 10 percent of their global turnover, it also has the power to force firms to change the way they do business.
The automotive industry employs approximately 800,000 people and accounts for about 20 percent of Germany’s industry revenue.
(Adapted from CNBC)