EU Slaps $1billion Fines On Volkswagen And BMW For Organizing Emissions Cartel

Charges that the Volkswagen Group and BMW had colluded with Daimler to cause delay in the development of technology that could have reduced levels of emission from their vehicles was upheld by the European Commission and has consequently slapped a fine of  $1 billion on Volkswagen Group and BMW.

The three German carmakers, along with Volkswagen subsidiaries Audi and Porsche had agreed to avoid competing on technical development in the sphere of cleaning of nitrogen dioxide and had therefore breached EU’s antitrust rules, the Commission said in a statement.

The Commission said that the breach in the regulations had been made by the companies between 2009 and 2014 at a time when the companies had held “regular technical meetings” between them for discussing the development of technology that can reduce the emission of harmful nitrogen-oxide from their diesel passenger cars, the Commission said.

“The five car manufacturers Daimler, BMW, Volkswagen, Audi and Porsche possessed the technology to reduce harmful emissions beyond what was legally required under EU emission standards. But they avoided to compete on using this technology’s full potential to clean better than what is required by law,” the EU Commission’s top antitrust official, Margrethe Vestager, said in the statement.

“In today’s world, polluting less is an important characteristic of any car. And this cartel aimed at restricting competition on this key competition parameter,” she added.

The Commission slapped a fine of €502 million ($595 million) on Volkswagen, which included its Audi and Porsche brands, while a fine of €373 million ($442 million) was imposed on BMW. The Commission did not impose any fines on Daimler because it was the whistle blower in this case and had informed the Commission about the existence of the cartel, the Commission said.

While suggesting that the ruling set a questionable precedent, Volkswagen said it was considering whether to appeal the ruling.

“The Commission is breaking new legal ground with this decision, because it is the first time it has prosecuted technical cooperation as an antitrust violation,” the company said in a statement. “It is also imposing fines even though the contents of the talks were never implemented and customers were therefore never harmed,” it added.

The guidelines of the Commission on technical cooperation agreements among car makers “no longer do justice to the complex challenges facing the automotive industry” and therefore there was need that the guidelines be updated, said Europe’s largest automaker.

The Commission had “dropped most of its charges of antitrust violations” and had cleared the company of any suspicion of using “prohibited defeat devices” to cheat on emissions tests, BMW said in a statement. The company added: “This underlines that there has never been any allegation of unlawful manipulation of emission control systems by the BMW Group.”

Admission of using software on millions of its diesel engines in its cars for apparently reducing the emissions during tests was made by Volkswagen in 2015. That admission resulted in a number of investigations, fines and settlements for years and has caused the company to take a hit of at least $39 billion while also ruining its reputation.

(Adapted from CNN.com)

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