Breaking: EU Accuses VW, BMW, Daimler Of Diesel Collusion — Potential Fines Up To $56 Billion
The European Commission has notified VW, BMW, and Daimler of its preliminary view that they engaged in illegal anti-competitive practices between 2006–2014, keeping diesel engines dirty. The automakers now have the right to defend themselves, but if found guilty, they face fines of up to 10% of global annual revenue ($26 billion for VW alone).
The Competition Commission released notice of its preliminary “Statement of Objections” on Friday morning, along with a the following comments by commissioner Margrethe Vestager:
“Companies can cooperate in many ways to improve the quality of their products. However, EU competition rules do not allow them to collude on exactly the opposite: not to improve their products, not to compete on quality. We are concerned that this is what happened in this case and that Daimler, VW and BMW may have broken EU competition rules. As a result, European consumers may have been denied the opportunity to buy cars with the best available technology. The three car manufacturers now have the opportunity to respond to our findings.”
The preliminary findings come on the back of a full investigation launched in September 2018, following inspections conducted in October 2017. There are two main areas of alleged collusion between the German Big 3:
- They allegedly colluded to limit expenditure on NOx emission technology (specifically, limiting the functionality of selective catalytic reduction technology), between 2004 and 2014.
- They allegedly colluded to avoid or delay implementation of particulate reduction technology (Otto particulate filters) between 2009 and 2014.
More details of the allegations are available in the Commission’s press release. The Commission notes that the scope of the current allegations is limited to alleged violations of competition law. Separate and independent investigations, and possible prosecutions, by other bodies (both EU, national and civil-society) are ongoing regarding dieselgate cheating and related environmental breaches.
The possible consequences for the Big 3 are significant:
“If, after the parties have exercised their rights of defence, the Commission concludes that there is sufficient evidence of an infringement, it can adopt a decision prohibiting the conduct and imposing a fine of up to 10% of a company’s annual worldwide turnover.”
In the case of VW, worldwide revenue in 2018 was almost €236 billion ($265 billion), for Daimler it was €167 billion ($187 billion), whilst for BMW (2017 figures) it was €99 billion ($111 billion).
Unfortunately, there is no legal deadline for the proceedings to complete, and given recent history, it’s likely that the German Big 3 will drag their feet on the issue, as they have with all other aspects of the dieselgate scandal.
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