Daimler, BMW, Volkswagen, Audi and Porsche colluded to avoid using technology’s full potential, Vestager says.
European Executive Vice-President Margrethe Vestager | Pool photo by Olivier Hoslet/AFP via Getty Images
BY SIMON VAN DORPE AND JOSHUA POSANER
July 8, 2021
EU Executive Vice President Margrethe Vestager today slapped German carmakers with an €875 million fine for conspiring to limit the development of clean emissions technology.
Between 2009 and 2014, BMW, VW (Volkswagen, Audi and Porsche) and Daimler used so-called "circle of five" technical meetings to agree to hold back on technological innovations that could reduce harmful nitrogen oxide gases of diesel cars, Vestager said in a statement.
VW will need to pay the bulk of the penalty, €502 million, despite being granted a 45 percent reduction for having cooperated with the investigators. BMW is fined the remaining €373 million. Daimler got total immunity as it was the first participant in the cartel to denounce its existence.
“The five car manufacturers Daimler, BMW, Volkswagen, Audi and Porsche possessed the technology to reduce harmful emissions ... but they avoided to compete on using this technology's full potential to clean better than what is required by law," Vestager said in a statement.
The decision comes just before the European Commission will announce an important batch of legislative proposals to advance the EU Green Deal.
While Vestager’s focus as a competition commissioner is to ensure fair competition between companies, the fine for Germany’s powerful car makers is a strong message to industry that she will not hesitate to use her powers to pursue green objectives.
"Competition and innovation on managing car pollution are essential for Europe to meet our ambitious Green Deal objectives," Vestager said, adding that "this decision shows that we will not hesitate to take action against all forms of cartel conduct putting in jeopardy this goal.”
Cartels usually conspire to fix prices, so a cartel to delay the introduction of green technology is not a very common case. But the EU treaties clearly say that agreements limiting “technical development” restrict competition.
The Commission decided not to pursue some of the original charges against the companies, according to which they coordinated “to avoid, or at least to delay” the introduction of a new type of filter in petrol cars. Brussels said the "evidence was insufficient" to prove this part of its case.
BMW noted that the Commission "dropped most of its charges of antitrust violations" in the case. "With the withdrawal of most of the original allegations, the Board of Management of BMW AG has agreed to a settlement proposed by the European Commission that will bring these proceedings to an end," the company said in a statement.
VW said it "will carefully review today's decision" and decide whether to appeal, according to a statement.
Volkswagen, BMW fined US$1 billion by EU for pollution cartel
, Bloomberg News
Volkswagen AG and BMW AG agreed to pay 875 million (US$1 billion) in fines by the European Union for collusion that regulators said curbed the rollout of AdBlue emissions-cleaning technology.
VW must pay about 502 million euros and BMW will pay nearly 373 million euros, the European Commission said in an emailed statement on Thursday. The penalty for BMW is far below its initial provision of 1.4 billion euros. BMW did a U-turn in May in agreeing to settle the probe, after previously indicating it would fight the EU.
A settlement means companies agree to the EU’s charges in return for a lower fine and usually agree not to challenge the EU decision in court. Daimler AG avoided a fine for being the first to tell the EU about the cartel. All three companies could now face compensation lawsuits from customers.
The carmakers “possessed the technology to reduce harmful emissions beyond what was legally required under EU emission standards,” Margrethe Vestager, the EU’s antitrust chief, said in the statement. “But they avoided” competing “on using this technology’s full potential.”
Volkswagen preference shares fell 1.4 per cent at 11:36 a.m. in Frankfurt. BMW shares fell 1.3 per cent.
The fines come as German automakers start to emerge from a pandemic that slashed car sales. Vestager has previously showed little sympathy for a diesel-cheating scandal that the “car industry brought upon itself.”
The EU said the three carmakers struck a deal on AdBlue technology that adds urea to exhaust gases to reduce harmful nitrogen oxide emissions from diesel cars. The companies reached an agreement on AdBlue tank sizes and ranges and a “common understanding” on AdBlue consumption.
Swapping commercially sensitive information “removed the uncertainty about their future market conduct” and restricted competition for product features useful for customers. The EU said the conduct lasted from 2009 and 2014.
Volkswagen “cooperated fully” with regulators, it said in an email statement. The EU fines punish discussions “that were never implemented and customers were therefore never harmed,” it said.
‘Large Fines’
“The large fines imposed in this case underscore the need for more comprehensive practical guidance” on how companies can cooperate without risking a breach of antitrust law. Existing rules “no longer do justice to the complex challenges facing the automotive industry in particular in the area of necessary technical cooperations.”
Volkswagen will consider an appeal before a mid-September deadline, it said, adding that regulators in China, South Korea and Turkey are also examining potential AdBlue collusion.
BMW said the EU had dropped allegations of joint development on software to restrict AdBlue dosing and efforts to curb a particle filter for direct-injection petrol engine. That lead to the lower fine, according to a company statement. BMW said the EU notice stated there’s no indication of collusion on the use of defeat devices to manipulate exhaust gas tests.
The EU case is the latest regulatory scandal for an industry that’s frequently tested the patience of authorities with emissions issues. VW is still dealing with the fallout of the so-called dieselgate affair, which has cost the company as much as 32 billion euros
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