EU fines VW Group and BMW $1 billion over emission collusion
The European Union (EU) handed down a fine of $1 billion in total to BMW, Volkswagen, Audi and Porsche. Why? Well, because these companies colluded to limit the development and effectiveness of the car emission control system. Daimler, while being part of the same ‘cartel’, was not fined as it got full immunity from prosecution for exposing the cartel to the EU. Here’s a quick look at what went down:
Daimler, BMW, VW, Audi and Porsche colluded to restrict emission technology
The companies agreed to restrict the use of AdBlue to avoid competition amongst themselves over cleaner emissions
The EU granted full immunity to Daimler while the other four German car brands were fined $1 billion (in total)
This was the first time that European Commission imposed a collusion fine
Essentially, the companies were in an agreement not to make their cars any cleaner than what was legally required by the EU, even though some had the technology to do so. This means that they not only restricted competition, which is important for innovation, but also denied consumers a chance to buy less polluting cars. EU Commission's top antitrust official, Margrethe Vestager says, "The trust of the consumer was broken since the car manufacturers deliberately avoided competing on cleaning better than what was required by EU emission standards for over five years."
According to the statement by Vestager, the companies agreed to restrict the usage of AdBlue. AdBlue is injected into the exhaust to convert the harmful nitrogen oxide into nitrogen and oxygen which are harmless. The carmakers agreed on the size of the AdBlue tanks placed in the diesel cars and on the intervals between refills. They also exchanged sensitive information about AdBlue tank sizes, refill intervals and average AdBlue consumption of future car models.
The carmakers knew that they had the technical possibility to clean better than what is required by law and compete on this important parameter which would benefit customers, as well as have a more positive impact on the environment. Instead, they decided to collude by agreeing that none of them would clean above the minimum standard required by law. Restricting technology that can aid emission by forming a cartel is against the law as explained by Vestager.
According to Vestager, companies working together is not the major concern for the EU. Companies can work together to improve standards. But the dividing line is clear. “Companies must not coordinate their behaviour to limit the full potential of any type of technology,” says Vestager. Companies must not restrict their competition on being able to perform better than what is required by law and all companies should be allowed to compete with each other for the benefit of the consumers. “Agreeing not to do so is simply illegal. As we have done today, also in the future, if we find that companies have restricted competition in such a way, we will not hesitate to take firm action,”Vestager adds.
The VW Group which includes Audi and Porsche were fined $595 million while BMW was fined $442 million. This was the first time the EU had to implement a regulation that stops companies from colluding against technological advancements. This not only alerts the car companies of dubious plays but also makes the laws much clearer in the sector. Moreover, the customer interest is safeguarded from the foul play by the companies and, in this case, also help safeguard the environment.