European Union has just fined VW & BMW with $1 billion for emissions cartel
The 'Big Three' including Mercedes-Benz (with parent company Daimler), and Audi, along with Porsche, have been illegally colluding to restrict competition in emission cleaning for new diesel passenger cars for more than a decade.
In what has to be a surprising piece of news, the EU has just found that Volkswagen, along with BMW, had been illegally doing business with Daimler, the parent company of Mercedes-Benz, along with Audi and Porsche, for more than a decade, to limit the use of emissions cleaning technology.
The European Commission said the German car giants held talks nearly a decade ago over the use of selective catalytic reduction (SCR) technology that injects AdBlue to reduce nitrogen oxide from the exhaust gases of diesel-fueled cars. According to the Commission, the three companies colluded for more than 5 years between 2009 and 2014 to avoid competition on introducing technology that would ultimately clean emissions beyond the legal EU requirements.
“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,” said Executive VP of the EU Commission, Margrethe Vestager in a statement.
“But they avoided competing on using this technology’s full potential to clean better than what is required by law. So today’s decision is about how legitimate technical cooperation went wrong. And we do not tolerate it when companies collude. It is illegal under EU Antitrust rules. Competition and innovation in managing car pollution are essential for Europe to meet our ambitious Green Deal objectives. And this decision shows that we will not hesitate to take action against all forms of cartel conduct putting in jeopardy this goal.”
Under the settlement, VW is supposed to pay a fine of 502 million euros (note, VW has already paid nearly $40 billion in fines, vehicle refits, and legal costs due to the infamous Dieselgate scandal), with BMW shelling out 373 million euros. Daimler, however, won’t pay a penny because it was the one that brought forward this situation to the EU. Lucky. Although the Commission has said that had that not been the case, Daimler would’ve been fined €727m (£624m).
The Commission found that the companies reached an agreement of sorts on the size of the AdBlue tanks and the average consumption of AdBlue in their machines, achieved by sharing commercially sensitive information. What this means is that they knew they would not need to compete on the technology in the future, thus reducing the need to develop systems in areas relevant to the buyers, while violating the European Economic Area regs.
On this, BMW issued a statement stating, “The European Commission dropped most of its charges of antitrust violations and it had decided to agree on a settlement to bring proceedings to an end.” It added, “Unlike some of its competitors, the BMW Group never considered reduced, illegal emission control.”
In a similar situation, a statement issued to Reuters by Volkswagen said, “The commission is entering a new judicial territory because it is treating technical cooperation for the first time as an antitrust violation.”
