EU slams 5 automakers with $1bn fine for infractions on emissions tech, dirtier cars

*The regulators say the affected automobile manufacturers’ shirking the emissions requirements amounted to ‘cartel behaviour’ with a far-reaching impact on both consumers and the environment

*Not only users of these cars, but all citizens must be able to trust that car manufacturers compete with one another to reduce harmful emissions from their vehicles ─ Margrethe Vestager, Executive Vice-President of EU

Gbenga Kayode | ConsumerConnect

For their ‘cartel behaviour’ by colluding to restrict competition in emission cleaning for new diesel passenger cars to safeguard consumers’ health and the environment, regulators have fined five German automakers: Daimler (Mercedes-Benz), BMW, Volkswagen, Audi and Porsche $1 billion (875 million Euros).

ConsumerConnect gathered the European Union (EU) in handing down the fine on the erring automobile manufacturers, stated what the car manufacturers did simply “amounts to cartel behaviour.”

The technology ploy the companies took is new territory for the Commission, agency report said.

It was learnt that in the past, the fines the regulators had handed down to errant automakers have dealt with price-fixing or market sharing.

Meanwhile, all the erring automobile companies were said to have acknowledged their role in the alliance and agreed to settle the case.

Interestingly, Daimler, which is a key figure in the “Dieselgate” scandal, is getting off scot-free because it blew the whistle on the others, report said.

The effect on both consumers and the environment

It is noted that at the centre of the issue are “selective catalytic reduction systems” (SCR) in diesel cars. Those systems are designed to clean up the emissions and make them less polluting.

However, in contravention of the stated requirements, the EU discovered that what the automakers did was concerning for both people and the environment.

The Commission said all seemed well after it introduced minimum standards for nitrogen oxide emissions in 2007.

Daimler, BMW, Volkswagen, Porsche and Audi held regular technical meetings to cooperatively develop the ‘Selective Catalytic Reduction’ systems to meet the requirements and quickly bring that technology to the market. But the bubble burst in the process, according to report.

While the automakers worked together to develop the technology, they also decided not to compete with one another so that the systems could be brought to their full potential. Officials said deciding to avoid competition breached the EU’s competition rules.

Margrethe Vestager, Executive Vice-President at EU, said: “They knew that they had the technical possibility to clean better than required by law and compete on this important parameter relevant for consumers.

“Instead, they decided to collude by indicating to each other that none of them would aim at cleaning above the minimum standard required by law.”

Creating a lack of trust with consumers

Report has indicated that unwinding the consumer impact of this infraction by the five automobile manufacturers could take some time.

According to the EU, their gambit lasted more than five years, leaving people who purchased a vehicle from one of the accused automakers with unfulfilled expectations.

Vestager stated: “Every year millions of new diesel cars worth billions of Euros are sold in Europe. And many more are already in use.

“Not only users of these cars, but all citizens must be able to trust that car manufacturers compete with one another to reduce harmful emissions from their vehicles.”

While the EU found the ruse disconcerting, officials said the ruling makes it clear that manufacturers have “ample room” to cooperate and compete for the common good on things like research and development.

“Companies must not coordinate their behaviour to limit the full potential of any type of technology.

“Companies must not restrict their competition on performing better than what is required by law and they should continue to compete to 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 added.

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