By on July 23, 2017

Volkswagen Blue

Government authorities are concerned that Germany’s automakers have been running one of the biggest CARtels in history. Allegedly active since the 1990s, automakers used secret working groups to remain in cahoots on decisions regarding technical issues, suppliers, and cost suppression. The groups may have even set the table for Volkswagen’s diesel emissions scandal by encouraging regulatory cheating.

Major manufacturers had apparently agreed on the size of the tanks containing AdBlue, Germany’s preferred diesel treatment fluid to reduce exhaust emissions, and decided the units should be small to keep fluid prices up. When the entire system turned out to be insufficient in meeting regulatory guidelines, illegal software manipulation became the alternative solution. 

At least that’s how Der Spiegel framed the news when it broke on Friday. Meanwhile, government authorities aren’t ready to issue any concrete accusations. “The European Commission and the Bundeskartellamt have received information on this matter, which is currently being assessed by the Commission,” a spokesperson said on Saturday. “It is premature at this stage to speculate further.”

Der Spiegel reported that Germany’s antitrust authorities had been investigating Volkswagen over the possible manipulation of steel prices. But, while that probe was underway, evidence of an illegal collusion within the auto industry emerged. VW essentially outed itself to committing anti-competitive behavior in a letter to cartel authorities on July 4th. Early information stemming from the letter seems to indicate that sixty industry committees, made up of about 200 employees, debated vehicle development, engines, transmissions, brakes, exhaust treatment systems, and more.

Any company found guilty of breaching the European Union’s cartel could face fines resulting in as much as 10 percent of their global turnover.

Volkswagen, BMW, Audi, and Porsche have yet to respond to the accusations.

 

[Image: Volkswagen]

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31 Comments on “Antitrust Regulators Worried German Auto Industry Has Been Running Secret Cartel For Decades...”


  • avatar
    APaGttH

    I don’t buy it – not to the extent suggested.

    The same thing was suggested about the Japanese automakers in the mid-90s. There was even a Japanese word for it which escapes me at the moment.

    • 0 avatar
      Matt Posky

      There does seem to be a bit of a witch-hunt taking place in Germany ever since VW “confessed” to dieselgate in 2015. However, enough wrongdoing has cropped up within the industry to seemingly warrant further investigations. I suppose we’ll find out how egregious this new scandal is (or isn’t) eventually.

      I believe the Japanese term you’re thinking of is keiretsu.

      • 0 avatar
        Lorenzo

        I thought keiretsu was the interlocking ownership of a car company and its suppliers. a cartel is a working arrangement of multiple car companies.

        Countries tend to foster that arrangement for whole industries, directly or indirectly. The Japanese and Germans promoted export industries, and that included cars and trucks.

        The Japanese first promoted the postwar steel industry, and then encouraged the auto industry as a market for steel, then encouraged export by refunding a large portion of VAT taxes collected for products that were exported, making the shipping of Japanese cars across the Pacific financially viable.

        Germany followed the same pattern in rebuilding after the war, with the tendency of companies to “cooperate” while the government ignored them in national self-interest.

        It should be no surprise that companies in those export industries would work together, with their home countries turning a blind eye to collaboration in the interest of promoting exports and building up currency reserves.

    • 0 avatar
      TW5

      It was true of the Japanese in the 80s and 90s, and it’s true of the Germans today. Oligopolies encourage collusion, and when oligopolies encounter lax regulators or supportive regulators, collusion and cartel behavior is basically a guarantee.

      Each Japanese manufacturer did not independently conclude that 276hp was the perfect amount. Honda and Toyota did not independently conclude that hybrid cars were a good use of resources when oil was $20/bbl. Japanese industry has been colluding among themselves and with regulators for a long time.

      The relationship between manufacturers and regulators is more adversarial in the West so companies are often colluding against regulators. The Germans are surely working together to game emissions regs and protect their diesel investment, just as US manufacturers and foreign US subsidiaries are trying to mitigate the effects of CAFE regulations. Sergio Marchionne is basically going around the industry trying to find collusion partners to create a de facto limit on development spending and capacity investment.

      This is just a fact of life. At the very least, all auto companies are involved in widespread price fixing and manipulation of transportation regs to maintain high barriers to entry. They are also working together to homogenize international car regulations regardless of the various needs of international markets. We like to pretend it’s not collusion, but everyone knows manufacturers and regulators don’t want automobiles to become cheap widgets manufactured in the third world.

      • 0 avatar
        Big Al from Oz

        TW5,
        Collusion?

        If you look at how governments regulate and control industry globally you’ll find there are plenty of cases where industry as a whole collaborates with unions, government and other stake holders to come up with ways to circumvent WTO and other global referees.

        I do think this is the biggest problem globally in all industries.

        It’s obvious when blatant abuses occur or when something that is blatantly obvious as protection is allowed.

        We do talk of dieselgate. But do we talk about the average FE or fuel usage across countries per capita.

        The US might think it has the “least polluting” vehicles, but in fact how much less? When the majority of it’s competitors are operating vehicles that emit far less because of lower energy use.

        Also, with VW and Dieselgate and Bosch, which I saw a comment earlier in another article.

        Bosch might not be a guilty as one might assume. I do know in the Aeronautical industry our avionics guys are given software to download.

        So, VW might have designed the software and it was downloaded into the vehicle. Bosch might or might not been aware of the extent of VAG’s “crime”.

        The best way forensic method to ascertain Bosch’s involvement is to examine all software on Bosch systems with diesels. This way you can see if the programming was interfered with by an outside entity.

      • 0 avatar
        joeaverage

        So this couldn’t be caused by engineers moving from employer to employer causing alot of “cross pollination”?

    • 0 avatar
      Big Al from Oz

      APaGttH,
      Yes, but the Japanese also, limited vehicle imports into the US to 1.5 million vehicles per year to allow the expansion of US manufactured small vehicles after the Energy Crisis.

      The US couldn’t make vehicle of the same quality.

      Also, don’t forget the chicken tax imposed by the US.

      The Japanese also followed the US with emissions and in some cases exceeded US emission standards.

      There is a lot more to this than meets the eye.

      Conspiracy theories will abound. And I think the truth is somewhere in the middle.

      • 0 avatar
        DenverMike

        @BAFO – Japanese automakers limited imports to the US in that early ’80s era, but they all doubled down on “options” on each car, with base models hard to find.

        This lead the way to Japaneses luxury brands, and slightly out of character, super sports cars, since Americans didn’t seem to mind paying much more for Japanese imports, in some cases, willingly gouged!

        But since there were no limits on pickup truck imports, Japanese brands flooded the US market with Japanese pickups. Every brand. This despite the chicken tax.

        It just seems a little too “carefully crafted”, as opposed to each Japanese brand independently coming up with the same strategy for success.

        • 0 avatar
          Big Al from Oz

          To the moderators.

          Can you please read the above comment and decide if this guy is trolling or could he big the biggest fnckwit on this site.

          Please advise him to use Google and if this is his best comprehension of a topic, then maybe, maybe TTAC could vote him as the dumbest fnck here and banish him as his IQ doesn’t reach at least 80.

          Maybe TTAC should only allow those with an IQ above a score to submit comments.

          Seriously the guy is out and out purely trolling.

          • 0 avatar
            iNeon

            Talked to the moderators– they suggested rubbing tuna oil on the nape of both y’all’s necks, locking y’all both in the bathroom– and waiting it out.

            You’ll eventually learn to like one another.

          • 0 avatar
            Big Al from Oz

            iNeon,
            Thanks for your comment.

            But I do believe if you read this dropkicks comments you will realise he isn’t stupid.

            So, one can only assume his comments are pure trolling. This has been brought up to TTAC in the past.

            I do believe people should have their own beliefs, but when there is massive information regarding a topic or subject, you just can’t disregard it as fake news, or whatever.

            But, I suppose they let me submit comments.

          • 0 avatar
            iNeon

            Al–
            I’ve -just- learned, by terribly negative experiences, at 37 years of age– that if another likes yanking others’ chains, and can do it without bothering their own conscience, that they will do it.

            If you know he’s yanking your chain and it bothers you this much– just don’t respond. It’s the only way to ‘win’ in this situation.

          • 0 avatar
            Big Al from Oz

            iNeon,
            You are totally correct. I’ve been avoiding making any comments in his direction for a while.

            But, enough is enough. TTAC should delete any comment he makes that’s connect to mine.

          • 0 avatar
            Adam Tonge

            The Moderators think that you two need to go get a beer together and figure this out.

          • 0 avatar
            DenverMike

            It’s not just my knowledge on the topic I can contribute, but I was there in the middle of it, early ’80s, working at a Toyota dealer watching hard-loaded Camrys, Celicas, option up, turbo 22R pickups, and Turbo Supras fly off the lot!

            Even Corollas were super tricked out! Think “GTS”, FX16, MR2 and others I’m probably forgetting. But sunroofs and graphic equalizers were practically standard equipment on everything on the lot. Then there’s the Cressida!!

        • 0 avatar
          joeaverage

          The Japanese played the Chicken Tax by importing “incomplete” pickup trucks. These pickup trucks did not have a bed attached when shipped. Later this was reduced to a lack of a rear bumper. Around here the dealers installed the bumper manufactured by a US based job shop that also added (stamped) in the dealer’s name. Couldn’t be hidden or removed as easily as a little dealer plate.

          While it might seem like a dishonest thing to do – last I checked Ford is doing the same thing with the Transit Connect. They bring it into the country as a passenger vehicle and then remove the extra seats to make it a cargo vehicle. Built in Turkey I believe.

          • 0 avatar
            Big Al from Oz

            joe,
            1981 was the last year a cab chassis was immune to chicken tax.

          • 0 avatar
            DenverMike

            Actually 1979 was the last (calendar) year for the loophole, but no chicken tax can slow down the entry of pickups trucks actually *in demand*!

            The broken record, constantly claiming import brands are always victims of US import policy is silly. Japanese brands made out like bandits in this era, as always.

  • avatar
    Fred

    Wouldn’t this sharing of information (cartel for you paranoids) come from their shared vendor Bosch?

  • avatar
    Tosh

    Suddenly every German car made since the 90’s went up in value by an average $3 grand, if you can hold on for this story to shake out.

  • avatar
    jpolicke

    I don’t question the existence of a German cartel, but that business with the DEF tanks makes no sense. First, I doubt that many users are obtaining their DEF from the dealer’s parts department. It’s a generic liquid; nobody’s brand is better than anybody else’s. The Walmart stuff is equal to what they sell at the M-B dealer. Second, suppose you have a 1 gallon tank. To save money you wouldn’t buy the 2.5 gallon container? It’s not hazardous and it doesn’t go bad.

    By the way, didn’t TTAC report a few days ago that Audi shrunk the size of the DEF tank to accommodate audio components? Which story is correct?

  • avatar
    ydnas7

    industry norms or cartel? meh

    what is key, is that the industry organized itself to limit the use of adblue in reducing diesel emissions. This was a voluntary, and secret agreement, which required sophisticated software cheats to deceive government agencies.

    government agencies don’t like to cheated, and hate being publicly shown to be incompetent. there will be consequences.

    The EU will through the book at whoever is not the first to squeal among the German 3 (VW, Daimler, BMW)

  • avatar
    Big Al from Oz

    Some of this can be put down to standardisation.

    But, technical “standardisation” and regulatory controls are often import barriers.

    The US has this within it’s auto industry. But, when it occurs it is said to offer better value to the consumer and the industry.

    I believe if a couple of companies get together and work out common practices and components to reduce price. Good on them.

    But, if regulatory controls are in place to protect the industry from competition, then it should be stopped.

  • avatar

    I am shocked, simply shocked. #shockedface

  • avatar
    thegamper

    Would not surprise me one bit. But, like others have said, there is fine line between collusion and standardization. Price fixing would be one thing that would certainly come back to haunt them, as would supplier influence. For instance, leaning on suppliers to offer same goods at higher prices to competitors, colluding on prices for common parts, commodities, etc.

    The good thing I suppose, is that the EU will come down hard on them. Germany isn’t the only country that manufactures cars and an even playing field is central to EU regulations. I am sure Fance and Italy would love to see zee Germans knocked down a peg if their practices appear dirty.

  • avatar

    God, why did I have to repeat logging in 5 times? Anyway, the last time Zjermans teamed up like this, it was named Gleichschaltung, and it formed the start of ze quest for world domination.

  • avatar
    Master Baiter

    This is despicable. Only governments should be allowed to do such things.
    .
    .

  • avatar
    bluegoose

    The German government and its automakers are very closely intertwined with one another. I don’t think this was done strictly on the automakers part. I do think the German government had a hand in this as well.

  • avatar
    SCE to AUX

    I’ll stick with the Koreans; they’re pretty honest.

  • avatar
    SCE to AUX

    Now we know where the mythical 100-mpg carburetor is kept… it’s in Germany!

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