By on December 16, 2019

While Europe appears infinitely suspicious of German automakers, it hasn’t been nearly as eager to cuff suspects and cart them off to the slammer. Considering how unappealing Japan’s treatment of a former Nissan employee happened to be with the general public (regardless of his guilt/innocence), that’s probably wise. Slow and sure is the ideal strategy for tackling corporate corruption — it just has the unfortunate consequence of dragging everything out.

In 2018, BMW, Daimler, and Volkswagen Group became the focus of an investigation aimed at uncovering illegal cooperation. Allegations going back to 2017 stipulated the three had coordinated on the rollout of clean emissions technology (specifically AdBlue); at the same time, Germany was under heavy scrutiny for the leeway it was giving automakers after VW’s diesel emission scandal. Before long, claims arose that Germany’s manufacturers had been effectively running an automotive cartel for decades, with supporting evidence slowly mounting. 

By April of 2019, the European Union Commission accused the companies of engaging in illegal behavior.

“Such market behavior, if confirmed… would violate EU competition rules prohibiting cartel agreements to limit or control production, markets or technical development,” the group said in a release. The trio was obligated to pay a combined total of $110 million in fines for unlawful actions relating to steel purchases in November.

Now, EU Competition Commissioner Margrethe Vestager claims she’ll be able to bust them for similar malfeasances regarding the deployment of exhaust gas cleaning technologies like AdBlue. “We suspect a foul game when it came to using the best technology for emission control or not,” Vestager told the Funke media group, adding that the EU commission always held “strong doubts.”

According to Germany’s Automobilwoche (an extension of Automotive News), Vestager wants to be careful not to issue any definitive statements. The EU may suspect the crap out of die großen drei, but it wants to be sure it can win any courtroom battles before it issues any formal charges. This all hinges on determining whether or not the automakers’ cooperation actually helped customers — which may be easier said than done.

Legally, German automakers can conspire quite a bit if it’s for the betterment of mankind — and the particulate filters and diesel exhaust fluid reservoirs under investigation are technically there to help clean up the environment. But VW has said the same thing about the software at the center of its 2015 emission scandal, which was eventually found by the U.S. Department of Justice to be an intentionally deceptive way to skirt testing procedures. The automaker still occasionally uses that excuse in European civil cases. We’re inclined to believe the EU has already made up its mind, however.

April’s accusations from the European Commission were pretty clear cut:

Commissioner Margrethe Vestager in charge of competition policy said: “Companies can cooperate in many ways to improve the quality of their products. However, EU competition rules do not allow them to collude on exactly the opposite: not to improve their products, not to compete on quality. We are concerned that this is what happened in this case and that Daimler, VW and BMW may have broken EU competition rules. As a result, European consumers may have been denied the opportunity to buy cars with the best available technology. The three car manufacturers now have the opportunity to respond to our findings.”

The Commission’s preliminary view is that BMW, Daimler and VW participated in a collusive scheme, in breach of EU competition rules, to limit the development and roll-out of emission cleaning technology for new diesel and petrol passenger cars sold in the European Economic Area (EEA). This collusion occurred in the framework of the car manufacturers’ so-called “circle of five” technical meetings.

The Commission’s preliminary view was that BMW, Mercedes-Benz, Volkswagen, Audi, and Porsche intentionally tried to restrict competition on innovation for emission cleaning systems and effectively denied consumers the ability to purchase less polluting cars despite there being superior technology available to all manufacturers. It’s not quite overt price fixing, but it’s not quite legal, either. The antitrust investigation will continue, with unconfirmed rumors of formal charges being worked up for the start of 2020. If true, the German automakers could find themselves facing billions in punitive fines.

[Image: Olrat/Shutterstock]

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5 Comments on “European Cartel Probe Suspects German Automakers of Illegal Agreements...”

  • avatar
    SCE to AUX

    “…to limit the development and roll-out of emission cleaning technology for new diesel and petrol passenger cars sold in the European Economic Area”

    If the technology consumers could purchase met the EEA requirements, does it really matter whether the mfrs could have done better? Frankly, most consumers don’t care; who really makes a purchase based upon PPM pollution outputs? These vehicles were sold based upon HP, torque, and MPG metrics (apologies for the US nomenclature).

  • avatar

    Sounds like the regulators are cutting it pretty fine here. If the EU carmakers’ engineers got together at the Euro equivalent of a Best Western, looked at PowerPoint slides, and talked about how expensive certain technologies were, was that collusion? Is there a smoking gun here, or just a faint whiff of Sterno?

  • avatar

    Manufacturers do the minimum to meet regulations. They know that regulators will require constant improvements. Ever wonder why we don’t use solenoids to operate engine valves? A Ford engineer told me because they are saving it for when it becomes necessary. They can meet current rules without it. If they did everything they can today, the governments would still expect an improvement next year that would no longer be possible.

  • avatar

    Corruption is in the nature of Socialism. EU arguments and actions against German companies and BTW American tech companies as well are very Orwellian. The real problem is that socialist countries of Europe as well as whole EU simply cannot compete with Silicon Valley – we are talking here about just part of one US state (California) and apparently with Germany as well so come up with absurd demands in attempt to remove competition. Of course they will fail – Germans will crush French and Italian competition and EU will never be technologically equal to US.

    • 0 avatar

      What is the way of Silicon Valley? Let me tell you: Tesla refused to perform a safety recall of the Takata airbag on a Model S, because said car was salvage-titled, but it was registered and insured to drive on public road. It took the intervention of NHTSA before Tesla saw the error of its way and reversed course. In the battle between regulators and corporations, I will always stand on the side of regulators. One of those 2 entities stands for profits and looks out first and foremost for its shareholders. I have decided that said entity is not the regulator. Your opinion may differ.

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