European Cartel Probe Suspects German Automakers of Illegal Agreements

Matt Posky
by Matt Posky
european cartel probe suspects german automakers of illegal agreements

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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  • MBella MBella on Dec 16, 2019

    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.

  • Inside Looking Out Inside Looking Out on Dec 16, 2019

    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.

    • Epc Epc on Dec 17, 2019

      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.

  • Keith Maybe my market's different. but 4.5k whack. Plus mods like his are just donations for the next owner. I'd consider driving it as a fun but practical yet disposable work/airport car if it was priced right. Some VAG's (yep, even Audis) are capable, long lasting reliable cars despite what the haters preach. I can't lie I've done the same as this guy: I had a decently clean 4 Runner V8 with about the same miles- I put it up for sale around the same price as the lower mile examples. I heard crickets chirp until I dropped the price. Folks just don't want NYC cab miles.
  • Max So GM will be making TESLAS in the future. YEA They really shouldn’t be taking cues from Elon musk. Tesla is just about to be over.
  • Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
  • Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
  • William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.