Volkswagen, BMW Among Four German Automakers Hit With $1B Fine by EU

Volkswagen and BMW are among four German automakers hit with a $1 billion fine by the European Union (EU) over collusion to limit the development of less harmful car emission-control technologies, the Associated Press said.

Audi, Porsche and Daimler were also involved in the collusion to restrict competition on limiting pollution in gasoline and diesel passenger cars, according to the EU's executive commission. Although Daimler was involved in conspiring with the other companies, it was not fined because it exposed the plans to the EU.

"These car manufacturers illegally colluded to restrict competition in the area of emission cleaning technology for diesel cars," said the EU's executive vice president of the European Commission for A Europe Fit for the Digital Age, Margrethe Vestager.

"This is the first time that the commission finds that cooperation on technical elements, as opposed to price-fixing or market sharing, amounts to cartel behavior," she said.

Vestager said the car companies engaged in collusion for over five years so they could avoid having "to compete on cleaning better than what was required by EU emission standards."

Margrethe Vestager
Four German automakers were fined $1 billion by the EU over collusion to limit the development of less harmful car emission-control technologies. Above, the EU's executive vice president of the European Commission for A Europe Fit for the Digital Age, Margrethe Vestager, speaks to the media on Thursday in Brussels. Thierry Monasse/Getty Images

For more reporting from the Associated Press, see below:

It was the first time the European Commission imposed collusion fines on holding back the use of technical developments, not a more traditional practice like price-fixing.

Vestager said that even though the companies had the technology to cut harmful emissions beyond legal limits, they resisted competition and denied consumers the chance to buy less polluting cars.

"They did so despite the relevant technology being available," Vestager said. That made their practice illegal, she said.

According to Vestager, the companies agreed on the size of onboard tanks containing a urea solution known as AdBlue that is injected into the exhaust stream to limit pollution from diesel engines, and also on the driving ranges that could be expected before the tank needed refilling. A bigger tank would enable more pollution reduction.

Vestager said cooperation between companies is permissible under EU rules when it leads to efficiency gains, such as the faster introduction of new technologies. "But the dividing line is clear: Companies must not coordinate their behavior to limit the full potential of any type of technology," she said.

Volkswagen said the investigation had ended with a finding that several other forms of cooperation under review were not improper under antitrust law.

"The [EU] Commission is breaking new legal ground with this decision because it is the first time it has prosecuted technical cooperation as an antitrust violation," the company said in a statement. "It is also imposing fines even though the contents of the talks were never implemented and customers were therefore never harmed."

Volkswagen said that the tank sizes produced by all the carmakers involved were "two to three times" bigger than discussed in the talks. It said it was considering an appeal to the European Court of Justice.

BMW said that discussions on the AdBlue tanks had "no influence whatsoever on the company's product decisions." The company said it was significant that the fine notice found there was no collusion involving earlier allegations of using software to restrict AdBlue dosing.

BMW said it set aside 1.4 billion euros ($1.7 billion) based on the commission's initial accusations but reduced the set-aside in May due to more serious allegations in the case not being substantiated.

The case wasn't directly linked to the "dieselgate" scandal of the past decade, when Volkswagen admitted that about 11 million diesel vehicles worldwide were fitted with the deceptive software, which reduced nitrogen oxide emissions when the cars were placed on a test machine but allowed higher emissions and improved engine performance during normal driving.

The scandal cost Wolfsburg, Germany-based Volkswagen 30 billion euros ($35 billion) in fines and civil settlements and led to the recall of millions of vehicles. The Volkswagen vehicles in the scandal did not use the urea tanks but relied on another pollution reduction technology.

Traffic in Brussels, Belgium
Commuters wait in traffic in Brussels during the morning rush hour on December 10, 2019. Francisco Seco/AP Photo