European Commission accuses Audi, BMW, Mercedes-Benz, Porsche and Volkswagen of emissions technology collusion (2006–2014)

In July 2017, we reported that the European Commission (EC) had opened an investigation on suspicion of collusion involving five leading German carmakers - Audi, BMW, Mercedes-Benz, Porsche and Volkswagen - relating to emissions-reduction technologies.

European Commission sends a “statement of objections”

The EC has now formally accused the five manufacturers of colluding between 2006 and 2014 by issuing a “statement of objections”. In the Commission’s view, technical meetings involving the five groups led to alleged anti-competitive conduct by restricting “competition in the development of technology to clean emissions from petrol and diesel passenger cars”.

Emissions-reduction technologies under investigation: SCR, AdBlue and petrol particulate filters

Among the emissions-control solutions cited by the EC are selective catalytic reduction (SCR) systems and particulate filters for petrol engines.

SCR systems (Diesel NOx)

For SCR systems, designed to cut NOx emissions from Diesel engines, the EC’s preliminary assessment points to coordinated strategies around AdBlue dosing, including limiting the size of the AdBlue tank. The stated motivations for smaller tanks include lower costs and easier packaging within vehicles. However, constraining AdBlue usage also reduces the overall effectiveness of the SCR system.

Particulate filters for direct-injection petrol engines

Regarding particulate filters for petrol engines with direct injection, the EC’s preliminary view likewise refers to coordinated approaches intended to avoid - or at least delay - introducing this technology in passenger cars with direct-injection engines between 2009 and 2014.

Potential fines and scope of the case under EU competition law

According to the EC’s statement, although the alleged behaviour did not involve price-fixing, it may still breach European competition rules covering agreements to limit or control production, markets or technological development, as set out in Article 101 (1.b.) and Article 53 (1.b.) of the EEA (European Economic Area) Agreement.

The EC emphasises that this kind of conduct is not the same as cooperation between companies intended to “improve product quality or innovation”. The Commission also stresses that the investigation is confined to the alleged breach of competition law and has nothing to do with potential breaches of environmental law, nor with the ongoing investigation into “defeat devices”, or manipulation devices, used to influence emissions results (Dieselgate).

If the EC ultimately decides there is sufficient evidence of an infringement - even after all manufacturers have exercised their rights of defence - it could levy a fine of up to 10% of each manufacturer’s worldwide turnover.

What are the manufacturers saying?

So far, only BMW has issued an official statement, saying it “will contest the allegations of the European Commission by all legal means if necessary”. The same statement adds that the German group will book a provision that may exceed one billion euros, as it believes there is a strong likelihood it will have to pay a “significant fine”, which would negatively affect its first-quarter 2019 financial results.

According to Automotive News, Daimler - which, notably, was the company that alerted authorities to the collusion - repeated that it did not expect to be fined as a result of the information it provided. Volkswagen said only that it would review the EC’s allegations before making any comment.

Source: Automotive News; European Commission.