Cartel probe looms over German car industry

Cartel probe looms over German car industry

FRANKFURT - Agence France-Presse
Cartel probe looms over German car industry German carmakers faced a brewing scandal on July 24 as suspicions grew they colluded illegally for decades, further damaging the industry’s image and exposing it to massive financial risks.

News weekly Der Spiegel reported on July 21 that German carmakers Volkswagen, Audi, Porsche, BMW and Daimler had secretly worked together from the 1990s onwards on huge areas of car development, construction and logistics -- including how to meet increasingly tough emissions criteria in diesel vehicles.
Both buyers and suppliers of the auto giants suffered from the under-the-table deals, the magazine alleged.

For the world’s largest carmaker Volkswagen, the diesel emissions scandal alone has already cost tens of billions of euros since it admitted to cheating on regulatory tests in 2015.

That is likely why the Wolfsburg-based firm, along with Mercedes-Benz parent Daimler, was one of the first to hand over details of the alleged broader collusion between the five firms to competition authorities, reported Spiegel, saying it had seen a VW document submitted to the authorities.

Regulators often treat the first company to report such infringements more leniently than the rest.
And Daimler has experience: it suffered a billion-euro fine from Brussels last summer after agreeing on prices for its trucks with three European competitors.

In theory, the maximum fine from the European Commission or Germany’s federal competition authority could reach 10 percent of a firm’s revenue -- or close to 50 billion euros ($58.3 billion) across all five car companies, based on their 2016 sales.

On top of that would come individual claims from customers.

Many buyers could have paid “a price that was far too high” for their vehicles, Klaus Mueller of the VZBV consumer federation told newspaper Sueddeutsche Zeitung on July 24.

It could be some time before the full details of the automakers’ cooperation come to light.

Both Brussels and German authorities say they have received information on the possible agreements between the firms.

These are now “undergoing examination by the Commission,” the EU’s executive arm said Saturday, while adding that it would not “speculate further” on the outcome.

Volkswagen has said nothing, although its supervisory board is set to meet on Wednesday, while Daimler insisted that it applies an internal competition law compliance program.

Munich-based BMW denied any collusion with competitors on July 23, adding that none of its vehicles had been manipulated to meet diesel emissions norms.

Among the areas Spiegel reported manufacturers collaborated on in its report Friday was the size of tanks for a liquid known as AdBlue, used to treat diesel exhaust fumes.

The fluid reacts with harmful nitrogen oxides found in the emissions and transforms them into water and nitrogen.

But carmakers agreed not to add large reserves of the additive to their vehicles, Spiegel reported, preferring to save space for customers’ golf bags or profitable upgrades such as speaker systems.

Rather than call on drivers to refill the tiny AdBlue tanks every few thousand kilometers, Volkswagen built systems into millions of vehicles that reduced exhaust treatment unless software detected the car was undergoing a regulatory emissions test.

Other manufacturers including Daimler are suspected of doing the same.

“If this turns out to be true it would cost tens of billions of euros altogether, and single-digit billions for each manufacturer,” analyst Frank Schwope of Nord/LB bank told AFP.