VW asks EU to scrutinize German car makers
Published: July 24, two thousand seventeen Two:09 a.m. ET
WilliamBoston
BERLIN — Germany’s largest car maker has asked Europe’s antitrust watchdog to scrutinize decades of coordination efforts by the country’s main auto manufacturers amid growing concern they might have breached antitrust regulations.
The revelation comes after Volkswagen AG alerted European antitrust authorities about a year ago to discussions inbetween itself and its main German rivals, a person familiar with the situation said.
Shares in the affected German companies fell on Friday after German newsweekly Der Spiegel very first reported the news. Shares in VW were down by almost 5% during the session in Frankfurt, eventually closing Trio.6% lower. Stocks in BMW AG closed Two.6% lower and Daimler AG was down more than 2% after partially recouping early losses.
The decision by VW to lift the veil on behavior it thinks could have been illegal was part of an effort by management to review past practices and invite closer scrutiny by authorities after a diesel emissions-cheating scandal engulfed the company, the person said.
The German car maker’s fresh management, installed after the diesel scandal, discovered documents during the course of a German antitrust investigation into steel price-fixing in two thousand sixteen it thought might constitute collusion by companies including VW, BMW, Porsche, Audi, and Daimler.
In a letter sent to the European Commission in mid-2016, Volkswagen provided details of years of discussions inbetween car makers to find common positions on a range of technologies, including the diesel emissions systems at the center of the emissions-cheating scandal, the person, a high-ranking auto industry executive, said on condition of anonymity.
The European Commission declined to comment and it remains unclear if an investigation into anticompetitive behavior by the participants is under way, or if it will ever be launched.
A spokesman for Germany’s federal cartel office declined to comment. The office said it had been looking into possible steel-price fixing by car makers and suppliers since last summer.
But the revelation comes at an awkward time for German — and European — manufacturers that face accusations that the diesel-powered cars that have become ubiquitous on European roads emit far more toxic fumes than advertised. VW has been fined in the U.S. after admitting to installing cheating software on its cars that reduce the level of harmful emissions environmental tests can detect. Other car makers have recalled millions of cars for their engines to be immobile after they were shown to emit more dangerous chemicals than they should.
It is standard practice in industry for manufacturers to work together to agree on technical standards for fresh technology. In the case of diesel, auto manufacturers established standards for emissions-control systems that regulated certain aspects, including fluid used to neutralize nitrogen oxide emissions, the size of tanks containing the fluid, and other details.
"We meet every month to discuss a broad range of issues significant to the industry and unify positions with the government. Where do these discussions cross the line into antitrust territory?" said another auto industry executive.
That was the question that Volkswagen’s legal experts raised in 2016. Under intense scrutiny in the wake of the diesel scandal, Volkswagen determined to let antitrust authorities make the determination. By suggesting itself as a whistleblower, Volkswagen could also be hoping for leniency in the event that Brussels rules against the German car industry.
Volkswagen admitted in two thousand fifteen to rigging almost eleven million diesel engines world-wide to cheat emissions tests and pleaded guilty in two thousand sixteen to conspiracy to defraud the U.S. government and U.S. consumers. The company agreed to pay more than $22 billion in fines, penalties and compensation for consumers.
By gargling the whistle on cartels and cooperating in investigations, some companies that had engaged into anticompetitive behavior have managed to obtain substantial penalty reductions, and sometimes finish exemptions, in latest years.
Germany’s antitrust authority launched a witness leniency program in 2000, suggesting companies diminished fines if they report themselves for potential cartel violations. A fine can be diminished by up to 50%, depending "on what stage you come forward and what we already knew," said the cartel office’s spokesman, Michael Detering.
The authority requests "continuous and unlimited cooperation" with investigations in comeback for diminished fines, according to its publications on the leniency program. Over half of all cartel proceedings are triggered by information from applications to the leniency program, according to the cartel office.
In the latest diesel-emissions development, Audi said on Friday it was suggesting an "update program" for up to 850,000 cars with six- and eight-cylinder diesel engines to add fresh software.
"Audi’s purpose is to keep diesel engines sustainable for customers and help keep air pollution under control," the company said in a statement.
VW asks EU to scrutinize German car makers
VW asks EU to scrutinize German car makers
Published: July 24, two thousand seventeen Two:09 a.m. ET
WilliamBoston
BERLIN — Germany’s largest car maker has asked Europe’s antitrust watchdog to scrutinize decades of coordination efforts by the country’s main auto manufacturers amid growing concern they might have breached antitrust regulations.
The revelation comes after Volkswagen AG alerted European antitrust authorities about a year ago to discussions inbetween itself and its main German rivals, a person familiar with the situation said.
Shares in the affected German companies fell on Friday after German newsweekly Der Spiegel very first reported the news. Shares in VW were down by almost 5% during the session in Frankfurt, eventually closing Three.6% lower. Stocks in BMW AG closed Two.6% lower and Daimler AG was down more than 2% after partially recouping early losses.
The decision by VW to lift the veil on behavior it thinks could have been illegal was part of an effort by management to review past practices and invite closer scrutiny by authorities after a diesel emissions-cheating scandal engulfed the company, the person said.
The German car maker’s fresh management, installed after the diesel scandal, discovered documents during the course of a German antitrust investigation into steel price-fixing in two thousand sixteen it thought might constitute collusion by companies including VW, BMW, Porsche, Audi, and Daimler.
In a letter sent to the European Commission in mid-2016, Volkswagen provided details of years of discussions inbetween car makers to find common positions on a range of technologies, including the diesel emissions systems at the center of the emissions-cheating scandal, the person, a high-ranking auto industry executive, said on condition of anonymity.
The European Commission declined to comment and it remains unclear if an investigation into anticompetitive behavior by the participants is under way, or if it will ever be launched.
A spokesman for Germany’s federal cartel office declined to comment. The office said it had been looking into possible steel-price fixing by car makers and suppliers since last summer.
But the revelation comes at an awkward time for German — and European — manufacturers that face accusations that the diesel-powered cars that have become ubiquitous on European roads emit far more toxic fumes than advertised. VW has been fined in the U.S. after admitting to installing cheating software on its cars that reduce the level of harmful emissions environmental tests can detect. Other car makers have recalled millions of cars for their engines to be immobilized after they were shown to emit more dangerous chemicals than they should.
It is standard practice in industry for manufacturers to work together to agree on technical standards for fresh technology. In the case of diesel, auto manufacturers established standards for emissions-control systems that regulated certain aspects, including fluid used to neutralize nitrogen oxide emissions, the size of tanks containing the fluid, and other details.
"We meet every month to discuss a broad range of issues significant to the industry and unify positions with the government. Where do these discussions cross the line into antitrust territory?" said another auto industry executive.
That was the question that Volkswagen’s legal experts raised in 2016. Under intense scrutiny in the wake of the diesel scandal, Volkswagen determined to let antitrust authorities make the determination. By suggesting itself as a whistleblower, Volkswagen could also be hoping for leniency in the event that Brussels rules against the German car industry.
Volkswagen admitted in two thousand fifteen to rigging almost eleven million diesel engines world-wide to cheat emissions tests and pleaded guilty in two thousand sixteen to conspiracy to defraud the U.S. government and U.S. consumers. The company agreed to pay more than $22 billion in fines, penalties and compensation for consumers.
By gargling the whistle on cartels and cooperating in investigations, some companies that had engaged into anticompetitive behavior have managed to obtain substantial penalty reductions, and sometimes accomplish exemptions, in latest years.
Germany’s antitrust authority launched a witness leniency program in 2000, suggesting companies diminished fines if they report themselves for potential cartel violations. A fine can be diminished by up to 50%, depending "on what stage you come forward and what we already knew," said the cartel office’s spokesman, Michael Detering.
The authority requests "continuous and unlimited cooperation" with investigations in comeback for diminished fines, according to its publications on the leniency program. Over half of all cartel proceedings are triggered by information from applications to the leniency program, according to the cartel office.
In the latest diesel-emissions development, Audi said on Friday it was suggesting an "update program" for up to 850,000 cars with six- and eight-cylinder diesel engines to add fresh software.
"Audi’s objective is to keep diesel engines sustainable for customers and help keep air pollution under control," the company said in a statement.
