Volkswagen Asks EU to Scrutinize Coordination by German Car Makers
July 21 2017 - 4:19PM
Dow Jones News
By William Boston
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 between
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 first reported the news. Shares in VW
were down by nearly 5% during the session in Frankfurt, eventually
closing 3.6% lower. Stocks in BMW AG closed 2.6% 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 new management, installed after the
diesel scandal, discovered documents during the course of a German
antitrust investigation into steel price-fixing in 2016 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 between 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 fixed 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 new 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 wide range of issues important
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 decided to let antitrust authorities make the
determination. By offering 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 2015 to rigging nearly 11 million diesel
engines world-wide to cheat emissions tests and pleaded guilty in
2016 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 blowing 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 complete exemptions, in recent years.
Germany's antitrust authority launched a witness leniency
program in 2000, offering companies reduced fines if they report
themselves for potential cartel violations. A fine can be reduced
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 demands "continuous and unlimited cooperation"
with investigations in return for reduced 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 offering an "update program" for up to 850,000 cars with
six- and eight-cylinder diesel engines to add new software.
"Audi's goal is to keep diesel engines sustainable for customers
and help keep air pollution under control," the company said in a
statement.
--Zeke Turner contributed to this article.
(END) Dow Jones Newswires
July 21, 2017 16:04 ET (20:04 GMT)
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