EU settles in AdBlue antitrust case with €875 million fine for VW and BMW
The European Commission has closed the antitrust investigation against German carmakers Daimler, BMW, and Volkswagen with a settlement and a total fine of €875 million for two of them. BMW has to pay 372,8 million, VW 502,3 million. Daimler gets off scot-free, avoiding a €727 million fine because it was the one who revealed the ‘illegal agreements’ on exhaust treatment technology.
Despite dropping a number of the initial accusations, EU Commissioner Margrethe Vestager said: “Manufacturers deliberately avoided to compete on cleaning better than what was required by EU emission standards. And they did so despite the relevant technology being available.” And this made their practice illegal, she concludes.
BMW wouldn’t budge
BMW, however, wouldn’t budge its opinion, saying that “BMW made it clear from the start of the antitrust proceedings that it considered the allegations made at that time to be exaggerated and unjustified. For this reason, unlike the other competitors involved, the company did not prematurely admit its guilt by applying for leniency.”
In the press release, BMW stipulates that “after the European Commission dropping most of its original allegations, the Board of Management has agreed to a settlement proposed by the European Commission that will bring these proceedings to an end.”
The antitrust investigation eventually had nothing to do with the ‘dieselgate’ scandal as such, the usage of software to tamper with exhaust emission results on the test bank, which Volkswagen has confessed, dragging along the whole car industry in the scandal. It focused rather on ‘agreements to delay’ the rollout of better technology available.
It goes back some ten years ago when the major German premium carmakers of the brands Mercedes, BMW, Volkswagen, including Audi and Porsche, met in ‘secret’ talks between 2009 and 2014 in the so-called ‘circle of five’.
Fines up to 10% of turnover
Discussions allegedly were about how to evolve in exhaust treatment technology, like the use of AdBlue and SCR systems for gas treatment. Initially, the EU Commission accused the carmakers of the joint development of software to restrict AdBlue dosing and delaying or preventing the development and rollout of a particle filter for direct-injection gasoline engines.
If proved true, those allegations could lead to a fine equalling 10% of the company’s turnover under the European ‘cartel law’ on competition. Despite crying out its innocence, BMW chose to reserve €1,4 billion as a piggy bank to pay a possible pending EU fine. When these allegations were dropped, the BMW Group already re-evaluated its provision on 20 May this year.
Dropping most allegations
BMW says it submitted a comprehensive statement to the European Commission after careful internal preparation and examination of the substance of the case. “As a result, the Commission dropped most of its original allegations against the BMW Group.”
According to BMW’s view, the talks within the ‘circle of five’ aimed to create a customer-friendly AdBlue filling infrastructure to be built by the petroleum industry. “A marketable filling solution was crucial to enabling wide-scale use of the highly efficient SCR system for exhaust gas treatment,” BMW states.
AdBlue tank size
“It became clear during the discussions with the petroleum industry that the AdBlue filling infrastructure, which was considered necessary under the conditions at the time, would not be available within the near future. To avoid any disadvantages this might create for customers, the BMW Group consistently designed the tank sizes and ranges of its vehicles to be well above the dimensions agreed in the working groups. For this purpose, the BMW Group even installed complex two-tank systems in most vehicles. The European Commission explicitly recognized this in its decision.”
“The discussions were clearly not held in secret. On the contrary, the aims pursued were openly communicated to the petroleum industry and within the VDA and ACEA associations. The European Commission also confirmed this.
But eventually, the Board of Management of BMW AG, says the press release, “has now accepted this fine in the current settlement, which acknowledges the excessive transparency provided in the context of the discussions in question – about the necessary size of AdBlue tanks, the range that can be achieved with them and the presumed average AdBlue consumption.”
Uncharted territory for antitrust law
Volkswagen is deliberating on whether to accept the fine like BMW or take further legal actions. It says a penalty over technical talks about emissions technology with other carmakers sets ‘a questionable precedent’. BMW, too, is talking about “the European Commission entering uncharted territory for antitrust law.”
“The commission is entering new judicial territory because it is treating technical cooperation for the first time as an antitrust violation,” Volkswagen said. “The content of the talks was never implemented, and no customers suffered any harm as a result,” the carmaker added.
It’s not illegal under European law for companies to work together on technical matters. But according to EU Commissioner Vestager, the carmakers deliberately agreed to avoid competing with each other “even though the companies had the technology to cut harmful emissions beyond legal limits, denying consumers the chance to buy less polluting cars.”
Normally, she said, “factories compete with one another also when it comes to reducing carbon emissions from the cars.” By avoiding this in ‘secret’ agreements, it was illegal, she concluded.