German Automakers, Already Resisting Diesel Engine Ban Proposal, Now Face Collusion Claims

By James Carstensen | July 23, 2017 | 9:55pm EDT

Berlin ( – German car companies have allegedly been colluding to fix costs and in other anti-competitive strategies in what may be one of the biggest cartel cases in German economic history, Der Spiegel news magazine reported Friday.

Volkswagen reportedly filed a report with the country’s cartel investigation office admitting it struck secret agreements with Audi, Porsche, BMW and Daimler dating back as far as the 1990s on a number of technical and economic aspects of their cars and production processes.

These agreements included deciding on using smaller tanks to save on costs, despite the fact this would not allow sufficient cleaning of exhaust gases to meet legal limits.

Volkswagen has declined to comment, and BMW in a statement Sunday denied any involvement in collusion with rival car companies.

The disclosures come at a time when automakers have been fighting a potential ban on diesel vehicles in major cities by 2030.

With pollution from cars and diesel engines becoming a sensitive subject both internationally and within Germany, and with just two months until national elections, the government has been mulling a potential total ban of diesel vehicles in major German cities, including its capital Berlin, and Stuttgart, which is the home of car giants Porsche and Mercedes.

Major automakers had been fighting back against the prospect, claiming it would deeply hit jobs, while formulating plans to curb diesel-related pollution in hopes of appeasing lawmakers ahead of a meeting with federal and regional authorities on August 2.

Arguing against a ban, the German Association of the Automotive Industry (VDA) commissioned a study by the Munich-based Ifo Economic Institute which said a potential ban on combustion engine cars by 2030 could put up to 600,000 jobs at risk in Germany, and cost German industry about 48 billion euros ($56 billion) annually.

The study, published on Tuesday, said a switch to sales of zero-emission cars would threaten 426,000 car manufacturing jobs, with the rest of the 600,000 figure coming from related industries, such as suppliers.

Others have countered that many of the jobs lost in the combustion engine sector would be replaced by jobs in research and development, information technology and other zero-emissions technology sectors.

Car and diesel engine emissions became a sensitive subject in Germany after the so-called “dieselgate” scandal, in which VW admitted to cheating emissions tests by masking dangerous nitrogen oxides levels in its cars.

VW’s automobiles were revealed to have been equipped with software designed to trick laboratory ratings tests and cover up the fact they were far exceeding legal emissions limits.

Since then the auto industry has come under fire for nitrogen oxide (NOx) emissions in diesel cars, blamed for causing a rise in respiratory disease.

VW’s filing comes two weeks after antitrust authorities searched the company’s premises in connection with another price-fixing investigation into steel prices. During that search, authorities coincidentally found potential evidence of illegal collusion in the auto industry, prompting VW to self-report, apparently in the hope of reducing penalties.

The E.U. Commission is already examining the case, having confiscated documents from the companies involved and calling first witnesses.

In the same week Spiegel reported on the VW admission, some car manufacturers coincidentally came to a consensus that they would effectively absorb the costs of deploying a software fix to reduce diesel emissions, in an attempt to curb an all-out diesel ban.

On Tuesday, BMW and Audi reached an agreement with the Bavarian state government to voluntarily retrofit its “Euro 5” diesel-engine cars with software that will reduce emissions.

Daimler announced later that day it would spend $257 million on software updates for 3 million diesel-engine vehicles to cut their emissions. On Friday, the Volkswagen group, which includes Audi and Porsche, announced similar software-fixes involving a recall of 850,000 vehicles.

In Europe, diesel motors are responsible for about 40 percent of poisonous NOx released by diesel motors, and the European Environment Agency estimates that some 430,000 Europeans die prematurely each year as a result of air pollution.

A study in May, by trade journal Nature working with the International Council on Clean Transportation, reviewed over 30 studies on diesel emissions, air pollution and disease, concluding that around 107,600 premature deaths in 2015 were directly related to air pollution caused by NOx emissions from diesel motors, and that roughly 38,000 people died as a result of cars exceeding legal emissions standards.

Dr. Barbara Hoffmann, head of the department of environmental epidemiology at the University of Düsseldorf Hospital told Deutsche Welle that “if you calculate just what premature deaths and additional illnesses really mean in terms of costs, then you quickly realize how relevant the topic is in societal terms and what an enormous financial burden it is.”

“Then perhaps people would also see that investing in cleaner air is really worth it,” she said.

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