In what seems to be a never-ending slaughter of German car manufacturers, they don’t seem to be helping themselves. A new in-depth investigation by the European Commission is intending to discover whether VW (Volkswagen, Audi and Porsche), BMW and Daimler, so-called the ‘Circle of Five’, colluded on a project to restrict the competition on development and roll-out on technology designed to help clean out emissions of both petrol and diesel cars.
How did this all come about?
In October of 2017, the European Commission entered into Anti-Trust investigations at the ‘Circle of Five’ headquarters to understand if any EU anti-trust laws had been broken. Now, nearly a year later, a formal investigation has been opened to properly investigate the matter.
The EU received information that cartel-like behaviour could potentially be happening through a report by the German magazine, Der Spiegel in a report they published last year. The report exposed the cartel and revealed documents that show potential collusion since the 1990’s. It states that VW initially self-incriminated themselves by voluntarily admitting to cartel-like behaviour in more recent years, but since that reveal, Der Spiegel researched heavily into the potential issue.
The EU frowns upon cartel behaviour, and this, if proven to be true, is a very prevalent example of cartel behaviour that limits the competition in the market, and potentially harms civilians by stopping them from buying lower emissions cars.
What is the investigation focusing on?
The core focus of the investigation is certain emissions control systems, two devices that are selective catalytic reduction (‘SCR’) systems to reduce harmful nitrogen oxides emissions from passenger cars with diesel engines; and ‘Otto’ particulate filters (‘OPF’) to reduce harmful particulate matter emissions from passenger cars with petrol engines.
Commissioner Margrethe Vestager, in charge of competition policy at the Europen Commision, said: “The Commission is investigating whether BMW, Daimler and VW agreed not to compete against each other on the development and roll-out of important systems to reduce harmful emissions from petrol and diesel passenger cars. These technologies aim at making passenger cars less damaging to the environment. If proven, this collusion may have denied consumers the opportunity to buy less polluting cars, despite the technology being available to the manufacturers.”
It is believed that the companies discussed numerous other technical issues as well, including at what speed a convertible roof could safely open and close, cruise control, common quality requirements for car parts, common quality testing procedures and crash testing.
While the EU anti-trust laws leave room for technical cooperation, it seems that this has gone a bit too far for the commission this time, hence the opening of a formal inquiry.
At the current stage in the investigation, the commision has no reason to believe the companies colluded on the defeat devices of the Dieselgate scandal.
Why is this important?
Something that is heavily frowned upon by the European Commission is cartel behaviour and anti-competitive behaviour. Since the 2015 dieselgate scandal, automotive groups, especially those based in Germany, have had to tread carefully, but this doesn’t help the already tarnished image that they, especially VW, already have. By potentially demonstrating this kind of behaviour, more shame will rest on the shoulders of the groups.
As this involves emissions, something that is currently at the forefront of the automotive industry’s issues, this propels the investigations to new heights. If the inquiry finds anything that shows that by engaging in anti-competitive behaviour the groups allowed higher emissions then it becomes a whole different ball game. It links it straight back to the dieselgate scandal and shows that despite everything there has been no change in the mindset of the companies. If the inquiry shows that they did engage in anti-competitive behaviour and from that emissions contributed to premature deaths and other pollution-related illnesses, then the fines could reach into the billions of Euros.
Next steps for the groups
All of the companies and brands involved, BMW, Daimler, VW (encompassing Audi, VW and Porsche,) are fully cooperating with the inquiry.
BMW said it was “wholeheartedly committed to the principles of market economics and fair competition,” and added “From the start of the investigation, the BMW Group has supported the commission in its work and will continue to do so. Due to the ongoing investigation, the BMW Group will not comment on the case.”
Daimler confirmed partaking in the investigation and filed a leniency application but wouldn’t comment any further on the matter.
All of the companies are focusing on electric cars now in order to show they are changing, indeed the BMW i8 and i3 are some of the most distinguishable electric cars on the roads. VW is aiming to release their first pure EV next year, called the iD, which will be a hatchback.
After this, the companies will have to do a lot of work to not only improve their image but to prove that they are contributing positively to society and actively helping to reduce emissions.
Do you think that this inquiry will show anything? What do you think about what has come to light? Let us know below