EU collusion probe threatens German carmakers’ ‘credibility’
23 July 2017
A new EU competition investigation into Germany’s top carmakers threatens the credibility of the entire industry, a German minister has warned, after Brussels confirmed it was probing suspected collusion on technology.
If proven, the allegations could plunge an industry already battered by Volkswagen’s emissions-cheating scandal into a fresh crisis.
Brigitte Zypries, German economics minister, said she took “very seriously” the allegations the allegations that Volkswagen, Audi, Porsche, BMW and Daimler ” had for years run secret technology working groups.
“What’s at stake here is nothing less than the credibility . . . of the whole German car industry. Without comprehensive clarification, confidence cannot be restored,” Ms Zypries said. She added that all the carmakers implicated in the allegations would be “well advised to fully co-operate with the authorities and ensure transparency”.
The European Commission said it had received information on the alleged collusion, which it was currently assessing. It said it was “premature at this stage to speculate further.”
The statement appeared to be partial confirmation of a report in Germany’s Der Spiegel magazine over the weekend that authorities were investigating evidence that the biggest German carmakers had been colluding on technology for decades.
The magazine said all the carmakers had since the 1990s been meeting in secret working groups to agree on costs for components and the choice of suppliers. The discussions allegedly covered technology from petrol and diesel engines to brakes, clutches and transmissions.
One of the most striking revelations in the Spiegel report concerned AdBlue, the liquid urea solution used to neutralise emissions from diesel cars. Der Spiegel said the groups all agreed to use small AdBlue tanks in their cars: larger ones would have done a better job but would have been more expensive. However, the volume of AdBlue in the smaller tanks turned out to be insufficient to cleanse the emissions.
Most of the companies, whose shares tumbled on Friday as the Spiegel allegations trickled out, declined to comment. However, BMW felt compelled to release a statement on Sunday categorically rejecting the accusations of a cartel or that its AdBlue tanks were too small.
“Technology employed by the BMW Group is clearly differentiated from other systems in the market. We compete to provide the best exhaust treatment systems: unlike other manufacturers, BMW Group diesel vehicles employ a combination of various components to treat exhaust emissions,” the group said.
Der Spiegel cited a legal document that it said VW had handed to the EU competition authorities and said Daimler had filed a similar document in Brussels. The magazine said the allegations could turn into one of the biggest antitrust cases in German economic history.
Arndt Ellinghorst, an analyst at Evercore, said that if the alleged collusion were proven, the carmakers could face fines totalling “several hundred millions or even low billions”, depending on the EU’s interpretation of the “duration and gravity” of the infringement.
A person familiar with the workings of VW told the Financial Times that the carmaker was undertaking a wide compliance sweep across the organisation last year when it uncovered the evidence of possible collusion.
VW told EU authorities about it in mid-2016, this person said. VW faces a bill of $24bn in North America alone after it admitted in September 2015 to installing illegal software that served to understate harmful emissions in official tests. Additional reporting by Patrick McGee