German Automakers Under Investigation Over Anti-Competitive Practices

The cloud of smoke from the 'dieselgate' scandal hadn't even lifted before Der Spiegel reported on the country’s automakers' anti-competitive practices. In July, the weekly German magazine claimed that prominent German car manufacturers had formed a cartel that led to higher emissions even though the technology to limit exhaust fumes in diesel vehicles existed.

Volkswagen, Audi, BMW, Mercedes-Benz and Porsche are now under investigation for fixing the maximum capacity of AdBlue in their vehicles at 8 litres instead of 19 litres. AdBlue is a urea-based chemical injected into exhaust gases to restrict harmful fumes. The cars were able to pass emission tests with a small tank too, but a greater quantity of AdBlue ensures better cleaning in diesel vehicles.

About 200 key executives formed 60 groups to discuss and collaborate on technological advancements relating to brakes, safety, emissions, etc. The European Commission is now investigating if forming those committees led to the fixing. On October 16, 2017, officials from the European Commission along with the German anti-trust body examined BMW's premises; and on October 23, they checked Audi, Daimler (Mercedes-Benz) and Volkswagen.

If found guilty, the automakers in question might have to cough up as much as 30 per cent of their worldwide yearly revenue. That puts the figure around €50 billion (~Rs 3.84 lakh crore). Additionally, European Union's laws allow affected individuals to sue the manufacturers and claim damages separately.

Volkswagen and Audi are currently recovering from the 'dieselgate' setback, and the two brands may walk away from this debacle unscathed for blowing the whistle on their peers. The Commission's spokesperson informed WardsAuto that VW and Daimler are cooperating with the ongoing investigation, which may earn Daimler a concession in the penalties.

The leniency program has helped uncover several anti-competitive practices. Earlier, MAN Truck & Bus, VW's subsidiary, had brought a truck cartel's price-fixing conspiracy to the EU's notice. MAN got its fines waived entirely for uncovering the 14-year long collusion. Daimler too earned a 40 per cent discount for contributing to the probe and saw its fines drop to about €1 billion (~Rs 7,671 crore).

Industry experts say that discussing various issues is common even for competitors as it leads to speedier innovation and works in the interest of consumers. For instance, automakers in the continent had earlier collaborated to standardise the charging connector for electric vehicles. The findings of this inquiry will determine how and on what projects manufacturers partner in the future. The manufacturers will need to bring in transparency and clearly state the scope of collaboration.