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26 July 2017

What Is the Latest Scandal to Hit the German Car Industry All About?

Allegations have been made that Volkswagen, BMW, Daimler,
Audi and Porsche were colluding in the 1990s and formed a
cartel which possible laid the basis to the 'dieselgate' emission
What is the latest scandal to hit the German car industry all about?
by Guy Chazan, irishtimes.com,
25 July 2017

EU regulator expected to take a tough line over allegations of cartel-like behaviour

The allegations of collusion among German carmakers have plunged an industry already tarnished by the Volkswagen diesel scandal into a fresh crisis.

The news magazine Der Spiegel reported on Friday that German carmakers VW, BMW, Daimler, Audi and Porsche had been engaging in cartel-like behaviour since the 1990s, in particular colluding with each other on the technical details of diesel exhaust treatment systems.

The European Union competition authorities have opened an investigation, and Germany’s economics minister says the credibility of the whole German car industry is at stake.

What are the carmakers accused of?

BMW, Daimler and the Volkswagen Group are accused of holding secret meetings since the 1990s to collude on technology, components and suppliers. The most significant allegation is that they agreed to use only small tanks for AdBlue, a urea solution critical for neutralising emissions from diesel engines. But so far there is no evidence they colluded on prices of end products.

How have they responded to the allegations?

VW and Daimler have refused to comment, while BMW adamantly denies that it colluded with its rivals. However, BMW said there was nothing unusual in working with other carmakers on certain components if they “do not contribute to differentiation of the two brands and are therefore not relevant to competition”.

The EU confirmed it is investigating the claims, but how likely is it they will really crack down on German industry? Germany exercises huge power in the EU and can easily influence the European Commission agenda. But the competition directorate has a reputation for fierce independence, one that under its current boss, Margrethe Vestager, has only grown. She has taken on a phalanx of corporate titans, ranging from Apple and Google to Gazprom, Amazon and McDonald’s, and is expected to be just as tough in her approach to the German carmakers.

“Knowing her, I bet she would have the guts [to go after them],” says Philippe Lamberts, a Green MEP. It would also be an opportunity for her to show “she is not just after big US companies, but also European champions [that break the rules]”.

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