Dieselgate’s Specter Haunts VW, Others As EU Looks Into Possible Diesel Emissions Collusion

Volkswagen's leaders hurriedly called a meeting of its supervisory board to look into allegations that the European Commission is probing reports of cartel-like actions on the part of automakers on diesel emissions.

Following a story over the weekend that implicated a cartel of automakers including Volkswagen in a price-fixing scheme on, among other things, diesel emissions control systems, Volkswagen has called what looks like an emergency meeting of its supervisory board Wednesday to discuss the matter, a source familiar with the matter told Reuters. A VW spokesman confirmed the extraordinary meeting but declined to give details. VW board calls crisis meeting.

Regulators looking at cartel actions

Reports on Saturday said that European Commission antitrust regulators were looking into the possibility that German automakers acted as a cartel in diesel emissions control systems. The regulators are following up on a tip.

The reported probe follows a story that appeared in Der Spiegel magazine that indicated VW – specifically Audi and Porsche – Daimler, owner of Mercedes-Benz, and BMW might have worked together to fix prices, using industry committees, on components. The parts include diesel emissions treatment/control systems. Shares take a hit as VW board to meet.

The Spiegel story indicated that the talks resulted in smaller AdBlue tanks for diesel emissions control. AdBlue is the urea-based liquid used to filter nitrogen oxides (NOx) from diesel emissions. The talks apparently determined that larger tanks would have been more expensive. Experts, though, countered that line of thinking. They said the effectiveness of filtering doesn’t depend on the size of the tanks. BMW’s system, Spiegel pointed out, uses AdBlue doping as well as an NOx-storage catalytic converter. The automaker combined systems to assure its vehicles would meet emissions requirements.

BMW Sunday called the emissions filtering systems in its vehicles adequate. The automaker said its talks with other manufacturers about AdBlue were to lay the foundation of a Europe-wide network of refilling stations for AdBlue.

Daimler’s works council head Michael Brecht Monday called for an immediate probe into the European Commission allegations. Meantime, the automaker said it had an extensive compliance program. The program, Daimler said, was regularly updated and adapted to meet changing conditions.

Little Information Known About the Allegations

Stuart Peterson, an automotive analyst at Exane BNP Paribas, said there was little information about the allegations. And, he continued, there were no signs that price-fixing had affected consumers. “More ugly details could yet emerge, leaving German manufacturers – and the EU auto sector – still firmly in the sin fin for now,” he continued.

Cartels have affected the auto industry for the last several years as there have been multi-billion euro/dollar fines relating to lighting systems, engine coolers, and bearings. And, the industry’s record on exhaust emissions has been and still is under scrutiny since VW admitted it had cheated on U.S. emissions tests. The fallout from Dieselgate continues, too. VW’s admission and subsequent actions by the Justice Department, Environmental Protection Agency, Federal Trade Commission and consumers have left the automaker struggling under the weight of a $25 billion price tag for fines, buybacks, and to settle criminal penalties. Meantime, the scandal continues to affect VW daily, it seems, as consumers and financiers go through the German court system and as prosecutors continue their probes into the scandal. Several executives face charges in the wake of Dieselgate. Some of them cannot leave Germany as international arrest warrants are outstanding that would bring them to the U.S. where they would be charged and held until their trials.

One engineer has pleaded guilty in the U.S. and has been working with authorities, while a second is sitting in custody awaiting his trial on conspiracy and fraud charges. The U.S. has also charged six others. They are the ones facing the international arrest warrants. Meantime, German prosecutors have conducted raids that have hit VW plants and offices and are continuing their probes.

Source: Reuters