Oh, This Is So Like The EU.

UK misses out on its share of £1.1bn of waived fines, which would have reduced UK ‘divorce bill’

If these car manufacturers had been British, would the EU have exercised the same leniency? I doubt it, in fact I know they would not have shown any.

This story is NOT about the first ‘emissions scandal’, where some German car companies are alleged to have deliberately falsified the emissions data for their new diesel cars.
Legal cases are still being pursued across Europe in regard to that.

What follows is on top of that scandal, and was announced in Brussels yesterday

Summary details of a second diesel emissions scandal involving exclusively German car manufacturers were released by the EU Commission in Brussels yesterday.

A settlement has been reached between the German-led EU Commission and German car-makers, involving eye-watering sums — however, part of the deal involves the EU either waiving fines completely or reducing them significantly. The car-makers involved have all admitted to colluding as part of a cartel.

Former Secretary of State, the Rt Hon Owen Paterson MP, commented

“For all its green talk, the EU has failed to properly punish German carmakers for corruption over diesel emissions which continue to choke our cities.

“The fine brings no remedy and merely equates to a dent in their advertising budgets.”

You are by now thinking, how the hell does this affects the UK taxpayer

The UK is entitled to a rebate on the notorious ‘divorce bill’ as a result of any monies coming into the EU which relate back to when the UK was a member, as in this case.

Here is what the EU said about this yesterday:

“In accordance with Article 141(2) of the EU-UK Withdrawal Agreement, this case is a “continued competence case”. The EU shall therefore reimburse the UK for its share of the amount of the fine once the fine has become definitive. The collection of the fine, the calculation of the UK’s share and the reimbursement will be the carried out by the Commission.”

Why didn’t the EU Commission collect all the fines?

Daimler (Mercedes-Benz) received full immunity from the EU because they were the first to cooperate with the investigation. In doing so they avoided an aggregate fine of ca. €727 million and paid nothing at all.

Volkswagen (VW, Audi and Porsche) cooperated but not until after Mercedes-Benz had spilt the beans. They received a 45% ‘leniency reduction’ and a further 10% ‘settlement discount’.

BMW received no leniency reduction but got a 10% discount anyway.

In addition, the second case against these motor manufacturers in a separate emissions matter was dropped due to ‘insufficient evidence. This thereby eliminated more possible financial benefits to the EU’s coffers — and meant the UK’s ‘divorce bill’ was not reduced further. Given that Mercedes Benz was let off completely for cooperating with the first investigation, this begs the question of why there was insufficient evidence to pursue the second one.

What are the German car manufacturers alleged to have done this time?

According to the EU Commission,

“These car manufacturers illegally colluded to restrict competition in the area of emission cleaning technology for diesel cars…. All companies acknowledged their participation in the cartel and agreed to settle the case.”

EU Commission statement, Thur 08 Jul 2021

The Commission went on to say:

“Every year millions of new diesel cars worth billions of Euros are sold in Europe. And many more are already in use. Not only users of these cars, but all citizens must be able to trust that car manufacturers compete with one another to reduce harmful emissions from their vehicles. But these companies did not meet these expectations.”

Nitrogen oxide (NOx) is now seen as more noxious than carbon dioxide, and it seems that over five years the top five German car manufacturers held private meetings to suppress any competition between them on the best use of technology to reduce these harmful emissions.

“Carmakers developed together a very good technology but decided not to compete on exploiting it to its full potential. By reaching a common understanding to avoid competition on the effectiveness of the SCR-system they breached our competition rules.”

Unfortunately and for legal reasons I have had to limit this report to the summary facts presented by the EU Commission yesterday. The details of this case will not be available for some time, and I suspect these will prove to be very interesting. As always with the EU, I have learnt that ‘the devil is in the detail’ but I am unable to bring this analysis to readers at this time. Still, the summary is bad enough.

Clearly, with the EU Commission not providing the details of these deals with the German car manufacturers, it is hard to say what the EU might have done. I can only comment based on what they have provided.

German-led Commission lets German car-makers off the hook

It is hard not to draw the conclusion that if the Commission had brought this case again British car manufacturers, it would have thrown the book at them. Instead, one cartel case against the German motor industry has been dropped completely and the one that has been settled has resulted in significantly reduced penalties. I understand from German media that BMW had set aside almost £1bn for the payment of fines. In the end, they will pay just £373 million. Mercedes will pay nothing at all, and the Volkswagen group of VW, Audi and Porsche have had their fine cut in half.

Repeat offenders

The EU’s Commissioner said yesterday: “This case is distinct from the diesel scandal, which was, and still is, prosecuted at national level under various administrative and criminal laws.” This appears to be the second, major, coordinated attempt by German car manufacturers to manipulate the market. In both instances, their actions fly in the face of the EU’s current ‘climate change’ imperative.

The EU’s Executive Vice-President Margarethe Vestager is the EU’s Commissioner for Competition. Needless to say, she has never worked in business. It is normal in the EU Commission for Commissioners to have no real-world experience.

The German car industry has dominated the EU for years. With its second major scandal inside a decade, it is difficult to understand why it saw the need to do what it has done. It was already benefiting from an artificially undervalued currency, allowing it to penetrate and profit from ‘captive’ customers across the EU’s Single Market.

Meanwhile, the UK will only benefit from a small reduction in its divorce bill, as a result of its share of the £754 million end result, but it seems it could have been a lot more. I suspect that I am not far wrong in saying that this was a deliberate ploy by the EU to once again punish the UK for the crime of leaving the EU club.

Sources: EU Commission