Volkswagen, Daimler in crisis meetings over cartel claims

If EU competition law is found to be breached the companies could face fines of up to 10% of turnover

Last Friday it emerged that, in July 2016, Volkswagen told European Commission competition investigators of secret meetings with its German competitors, dating back 14 years, to discuss production and components, including elements related to the diesel emissions scandal

Last Friday it emerged that, in July 2016, Volkswagen told European Commission competition investigators of secret meetings with its German competitors, dating back 14 years, to discuss production and components, including elements related to the diesel emissions scandal

 

The latest scandal for German automakers started with a cover story in the respected news weekly Der Spiegel, which suggested that Volkswagen, Daimler and BMW have operated as a cartel since the 1990s.

It described how the companies formed myriad working groups to agree on common standards and specifications – for example, to keep urea tanks for diesel engines relatively small so more space under the hood would be available for pricey extras. This comes as the industry is still reeling from investigations into the diesel emissions scandal.

In response, German car giants Volkswagen and Daimler held crisis board meetings on Wednesday as cartel claims threaten long-standing co-operations on development, purchasing and electro-mobility.

Last Friday it emerged that, in July 2016, Volkswagen told European Commission competition investigators of secret meetings with its German competitors, dating back 14 years, to discuss production and components, including elements related to the diesel emissions scandal.

Now it has emerged that, two years before VW, in 2014, Daimler also went to Brussels investigators to inform on the talks.

If investigators find the talks breached EU competition law, commissioner Margrethe Vestager could impose fines of up to 10 per cent of global turnover.

Secrecy

To avoid prosecution, Daimler was bound to secrecy about its approach. As the second informant, cartel regulations could see VW granted a 50 per cent discount on any fines imposed. Meanwhile BMW, which doesn’t appear to have gone behind its competitors’ backs, could face a full fine. In retaliation, it has cancelled several co-operation agreements with Daimler including plans to merge their respective smartphone car rental services, joint electro-auto charging facilities and joint component purchases.

The latter was devised to enable the two luxury car makers to compete on price and production with larger competitors, such as Volkswagen and Toyota.

But the cartel revelations have left these co-operations “totally damaged”, an unnamed BMW source told the Süddeutsche Zeitung daily, with both firms “trapped in a tsunami”.

Shockwaves

The cartel shockwaves and ongoing investigations into diesel emissions manipulation have seen a plunge in German auto share prices in recent days, and prompted emergency board meetings.

The VW supervisory board met on Tuesday in its Wolfsburg headquarters on Wednesday while Daimler executives met in Stuttgart.

Neither company would comment on the latest claims, though their respective chief executives, Matthias Müller and Dieter Zetsche, insisted they would not participate in “speculation”.

According to Der Spiegel five German car firms held more than 1,000 meetings in 60 working groups discussing everything from seats to motors, convertible roofs to tanks for urea fluid used to remove noxious gases from diesel emissions.

Senior German politicians have admitted that a long-planned meeting with auto bosses next week in Berlin, originally to discuss ongoing diesel manipulation claims, is now a “last-minute effort” to avert a calamity in an industry employing one million directly with annual earnings of €405 billion: 23 per cent of Germany’s total exports.