Brussels vows to untangle latest German car scandal

European Commission demonstrates its commitment to the case by appointing a vice president to oversee the sprawling scandal.

The European Commission reiterated Monday it is examining new allegations that a club of German carmakers colluded on specifications for hardware key to purifying engine exhausts, and showed how seriously it is taking the case by appointing a vice president to oversee the sprawling automotive emissions scandal puzzle.

The cartel allegation, implicating Volkswagen, BMW, Daimler, Porsche and Audi, could lead to record fines given the size of the companies and the number of diesel cars sold. Just over 40 percent of the 12.6 million cars sold in Europe in 2015 ran on diesel, according to European auto manufacturer association ACEA.

The furor is over whether the auto giants conspired to rig the size of tanks for so-called AdBlue liquid in working group meetings dating back decades, making them too small to effectively purify the exhaust. AdBlue reduces exhaust emissions in diesel vehicles and is one way to reduce harmful nitrogen oxide output. It works by slowly injecting the liquid into the exhaust pipe, which traps some of the NOx.

Alongside the installation of defeat devices in millions of vehicles sold by VW that was exposed in 2015, the latest scandal feeds into concerns that carmakers spent decades devising ways to dodge emissions rules in the run up to the Dieselgate scandal. A €2.9 billion EU cartel sanction against several truckmakers last year for colluding on the rollout of emissions reducing technologies reinforced that impression.

Commission Vice President Jyrki Katainen will oversee efforts to clean up the automotive sector, coordinating work by Commissioner for theInternal Market Elżbieta Bieńkowska on so-called type approval rules, Commissioner for Justice Věra Jourová on consumer action, and, possibly, Margrethe Vestager, the powerful competition commissioner, to break up the cartel, Commission spokesperson Alexander Winterstein said.

A Friday report by Der Spiegel said Volkswagen blew the whistle on the alleged collusion, citing secret working groups dating back to the 1990s and submitting information to German and European competition regulators in July 2016. Both subsequently confirmed they received the information, and the Commission took the lead in assessing whether it indicated a breach of EU law.

If either German or EU authorities open a probe, Volkswagen, as the whistleblower, would be entitled to immunity from fines. The other carmakers may try to cooperate with the Commission to reduce their exposure.

Experts said the move by Volkswagen could be an effort to put its house in order in the wake of the huge financial and reputational fallout of the Dieselgate emissions scandal. Volkwagen’s subsidiaries were also caught up in the truck cartel case — MAN received immunity as the whistleblower, and Scania continues to fight the charges — facing the prospect of large damages claims.

“After how much they paid, I guess Volkswagen did not want to have any pain on any other issue,” said one Brussels-based antitrust adviser. Volkswagen management should have known that any meetings, including technical meetings, between competitors will attract suspicion, he added. “People knew this was risky.”

VW is set to hold a board meeting Wednesday to discuss the issue, a company official said.

The other carmakers may try to portray the meetings to competition regulators as innocuous. BMW said in an emailed statement that the “objective of discussions with other manufacturers concerning AdBlue tanks was the installation of the required tanking infrastructure in Europe.”

Germany’s Association of the Automotive Industry (VDA), which represents the carmakers concerned, urged caution in any investigation, noting that “standardization and standardization activities are generally neither harmful nor illegal” within the industry, suggesting that the working groups could have served to simply make their technology interoperable.

VDA President Matthias Wissmann said the industry must address criticism head on.

“With its technical innovations and its economic success, the automotive industry is an important part of the image of Germany all over the world,” Wissmann said. “It is our duty and responsibility to protect this reputation … In order to meet this responsibility, we must face critical questions more openly and practice more self-reflection.”

BMW said Monday it “categorically” rejected the accusations. Volkswagen, which now owns the Porsche and Audi brands, and Daimler both refused to comment on what spokespeople termed “speculation.”

BMW stressed that its vehicles “are not manipulated,” and its desire to draw a clear line between itself and Volkswagen is obvious — though not everyone buys it.

“It has been clear from the start that Volkswagen represented the tip of a dirty Dieselgate iceberg and that most other companies were doing much the same,” said Greg Archer, who works on the emissions scandal at green NGO Transport & Environment.

Only VW has admitted to emissions cheating, but rivals including Daimler, Renault and Fiat Chrysler are also suspected of installing defeat device software to cheat emission readings under certain conditions.

Richard Pike, a U.K. litigation lawyer with Constantine Cannon, reckons any such protection may be coming to an end.

“You can imagine after Dieselgate these companies are more politically attractive” to antitrust regulators, he said.

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