VW unlikely to face punitive US fines in Europe for scandal
Print Edition
Volkswagen is unlikely to face US-style fines in Europe over its emissions scandal because of a softer regulatory regime and Germany’s determination to protect its car industry, EU sources and legal experts say.
VW has been embroiled in crisis since last September, when it admitted it had cheated US emissions tests using software known as “defeat devices.”
The US Justice Department is suing VW for up to US$46 billion for allegedly violating environmental laws — though some legal experts expect the final settlement to be far lower.
Other countries have also acted — Brazil and South Korea have both imposed fines of well over US$10 million on VW for cheating on emissions.
But although VW says 8.5 million of the 11 million vehicles worldwide that contain banned software are in Europe, no European national authority has ordered any penalties so far.
European Union sources and lawyers say it would be a surprise if the firm received any significant fines in the EU.
While the bloc outlawed defeat devices in 2007, there are no defined penalties for using such software to mask emissions. Under US law, by contrast, carmakers must identify and describe any emissions control devices, meaning they can be pursued for omission or wrongful declaration, widening the scope for punitive action.
EU states are also reluctant to mete out tough financial penalties, because of an unwritten rule in the 28-member club that some national interests are sacred, according to the EU sources — and Germany’s car industry has traditionally been one of them.
VW, Europe’s biggest motor manufacturer, employs more than 750,000 people in Germany, and has been a symbol of the nation’s engineering prowess. VW, Daimler and BMW, Germany’s big three German carmakers, got revenues of 413 billion euros (US$451 billion) in 2014, bigger than the German federal budget, which stood at just under 300 billion euros.
Even if the European Commission wanted to impose penalties on VW, its powers are curbed. The EU executive can directly only impose financial sanctions on trade and competition issues.
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