Monday, February 19, 2024

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BMW and Volkswagen Are Fined $1 Billion for Emissions Cartel

The EU Commission has fined German car manufacturers, BMW and Volkswagen, $1 billion for running an emissions cartel. In short, both companies agreed to not compete with each other on a technical level.

In particular, this was technology that would have reduced emissions from their vehicles throughout 2009-2014. During this time, both companies held regular meetings to discuss the technology but decided to not advance it.

As a result, this violated the EU’s antitrust laws, which led to a massive fine.

What Exactly Happened Between These Companies?

Questionmark

The car manufacturers at this meeting would regularly discuss catalytic reduction (SCR)-technology that eliminates harmful nitrogen oxide (NOx)-emissions from diesel passenger cars.

At the time, the manufacturers were already within the legal limits of EU emission standards, thus implementing the technology was unnecessary. However, by all members agreeing to not pursue this innovation, it violates the law.

Why would they do this?

It’s pretty simple; by choosing to compete with each other on a technical front, this would have cost the companies millions, if not billions, in R&D. It would also likely raise the price of the cars they produce.

At the same time, if EU emission standards became stricter, BMW, Volkswagen, and Daimler would now have an innovation on standby.

Thus, by choosing to not compete, the car manufacturers reap the benefits, while the atmosphere absorbs the emissions.

There Was One More Car Manufacturer

BMW and Volkswagen, and their subsidiaries, were not the only car manufacturers at the meeting. Daimler was also present at the meeting, however, it was excluded from the fines.

The reason was that it exposed the entire emissions cartel. Thereby avoiding an $863 million fine.

Volkswagen also received a 45% reduction by providing additional evidence in a swift manner. BMW received no discount for cooperation, however, both manufacturers received a 10% discount by agreeing to a speedy settlement.

The reason a discount is given is that if the companies chose to battle the allegation, it could take years to settle. This would add to the expense. In addition, it would prevent the commission from looking at other anti-trust cases.

And in case your wondering where all this money goes, it goes directly into the EU budget. As a result, it lowers the burden on taxpayers.

Is the Technology Still Useful Today?

In all honesty, it depends on your outlook.

On one hand, fossil fuel vehicles will continue to be produced by all major car manufacturers for years to come. The innovations that can reduce emissions are still vital in the race against climate change for new cars.

Yet, if you take a look at the final goal, full adoption of electric vehicles (EVs), it’s too late for this technology to have a large impact.

That said, making sure these companies face legal ramifications is important. Slowing down technological innovation that could help reduce emissions is reckless. On top of this, it could lead to price manipulation of new vehicles.

Thus, regardless of the technology itself, enforcing anti-trust laws is something every government must do.

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Robert Giaquinto

Robert has been following and writing about environmental stories for years at GreenGeeks. He believes that highlighting environmentally friendly practices can help promote change in every household.

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