Car Emissions Case: First Sanction of an Anti-competitive Agreement on Technical Development by the European Commission

Kramer Levin Naftalis & Frankel LLP

On Nov. 12, 2021, the European Commission published its decision AT-40178 of July 8, 2021, fining BMW, Volkswagen, Audi and Porsche a total of 875 million euros for their involvement in a cartel within European Economic Area territory, upon the postponement of the introduction of techniques to clean exhaust gases generated by new diesel cars.

Daimler received full immunity for disclosing the existence of the cartel to the Commission, while the four car manufacturers previously mentioned benefited from the settlement procedure leading to a reduction of their fines. Volkswagen was fined as a direct participant and as the parent company of Audi and Porsche.

It should also be noted, with regard to fine calculation, that the European Commission applied a 20% reduction to all the car manufacturers’ fines, as it was the first cartel case based on the limitation of technical development under Article 101(1)(b) of the Treaty on the Functioning of the European Union.

In practice, all these car manufacturers had AdBlue technology (a liquid solution that removes some of the nitrogen oxide (NOx) from car exhaust), allowing them to reduce harmful emissions from diesel car exhaust to a level below what was legally required by the European Union.

However, the car manufacturers deliberately avoided competing with each other by not developing the full potential of this technology to make their diesel cars less harmful to the environment.

Specifically, between 2009 and 2014, the car manufacturers exchanged commercially sensitive information about this technology and agreed on the use of AdBlue tank sizes and refill ranges in their vehicles.

As a result, they deliberately reduced innovation and restricted competition on the technical features of the cars they will bring to market, at a time when managing vehicle pollution is an increasingly important concern for consumers.

With this decision, the European Commission illustrates how competition and innovation can be factors in the fight against environmental degradation and thus contribute to the implementation of the European Green Deal.

This case may give rise to actions for damages, as is currently the case for other cartels in the automotive sector, such as the Truck cartel case. But the specifics of this case, which concerns an agreement that exclusively restricted technical innovation, will raise peculiar questions about the quantification of damages if competition damages actions are effectively started.

For more information on the regime applicable to such competition damages claims in France, see our study published by the Legal 500, accessible via this link: France: Competition Litigation – Country Comparative Guides (legal500.com).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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