not guilty

BMW holding out and holding up EU cartel probe

main 06992774 source BMW – X5 SUV dirtroad
Pardon my dust. Source: BMW

If BMW is bluffing EU authorities investigating collusion among German automakers, the Munich-based luxury carmaker is doing a pretty good job of it.

Unlike Daimler and the Volkswagen Group, which includes its subsidiaries Audi and Porsche, BMW is not volunteering any secret files to clear things up in the hopes of getting a lower fine. The company is cooperating, but insists it has not been involved in any collusion on emissions-cleaning technology.

The antitrust case, which became public last year, addresses cooperation among Germany’s five big carmakers dating from the 1990s. The agreements on costs, suppliers and technology may have violated competition rules and in fact, could be one of the biggest antitrust cases in German history. The European Commission, the EU’s antitrust watchdog, has reduced its investigation to two areas: agreements to limit the size of emissions cleaning tanks for diesel cars, and particle filters for gasoline engines.

VW has officially volunteered to be a witness for the prosecution to get milder punishment, and so has Daimler, the maker of Mercedes-Benz cars and trucks. But BMW hasn’t yet come forward. The company is cooperating, it says, but is not tripping over itself to be helpful. According to industry sources, BMW is not even able to act as a witness because it no longer has any documents that could make it eligible.

Billion-euro fines

BMW’s stance will make it difficult to reach a settlement between the carmakers and the Europan Commission, because such a deal requires the consent of all parties, competition experts said. The carmaker’s tactic could backfire if Brussels does get proof of collusion, because fines are likely to run in the billions of euros given the number of vehicles concerned and BMW, unlike VW and Daimler, would get no breaks.

In 2016, European Competition Commissioner Margrethe Vestager slapped huge fines on five European truckmakers to the tune of €2.9 billion (€3.3 billion) for price-fixing and colluding on emissions technology. Apple and Google have also received multi-billion euro fines from Vestager, who is keen to conclude her case against the German carmakers by the end of her term in October 2019, according to sources familiar with the matter.

Such a deadline looks unlikely as long as BMW refuses to agree to a settlement. The Munich-based company is maintaining its innocence. Industry sources note that BMW actually did install bigger emissions-cleaning tanks in diesel cars than its competitors.

BMW’s risks of a stiff fine are also smaller than in a traditional price-fixing cartel. Vestager accuses the carmakers of not having used the best possible technology to clean the exhaust of diesel and gasoline cars, but handing out costly penalties based on that argument may be difficult, according to legal experts. The carmakers would have a reasonable chance of success to bring down high fines at the European Court of Justice, they said.

BMW, which has so far steered clear from emissions-cheating investigations that have hit VW Group and Daimler, can take comfort in this scenario, should it play out.

Till Hoppe is a Brussels correspondent for Handelsblatt while Markus Fasse is a reporter in Munich. Darrell Delamaide and Gilbert Kreijger adapted this story into English for Handelsblatt Global. To contact the authors: hoppe@handelsblatt.com and fasse@handelsblatt.com

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