No Penalties

VW Dodges a Bullet

Bundesverkehrsminister Alexander Dobrindt (M, CSU), Herbert Diess (l), Vorstandsvorsitzender der Marke Volkswagen Pkw und Werkstattleiter Johannes Heckel stehen am 02.02.2016 in Berlin in einer Volkswagenwerkstatt an einem Volkswagen Amarok. Hier wurde das nötige Software-Update im Rahmen der Rückrufaktion von Volkswagen an dem Auto vorgenommen. Foto: Kay Nietfeld/dpa [ Rechtehinweis: Verwendung weltweit, usage worldwide ]
Alexander Dobrindt (r) and Herbert Diess (l), head of VW Pkw.
  • Why it matters

    Why it matters

    The VW’s diesel emissions scandal could rise further if investors or car owners succeed in getting compensation for the lost value of VW shares and VW cars.

  • Facts

    Facts

    • VW last month agreed to pay approximately $15.3 billion in a settlement with the U.S. Environmental Protection Agency and nearly half a million VW diesel car buyers in the United States.
    • The carmaker remains exposed to financial risks associated with more than 10 million affected diesel vehicles sold in the rest of the world, including around 8 million in Europe.
    • VW’s legal troubles are only beginning to unfold in Europe. A group of 278 large investors, for instance, is seeking nearly €3.3 billion in damages in a district court in Germany.
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    Audio

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Germany’s transport minister, Alexander Dobrindt, has said he will not be slapping any fines on Volkswagen for its diesel emissions manipulation scandal, a decision that is likely to draw the ire of consumer groups and customers in VW’s home country.

The development Wednesday comes despite the fact that Volkswagen, Europe’s largest carmaker, has admitted to manipulating 11 million diesel cars worldwide, of which 2.8 million are in Germany. The carmaker is currently repairing the affecting cars in Europe with a software upgrade and an air filter.

VW’s decision to install software to cheat emissions tests mean that millions of its diesel-powered cars emit more nitrogen oxide, a toxic gas which contributes to creating smog, than U.S. and European laws allow. The refitting of European cars will bring the cars in compliance with the law again, according to VW and the German Federal Motor Transport Authority, which has approved the repairs.

Mr. Dobrindt on Wednesday said that forcing VW to repair the cars was punishment enough.

“We now have the situation that Volkswagen is meeting with the requirements we have set, namely, to bring the cars in compliance with the rules,” Mr. Dobrindt told German broadcaster N-TV. “This is what is appropriate.”

“This is a scandal as well as unlawful. It is unlawful from a European perspective, because deterrent sanctions should be levied when breaches of law occur.”

Remo Klinger, Berlin-based lawyer

The lack of a German fine comes after VW agreed last month to a $15.3-billion settlement with U.S. authorities and car owners. The bulk of the money, $10 billion, is reserved for consumers, who can sell their cars back to VW and claim up to $10,000 in damages. VW will also pay $4.7 billion for funds to support the environment and $603 million as part of a settlement with U.S. states.

In Europe, however, VW has not faced any penalties nor has it offered to pay financial damages to consumers, despite calls from some opposition politicians and consumer organizations to do so.

Mr. Dobrindt’s decision not to fine the carmaker was met with anger from some of these groups on Wednesday.

“This is a scandal as well as unlawful,” Berlin-based lawyer Remo Klinger said about Mr. Dobrindt’s decision not to pursue any penalties against VW.

 

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“It is unlawful from a European perspective, because deterrent sanctions should be levied when breaches of law occur. This is not deterring,” Mr. Klinger told Handelsblatt Global Edition.

The lawyer offers legal advice to German environmental group Deutsche Umwelthiffe, which has called for tougher regulations for carmakers and has launched several legal cases against German authorities and carmakers, including GM’s European unit Opel.

VW’s Chief Executive Matthias Müller, who took over the company last September after Dieselgate had become public, told German newspaper Welt Am Sonntag over the weekend that settlements similar as in the United States would “overstretch” the carmaker.

Volkswagen has set aside €16.2 billion to cover the Dieselgate costs, but Mr. Müller has not ruled out that this sum might rise further. The U.S. fine makes this likely.

Investors have also sued the carmaker in Europe and the United States, demanding compensation for the lost value of their shares.

 

Gilbert Kreijger is an editor with Handelsblatt Global Edition in Berlin, covering companies and markets. To contact the author:  kreijger@handelsblatt.com

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