The German Bundesanstalt fur Finanzdienstleistungaufsicht (BaFin) have announced they will begin investigations into Volkswagen and Daimler after allegations of price collusion and other cartel activities.
The colossal carmakers admitted to cartel authorities that secret meetings and discussions had taken place and that they reportedly did not notify investors of their activity.
Although this is not directly related to the emission scandal, it’s yet another headache for the German car giant to deal with off the back of alleged unfair practices.
Investigations in Germany and Europe
A spokesman for the German Federal Financial Supervisory Authority stated that regulators:
“…are examining whether VW and Daimler respected their duty to inform markets following their allegedly reporting themselves to the authorities.”
The European Commission are also launching their own probe into the matter. Under European competition laws, competitors are prohibited from engaging in certain discussions and cannot share sensitive business information and come to agreements that can affect the market. The carmakers’ reported admissions, made in a letter to competition authorities, points towards potentially illegal activities that may be deemed as cartel activity.
Secret meetings
Reports reveal that the Volkswagen Group, along with their subsidiary companies Porsche and Audi, admitted to meeting up with Daimler and BMW to discuss all sorts of business matters. A couple of senior employees per company would apparently come together to these ‘working groups’ to discuss the prices they are paying for parts; how they were marketing their products; technicalities of building the cars; and even emissions.
During these talks, employees reportedly discussed the high prices of “AdBlue” containers. “AdBlue” solution is used to reduce the amount of Nitrogen Oxide pollution being emitted.
Large AdBlue containers can be expensive, so it’s been suggested that smaller and cheaper containers were used in conjunction with the sorts of clever software involved in the Volkswagen Emissions Scandal; software that we say constitutes as a “defeat device”.
The cost of doing underhanded business…
The decision to engage in activities that have spawned what seems to be the biggest automotive scandal in history is one VW is paying for dearly. Since their cheating emissions software was revealed back in 2015, VW has paid out tens of billions for all sorts of penalty fines, compensation schemes, and investments into environmental projects.
For the German BaFin, their concern is over the effect this new issue may have had on market shares. Companies that have shares must inform investors of anything that may affect share prices.
Any wrongdoing found by the competition authorities may result in VW and Daimlers’ share values falling, with investors losing money. Because of this, BaFin has the capacity to impose penalty fines on companies who fail to notify investors of something that would drastically affect share values. Under new laws, the fine could be up to 5% of the company’s annual revenue. For the car giants VW and Daimler, 5% could mean billions.
Volkswagen doesn’t seem too bothered by the cartel allegations, suggesting that meeting with manufacturers to discuss technical information helps with speeding-up innovation. The competition authorities may not share the same view as collusion can restrict competition and therefore disadvantage the consumers.
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