‘Circle of Five’ German Automakers Accused of Price Fixing Agreement

The “circle of five” German carmakers are accused of participating in a price fixing agreement that led to stalled improvements in emissions technology.

Daimler, which owns Mercedes-Benz, reportedly blew the whistle on the alleged collusion the company participated in with BMW and Volkswagen, along with VW subsidiaries Audi and Porsche.

According to Reuters, antitrust regulators from the European Union conducted raids at each carmaker’s headquarters in 2017. The European Commission determined that from 2006 to 2014, the German auto manufacturers allegedly agreed to limit the development of technology that would reduce emissions of diesel vehicles.

Between 2009 and 2014, they also allegedly agreed not to use technology that would allow the filtering of particulates produced by gasoline vehicles. The automakers are accused of delaying the use of  “otto” particle filters.

EU’s antitrust regulators said the purported deal was an effort to restrict competition, and such collusion was a breach of EU antitrust regulations.

The EU released a statement in April, saying, “Restricting competition on innovation for these two emissions cleaning systems… denied consumers the opportunity to buy less polluting cars.”

Companies are allowed to cooperate with each other to improve their goods, but they are not allowed to compete on quality, said EU Competition Commissioner Margrethe Vestager.

Price Fixing Agreement Involved Not Using Technology

The European Commission made it clear that the new allegations are different from the past issues with VW, which in 2015 admitted to using cheat devices to make its cars appear to emit fewer emissions.

The new allegations involve simply agreeing not to use technology that exists to make vehicles produce fewer emissions. One technological option called AdBlue would have tempered nitrogen oxide emissions produced by diesel engines.

The Commission could only speculate that the German carmakers thought the new emissions cleaning technology would be too great of an expense, and if they passed that cost on to consumers, their sales might have suffered.

The EU could fine the companies 10 percent of their total global sales. Daimler does not expect to receive a fine because it blew the whistle on the price fixing agreement.

BMW told Reuters the company plans to contest the allegations, but is setting aside more than one billion euros in the event of a fine. Volkswagen had no comment until the company examined the accusations made against it.

The German automakers have a chance to respond to the European Commission’s report before any fines are assessed.

What are nitrogen oxide emissions?

Nitrogen oxide produced by diesel engines
can irritate the airways of the human respiratory system. Short-term exposure can bother people who already have respiratory problems, such as those with asthma. Long-term exposure to nitrogen oxide might spur the onset of asthma and cause an increased risk of respiratory infections.

Particulate matter is more dangerous the smaller it is. Tiny particles can be breathed deeply into the lungs, and some smaller than 10 micrometers may even enter the bloodstream. Both the lungs and heart are susceptible to damage from particulate matter according to the EPA, which has been linked to:

• Premature death in people with heart disease or lung disease
• Nonfatal heart attacks
• Irregular heartbeat
• Aggravated asthma
• Decreased lung function
• Increased respiratory problems that can include irritation of the throat, coughing or trouble breathing.