VW settles with ACCC over diesel claims

VOLKSWAGEN Group Australia (VGA) is one step closer to putting the dieselgate affair behind it in this market with an announcement this week that it has reached in-principle settlement with the Australian Competition and Consumer Commission (ACCC) over claims by the consumer watchdog that the company engaged in misleading or deceptive conduct over diesel emissions claims.

The terms of the settlement must now go before a Federal Court judge to be confirmed – a move that VGA expects before the end of this year.

Details of the settlement are to remain confidential until that court hearing, but the deal will almost certainly involve a heavy monetary penalty.

The announcement of the ACCC civil suit settlement by VGA follows the recent in-principle settlement of multiple class actions by law firms on behalf of Australian owners of Volkswagen, Skoda and Audi diesel vehicles fitted with so-called cheat devices that allegedly illegally masked diesel emissions during official tests.

The affair has been brewing since 2015 when it was revealed that VW Group vehicles fitted with the EA189 diesel engine had been delivered in Australia.

Although VW committed to recall the vehicles to rectify the software, the ACCC brought its Federal Court civil action in September 2016, accusing VW’s parent company, VW AG, and its Australian subsidiary, VGA, that they “engaged in misleading or deceptive conduct, made false or misleading representations and engaged in conduct liable to mislead the public in relation to diesel vehicle emission claims”.

The ACCC case alleged that 57,000 VW-branded vehicles were fitted with the cheat device, although it has been alleged that almost double that number of vehicles – including cars from VW Group brands Skoda and Audi – have been caught up in the scandal in Australia.

VW vowed to fight the claims in court, but has now agreed to settle.

A separate ACCC action against Audi AG and Audi Australia over 12,000 vehicles sold in Australia remains to be settled.

The dieselgate affair has been an expensive lesson for VW, costing billions of euros around the world and the scalps of several senior executives who now face potential jail time.

In Australia, the class action lawsuits will cost the company between $87 million and $127 million, plus legal fees that will possibly stretch to several million dollars more.

Now it will face further financial penalties arising from the ACCC action. Apart from pecuniary penalties, the ACCC was seeking corrective advertising and costs, which could add millions more to the final reckoning.

The ACCC sought to make an example of VW, with chairman Rod Sims saying consumers rightly expected that their vehicle’s emissions would operate as advertised during their day-to-day use.

“We allege that this was not the case with more than 57,000 vehicles sold in Australia by Volkswagen over a five-year period,” he said when announcing the civil case against VW in 2016.

“These allegations involve extraordinary conduct of a serious and deliberate nature by a global corporation and its Australian subsidiary misleading consumers and the Australian public. We expect higher standards of behaviour from all companies that supply to Australian consumers.”

VW-branded models named by the ACCC included the Amarok, Caddy, Eos, Golf, Jetta, Passat, Polo, Tiguan and CC sold with diesel engines for various periods stretching from 2008 to 2015.