21 May, 2021

BMW confident over EU emissions-cartel investigation

BMW has expressed its confidence that allegations against the company over its involvement in an emissions cartel will be reduced.

Along with fellow German carmakers Volkswagen (VW), Audi and Daimler, BMW was accused in 2017 of taking part in a cartel to block the introduction of emissions-reducing technology. Daimler blew the whistle, and as such, expects a 100% reduction in any fine issued.

However, BMW has remained resolute in its innocence. As the carmaker was the only one not to hold its hands up, it was facing the biggest fine of the four. The European Commission confirmed plans to charge the carmakers involved in 2019, having reviewed the evidence made available to them.

Diesel denial

The EU Commission was concerned that the cartel had ‘participated in a collusive scheme, in breach of EU competition rules, to limit the development and roll-out of emission-cleaning technology for new diesel and petrol passenger cars sold in the European Economic Area (EEA).

Particular concerns were raised over the introduction of selective catalytic-reduction (SCR) systems to reduce harmful nitrogen-oxide (NOx) emissions of diesel vehicles and otto particle filters (OPF), which reduce harmful emissions from petrol engines.

In the Commission's preliminary view, BMW, Daimler and VW coordinated their SCR AdBlue dosing strategies, tank size and refill ranges between 2006 and 2014, with the common understanding that they thereby limited AdBlue-consumption and exhaust-gas cleaning effectiveness.

BMW has now stated that as it has never been part of any diesel-emission investigation, and expects the Commission to reduce allegations of involvement in the cartel. This will also result in a smaller fine than the one the carmaker prepared for.

‘The subject matter of the proceedings is whether German automobile manufacturers cooperated in technical working groups to restrict competition in the development and roll-out of emission-reduction technologies,’ the carmaker said. ‘The legal conformity of diesel vehicles is not a subject of the proceedings. The BMW Group is not and has not been accused of unlawful manipulation of emission-control systems.’

Money-saving

BMW Group had made provisions for a potential fine from the EU Commission, setting aside €1.4 billion in 2019. This had an impact on its financial results for that year.

The carmaker has said it continues to consider it likely that the Commission will issue it with a fine. ‘However, the significant limitation in the scope of the allegations has led to a revaluation of the provision. This revaluation will result in a positive effect on earnings of around €1 billion in the second quarter of 2021,’ the carmaker added.

‘This effect on earnings is not included in the current guidance for 2021, and will lead to an increase in the EBIT margin for the automotive segment of around one percentage point.’

The carmaker also stated that if, as expected, the allegations against it are significantly reduced, it would refrain from taking any legal action against the issuance of a fine.