Over-reliance on all aspects of diesel vehicle production is suspected of plotting
German auto giants face heavy penalties due to monopoly
Recently, the German media revealed for the first time that the auto giants such as Volkswagen, BMW and Daimler were suspected of being inside the biggest cartel case in the history of German economy. In the diesel exhaust gas scandal, Volkswagen has pleaded guilty and paid a heavy price, but this may be just the tip of the iceberg. If German automakers are really suspected of monopolizing, they may pay huge compensation in the future due to the litigation wave from a large number of consumers, and may face huge fines from regulators.
Suspected of large-scale industry monopoly
Recently, Germany's "Der Spiegel" magazine disclosed for the first time the contents of the misconduct of the misconduct submitted by the Volkswagen Group and Daimler to the German Cartel Administration of the German competition regulator, which made the German auto industry's cartel case surface. According to reports, since the 1990s, cartels have been formed, colluding privately in research and development, production and other fields, manipulating pricing, eliminating competition, and defrauding parts suppliers and consumers. If verified, this may be one of the largest cartel cases in the history of German economy.
Cartel refers to the achievement or implementation of complicity between competitors in the industry to help weaken competition between them. Based on the information currently disclosed, the extent of the negotiations between these auto giants is not fully understood. The internal documents cited by Der Spiegel on the 21st show that over the past 20 years, the five giants of Volkswagen, Audi, BMW, Porsche and Daimler have instructed more than 200 executives and employees to form more than 60 working groups. They colluded privately. The content ranges from technology, cost, and supplier to a diesel emissions treatment system that has recently been mired in scandals.
A related internal document obtained by Der Spiegel from the public shows that the details of the private discussions of the five companies are very specific, even including the size of the diesel exhaust gas storage tank. According to the report, in order to make room for a more profitable speaker system, these companies negotiated to reduce the size of the storage tank.
The report said that the Volkswagen Group, which had exposed the “Drainage Door†scandal in 2015, first reported this to the regulatory authorities. For the first time, German regulators realized that the problem was when they raided the public office last year. The purpose of the search at that time was to find the public to take the initiative to admit that it might violate anti-monopoly regulations. Daimler also confessed to the regulators, hoping to reduce punishment as much as possible.
It has been reported that Daimler has at least partially withdrawn from the secret negotiation activities of German auto giants in the past few years, becoming the only automaker to voluntarily withdraw from collusion.
Germany's "Süddeutsche Zeitung" quoted people familiar with the matter as saying that Daimler chose to partially withdraw because of the monopoly activities that were discovered in the truck sector in 2011. Later, Daimler was fined nearly 1.1 billion euros by the European Commission for participating in the negotiation of truck prices. According to the report, Daimler also opened a special anti-monopoly course in 2011, hiring legal persons to explain to the company employees what is allowed and which actions are not allowed. At the same time, Daimler began to partially withdraw from secret consultations with other auto giants. However, it is unclear whether partial withdrawal will result in a lighter punishment for Daimler.
According to the German "Business Daily" report, a former judge of the Constitutional Court, Christine Hörmann Denhart, played a key role in Daimler's withdrawal from the secret meeting. She was in charge of legal affairs at Daimler and transferred to Volkswagen. It was she who noticed the suspicious meeting and sounded the alarm for the two companies.
After Daimler announced its second-quarter earnings on the 26th, its CEO Dieter Zecher still refused to comment on the cartel allegations, saying that the matter should not be speculated. The EU has not officially launched a survey on Daimler. program. Daimler’s operating profit for the second quarter increased 17% year-on-year to 3.74 billion euros.
Volkswagen CEO Matthias Miller also said that media reports are speculations about the facts. It is reported that both Volkswagen and Daimler held an emergency supervisory board meeting on the cartel on the 26th. A spokesman for the Volkswagen Workers' Committee told DPA that the board of directors has an obligation to fully inform the board of supervisors, but this has not been the case so far.
For this allegation, Daimler remains silent. Ceche said, "It is appropriate to not participate in guessing." He said that in his view, the relevant reports will not affect the existing cooperation with other manufacturers, and such cooperation is in line with the current legal framework.
In addition to Daimler, other automakers have so far kept silent on relevant reports.
Fest, head of the German Ifo Economic Research Institute in Munich, believes that the monopoly on German automakers will not lead to a sharp drop in sales. In an interview with Bavarian Radio, he said that no matter how you look at it, all of these companies produce good cars. "Although in the past, they may be slightly more expensive for consumers, but sales will not be affected immediately." After the exhaust scandal was exposed, Volkswagen's sales were still good.
However, Fest pointed out that the reputation of German producers has been damaged. "The impact on the financial market is very interesting. The total value of auto stocks has fallen by about 10 billion euros." He said that Daimler can hold up the possible fines and compensation, because, "Before, they made huge profits and handed in the money. They are big companies that can withstand heavy burdens."
Volkswagen also expressed a silent attitude toward the allegations that German automakers formed a monopoly relationship, while defending the information between them. After holding a special meeting of the board of supervisors, Volkswagen reported that “automakers exchange opinions on technical issues to improve the speed and quality of innovation, which is a global practiceâ€. According to Volkswagen, consumers will also benefit from this, because in this way, innovation can be applied faster and more economically than the costly and independent research and development. Volkswagen pointed out that the charging socket of electric vehicles is an example.
BMW Motor Corporation issued a statement on the 23rd denying industry monopoly with its peers. According to the "Süddeutsche Zeitung" report, BMW has suspended some cooperation projects with Daimler, including plans to jointly purchase auto parts and a network construction project for electric vehicle charging stations.
The media broke the news that the German auto industry, which has not yet got rid of the scandals of exhaust emissions, has once again cast a shadow. On the 24th, the shares of major German auto companies plunged. Audi's share price plummeted by more than 5%, Daimler, Volkswagen and BMW also fell more than 2%.
Or face weight penalty
This industry monopoly scandal has caused the German auto industry to be in crisis and attracted the attention of the German Federal Antimonopoly Service and the European Commission. Experts believe that if the report is true, these car companies will face a fine of 10 billion euros. At the same time, calls for reasonable explanations from the levels of trade unions, businesses, consumers and politics are also growing.
The German automotive industry is a business card for the German industry, representing Germany's advanced and rigorous engineering and manufacturing technologies. The exhaust gas detection scandal exposed in 2015 and the cartel case not only caused the entire German automobile industry to face a crisis, but also made the entire German industry face an embarrassing situation. With the fermentation of the event, the Cartel case is causing an uproar in Germany.
The website of the relevant German department has not disclosed the results of the investigation of the public office last year, and there is no progress in the incident. Some analysts pointed out that according to the laws of the EU and Germany, the results of the preliminary inspection do not require inevitable disclosure. Therefore, the existing information disclosed by the media may still be in the stage of preliminary external investigation, which is not enough to determine whether the automobile enterprise is illegal.
German Economy Minister Brigitte Chipris emphasized the seriousness of the allegations: "On this issue, the root of danger is the credibility of the entire German automotive industry."
The German Green Party asked the Bundestag Transport Committee to hold a special meeting. Christian Lindner, chairman of the German Liberal Democratic Party, said the above suspicions were shocking. "If monopoly suspicions are confirmed, this market-breaking principle must not be allowed to continue without impunity."
Klaus Muller, president of the German Federal Consumer Center Federation, said on the 24th that major German automakers may face huge claims from consumers for allegedly the largest cartel case in German history. Muller said that because these automakers are suspected of monopolizing, a large number of consumers have the possibility of buying cars at excessive prices. Therefore, in the future, major automakers may encounter “litigation†and face huge claims. He also said that the German Federal Federation of Consumer Centers is currently promoting a class action lawsuit against these automakers.
The European Commission expressed its shock. According to Reuters news, EU anti-monopoly officials have said that the European anti-monopoly commission and the German anti-monopoly organization have launched a joint investigation on the possible monopolistic behavior of German car companies. The European Commission said on the 22nd that it has been informed of relevant information and is evaluating it. "It is too early to speculate at this stage."
According to the EU's anti-monopoly rules, the company involved may face a fine of 10% of its global turnover. If calculated in this proportion, the Volkswagen Group may face a fine of more than 20 billion euros, Daimler faces 15 billion euros, and BMW faces a fine of more than 9 billion euros.
Some analysts pointed out that there are frequent exchanges between companies in the automotive industry. It will be very complicated and difficult to assess the economic losses caused by these collusion, and there is still a large gray area between legal and illegal cooperation.
Some experts said that legal information exchange solves the problem of information asymmetry, and it is beneficial to enterprises to improve their operational efficiency by reducing inventory, accelerating distribution, and coping with unstable demand. However, if the exchange of information between competitors is aimed at fixing prices, limiting production, and dividing the market, especially when it involves sensitive information such as future expected prices and production or R&D and business strategies, such information exchange is likely to be recognized as The cartel acted and was punished. At the same time, the sales network of these car giants is spread all over the world. If German law enforcement agencies determine that the actions of the three German car companies are illegal, these car companies may face anti-monopoly investigations and litigation in other countries.
The cartel case may also be a test for the EU legal community. The German car companies involved in the cartel monopoly were all reported by the media. Ford Europe and Opel, which had previously been owned by General Motors of the United States, were rejected by secret organizations. The German automotive industry is very "ununited" at this point.
Some analysts pointed out that the EU anti-monopoly organization has always emphasized its independence and is not affected by the outside world. Its anti-monopoly department has investigated the anti-monopoly cases involving a series of US companies such as Apple, Google, Amazon and McDonald's. The investigation of the car companies will, to a certain extent, explain to the outside world the position of the EU anti-monopoly organization on large European companies that violate regulations.
No future diesel car
Whether or not the behavior of these auto giants is recognized as a monopolistic act, its collusive behavior undoubtedly buryes hidden dangers for many problems, such as the "emission door" scandal of diesel exhaust.
In September 2015, the Volkswagen “Drainage Gate†was exposed in the United States. The US Environmental Protection Agency has designated the public to install cheating software on some diesel vehicles through exhaust gas detection. The exhaust emissions of vehicles are qualified, but the number of pollutants actually removed exceeds several times or even several times. Volkswagen subsequently admitted to installing the software on 11 million diesel vehicles sold worldwide, including Volkswagen, Audi, Seat, Porsche and many other brands. In January of this year, Volkswagen admitted three counts of fraud in the United States. The amount of fines and indemnities that Volkswagen has to pay for the “emissions gate†is also snowball-like, which is close to $25 billion.
Recently, the “emission door†scandal of diesel exhaust has continued to ferment in Germany. After the public, Daimler and Audi also carried out a large-scale recall. Daimler recently announced the recall of 3 million diesel vehicles in Europe. Audi also announced on the 21st that it recalled 850,000 diesel vehicles worldwide.
According to media reports, these auto giants have sold cars with harmful gases exceeding the standard for nearly 10 years, and the actual pollution caused by the environment is shocking. The Bavarian State Council of Germany recently announced the air pollution study in Munich and found that air pollution in some parts of Munich exceeded the standard. The main roads of the city of Munich and the main streets of the inner city have serious air pollution, and the culprit of urban pollution is the old diesel cars.
Around the "emission door" of diesel exhaust, the investigation of many German automakers by relevant institutions is still in progress. In Europe, the emergence of this problem has caused the opposition of diesel vehicles to increase, which has promoted the government's accelerated tightening of diesel vehicle supervision and will have a major impact on the entire European automotive industry.
In many European cities, including Porsche's headquarters in Stuttgart, they are calling for a ban on diesel vehicles. Germany's "Automotive Weekly" reported that the Bavarian State of Germany decided to implement a number of measures to reduce air pollution, including car companies must recall, repair diesel vehicles, public transport to electric vehicles. The Bavarian state government explicitly requires the car company to recall and repair the diesel engine of the Euro 5 engine. The relevant costs are borne by the car company. In order to avoid the diesel ban in Munich, BMW and Audi have announced that they will recall half of the Euro 5 diesel vehicles sold in Germany.
In the longer term, there may be no future for diesel vehicles and even fossil fuel vehicles. The British government announced on the 26th that it will ban the sale of gasoline and diesel vehicles in 2040. Only new energy-environment vehicles such as electric vehicles will be allowed to be sold in the market. The British government hopes to ensure that there will be no more gasoline and diesel vehicles on the road in 2050. Earlier this month, France announced that it would ban the sale of diesel and petrol vehicles by 2040. Norway has also previously announced that it will ban the sale of fossil fuel vehicles by 2025.
This means that German car companies are under great pressure to accelerate the transformation of new energy vehicles. At present, diesel vehicles are also a major source of sales for German car companies. According to statistics, in the second quarter of this year, diesel vehicles accounted for about 47% of the sales of cars in Europe's five major markets. This means that German car companies can't get rid of the dependence on diesel car sales in a short time.
In Germany, the issue of whether to ban the sale of diesel vehicles between the government and automakers is still under negotiation. The German automotive industry still does not want local and federal governments to impose bans on diesel vehicles. According to data from the Munich Economic Research Institute, if Germany bans internal combustion engine vehicles including diesel and petrol vehicles by 2030, there will be 600,000 jobs in Germany. According to the website of the German Voice Radio, a government source said that the German government and the automotive industry have agreed to a diesel vehicle rescue plan, which is scheduled to be launched in early August.
At present, major auto manufacturers have begun to deploy new energy vehicles, and electric vehicles are currently the most important direction. German BMW Motors announced this week that it will start producing pure electric Mini cars at the Oxford plant in the UK in 2019. Earlier this month, Swedish automaker Volvo said that all new models of the company will be equipped with electric engines from 2019. Volkswagen’s plan announced last year showed that its annual production of electric vehicles will reach 2 million to 3 million units by 2025, accounting for about 25% of its total production.
Volkswagen CEO Matthias Miller has said that although the internal combustion engine will have a future of at least 20 years, it is clear that the future belongs to electric vehicles.
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