VW Taken to Court by ACCC Over Misleading Diesel Data

Friday 2 September 2016 @ 8.25 a.m. | Legal Research | Trade & Commerce

It has been revealed that the Australian Competition and Consumer Commission (ACCC) has brought legal proceedings against car manufacturer Volkswagen (VW) over allegations that it concealed software in its vehicles to cheat emissions testing and mislead consumers.

The action covers 10 brands including Volkswagen's biggest selling models: Golf, Passat, Polo and Amarok.

Background to the Case

As previously stated at TimeBase, in February 2016, Volkswagen Group Australia Pty Ltd (VGA) announced the implementation of a recall which was initiated in October 2015, with rectification for affected Amarok vehicles. VGA is seeking approval from the Department of Infrastructure and Regional Development for rectification of other affected vehicles across all brands.

Private class actions seeking redress for consumers affected by this conduct are currently before the Federal Court in relation to Volkswagen, Audi and SKODA branded vehicles. VWAG is the world’s second-largest car manufacturer by sales volume in the world.

The emissions scandal erupted in September 2015 when the US Environmental Protection Agency discovered many Volkswagen cars sold in America were fitted with software controlling their diesel engines that could detect when they were being tested and lower emissions during the tests.

The Allegations

The ACCC alleges that between 2011 and 2015 Volkswagen engaged in misleading conduct by installing and not disclosing the existence and operation of "defeat" software, which controlled the operation of the vehicles' exhaust gas recirculation system. Volkswagen revealed in 2015 that the software is installed in around 11 million vehicles worldwide.

Comment from the ACCC

ACCC Chairman Rod Sims said the allegations involved extraordinary conduct of a serious and deliberate nature by a global corporation and its Australian subsidiary, misleading consumers and the Australian public:

"The ACCC alleges Volkswagen engaged in multiple breaches of Australian Consumer Law by concealing software in their vehicles to cheat emissions testing and misleading consumers about the vehicle's compliance with standards and emission levels during on-road conditions. We allege that this was not the case with more than 57,000 vehicles sold in Australia by Volkswagen over a five-year period."

Each contravention under the act carries a maximum penalty of $1.1m, with the court having discretion to assess how many contraventions will be considered and the ultimate scale of the penalties.

Response from VW Australia

Volkswagen Australia said the ACCC's action did not provide any practical benefit to consumers.

It said new software for the cars affected by the recall was expected to be approved by Federal Government agencies by the end of 2016. Volkswagen Australia Managing Director Michael Bartsch said:

"The best outcome for customers whose vehicle is affected is to have the voluntary recall service updates installed."

Volkswagen Australia said it is now reviewing the claims made by the ACCC. It is also defending class action suits brought by private plaintiffs in the Federal Court. Volkswagen has so far set aside $25 billion as part of a global recall program to fix the problem.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

Sources:

ACCC takes action against Volkswagen over diesel emission claims – ACCC Release MR 157/16

ACCC takes Volkswagen to court over diesel emission claims – smh.com.au

Volkswagen emissions scandal: VW taken to court by ACCC over diesel data - abc.net.au 

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