Volkswagen Aktiengesellschaft v ACCC [2021] FCAFC 49: Appeal Against Penalties Dismissed

Monday 12 April 2021 @ 2.08 p.m. | Legal Research | Trade & Commerce

In Volkswagen Aktiengesellschaft v ACCC [2021] FCAFC 49 (9 April 2021), the Full Federal Court has dismissed an appeal by Volkswagen Aktiengesellschaft ("Volkswagen") against the penalties handed down for making false representations in regards to its compliance with Australian diesel emissions standards.

The Australian Competition and Consumer Commission (“ACCC”) Media Release  commented that the Full Federal Court “upheld the $125 million penalty imposed ... and held that the $125 million penalty ‘was not excessive, let alone manifestly excessive’.”


In December 2019, Federal Court imposed penalties of $125 million following its decision in ACCC v Volkswagen Aktiengesellschaft [2019] FCA 2166 (20 December 2019). Volkswagen sought to appeal this decision on seven grounds. Part of Volkswagen's appeal included an appeal against the fine, stating that the fine was “manifestly excessive” as the company had already been penalised in other jurisdictions, including a US$2.8 billion fine in America. Volkswagen sought orders that the Court impose a $75 million penalty amount instead, which had been jointly put to the Court by Volkswagen and the ACCC.

The penalties were imposed under the previous Australian Consumer Law (“ACL”) penalty regime within the Competition and Consumer Act 2010 (Cth), which specified a maximum penalty of $1.1 million per contravention.

Since then, legislative amendments have come into effect, and the maximum penalty for certain contraventions under ACL is now the higher of:

  • $10 million; or
  • Three times the profit or benefit obtained; or
  • If the profit or benefit cannot be determined, 10% of the company’s annual Australian sales turnover.

In its media release, the ACCC said that between 2011 and 2015, Volkswagen admitted to making false representations when seeking to import more than 57,000 diesel vehicles into Australia and when listing those vehicles on the Australian Government’s Green Vehicle Guide website. Volkswagen did not disclose that the vehicles were fitted with two-mode software. The cars would operate in one mode for the purposes of emissions testing and in the other when being driven. If tested in the second mode, the vehicles would have failed Australian emissions standards.

Comments and Reaction

ACCC Chair Rod Sims said in the Media Release:

“$125 million is the highest penalty ever handed down for breaches of the Australian Consumer Law. It’s about five times the previous highest penalty, and that reflects just how egregious Volkswagen’s conduct was. This record penalty increases the signal to large corporations that they could face massive penalties for misleading consumers about their products.”

Mr Sims further said:

“Volkswagen misled consumers and regulators about whether the diesel vehicles complied with environmental standards. It deprived consumers who may have deliberately sought to buy a low emissions vehicle, of the ability to make an informed decision.”

In their judgement, Wigney, Beach and O’Brien JJ said at [paras 212-213]:

“There is, in all the circumstances, no basis for concluding that the penalty of $125 million was excessive, let alone manifestly excessive. Volkswagen’s contraventions were, for all the reasons given by the primary judge, extremely grave and serious contraventions of the Consumer Law. There were very few mitigating circumstances … the imposition of a penalty of $125 million could not be said to be manifestly excessive.”

Response from Volkswagen

A spokesperson for Volkswagen commented in an Australian Financial Review article that:

“Volkswagen AG remains firmly of the opinion that the penalty of $75 million agreed in principle with the Australian Competition and Consumer Commission to resolve the regulatory proceedings in the Federal Court was a fair amount. Volkswagen AG will review the decision of the Full Federal Court and consider its options further.”

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