Dieselgate Puts VW in Crosshairs of Australia’s Competition Commission

Volkswagen is faced with potentially heavy fines following charges in Australia related to its global Dieselgate emissions scandal.

The Australian Competition and Consumer Commission is charging VW and its Australian subsidiary with engaging in misleading or deceptive conduct, making false or misleading representations and engaging in conduct liable to mislead the public in relation to diesel vehicle emission claims.

“I think this is a 10-out-of-10 matter, in terms of the seriousness of the allegations we are making,” ACCC Chairman Rod Sims tells the Sydney Morning Herald newspaper. “I think it is fair to say it is about as serious as it gets.”

There was no immediate official comment from VW, which claims it has not broken local laws. But Australian Managing Director Michael Bartsch tells the newspaper the action taken in the Federal Court of Australia is unnecessary and will not help consumers.

“The best outcome for customers whose vehicle is affected is to have the voluntary recall service updates installed,” Bartsch says. “This takes 45 minutes. It is free of charge. We will be contacting owners of affected vehicles to arrange an appointment with their dealer.”

Sims tells reporters there is a point to be made.

“What we’re trying to achieve here is deterrence, a declaration about what was done here, we’re trying to achieve a significant penalty and we try and do that in the most focused way we can,” he is quoted as saying.

The competition watchdog accuses VW of engaging in misleading conduct by installing and not disclosing the existence and operation of defeat software that controlled the operation of the vehicles’ exhaust-gas-recirculation system.

The software caused the vehicles to produce lower nitrogen oxide emissions when subject to test conditions in a laboratory but switched to a different mode under normal on-road driving conditions, resulting in significantly higher NOx emissions being produced by the vehicles.

ACCC says in a statement VW engaged in misleading conduct by representing that the vehicles complied with Australian and European standards and all Australian regulatory requirements.

The ACCC is seeking fines and corrective advertising.

The VW-branded vehicles involved are the Amarok, Caddy, Jetta, Passat, Tiguan and CC equipped with 2.0L and 1.6L diesel engines.

Private class-action lawsuits also are before the federal court in relation to VW, Audi and Skoda vehicles.

VW, headquartered in Sydney, might have heard the cheering from the 9 million-member Australian Automobile Assn.’s headquarters in Canberra.

The AAA has waged a bitter campaign against VW, which last month saw VW refusing to enter its vehicles in the association’s annual car of the year competition after the AAA demanded – and VW refused – that Aussie owners get the same compensation as that offered to American owners.

In the U.S., VW diesel owners can choose between a buyback or a fix and also receive compensation ranging from $5,100 to $10,000 per owner. Those who owe more than their vehicles are worth get their loans paid off.

AAA Chief Executive Michael Bradley says it’s fitting the legality of the company’s actions be tested against Australian law.

“But irrespective of whether or not the federal court finds the company guilty of a breach of law, Volkswagen Group is clearly guilty of breaching the trust of the Australian owners of tens of thousands of vehicles,” Bradley says in a statement.

The Australia government also comes under AAA’s steely stare.

“Volkswagen’s actions underline how the Australian government has neglected its responsibility to properly ensure compliance with vehicle design standards,” Bradley says.

“Current consideration of new emissions laws only heightens the need for government to begin properly measuring what it seeks to manage,” Bradley says.

The AAA says it also is looking for clarification regarding the alleged actions of other VW Group brands not currently subject to the ACCC’s proceedings.