Turkey: New Horizons In Competition Law; Diesel Emissions Scandal

"No one is as blind as someone who doesn't want to see."

İbni Sina

Introduction

The United States of America Directorate of Environmental Protection announced in 2015 that the exhaust emission tests performed on Volkswagen ("VW") diesel engine vehicles at the factory exit point were faulty1. Following this announcement, it was alleged that many German Automakers, amongst which BMW, Daimler, and VW groups also take part, had been manipulating exhaust emission rates. This situation rendered the millions of vehicles produced worldwide by the above-mentioned automakers controversial. It is alleged, however, that the exhaust emission tests performed at factory points of exit on 11 million vehicles manufactured only by VW were faulty.

In fact, many vehicles were also recalled due to airbag, gearbox problems, or other faulty issues, such as braking systems. However, the incident referred to as the "Diesel Emission Scandal" involves very different aspects than these noted issues. According to the alleged claims, the subject vehicles' carbon emissions are being deliberately understated through software placed in the diesel engine vehicles. In other words, the manufacturers are deliberately understating the exhaust emission rates through software, thereby deceiving the consumers.

The Diesel Emission Scandal consumed the agenda of public opinion over the course of time. The stock share values of the aforesaid automakers decreased by the billions of dollars as a result of this scandal. Certain German cities imposed several prohibitions with respect to allowing entry of these diesel vehicles. However, the most important development was the VW settlement announcement regarding the claims for damages published by the USA Directorate of Environmental Protection2. Thus, VW settled, with prejudice, agreeing to pay billions of dollars in compensation by accepting the claims against it.

On 18 September 2018, namely, approximately three years after the Diesel Emission Scandal outbreak, the European Union Commission ("EU Commission") announced that it had opened an investigation with respect to BMW, Daimler and VW (Volkswagen, Audi, Porsche) on charges of violating competition laws3. The EU Commission will investigate whether the automakers are part of an agreement that eliminates competition between them regarding the development and dissemination of emission-reducing technologies for gasoline and diesel vehicles. Thus, it will be examined whether automakers that are competitors for the development of emission technologies in gasoline and diesel vehicles are violating the competition laws by eliminating the technological competition between them.

Diesel Emission Scandal Investigation by EU Comission

The EU Commission took its first action regarding the Emission Scandal in October, 2017. The EU Commission announced on 20 October 2017 that they conducted on-the-spot investigations on the suspicion that these German Automakers are violating the competition laws4. The EU Commission closely followed the developments regarding the Diesel Emission Scandal over the course of time, and continued to monitor events as they unfolded. However, in its press release dated 18 September 2018, the EU Commission clearly indicated that at this time, automakers, such as VW, BMW and Daimler are being investigated regarding the Diesel Emission Scandal.

The statement of the EU Commissioner for Competition, Margrethe Vestager, concerning this matter is also remarkable. Vestager stated that they have investigated the claim that the above-mentioned automakers are violating the competition laws with respect to the development of emission-reducing technologies used in gasoline and diesel vehicles. Vestager qualified this claim as an infringement of the competition law that prevents consumers from purchasing lower pollutant-emitting vehicles, despite what is technologically available.5 Therefore, an interesting investigation concerning the unusual claim that the competition laws are being violated by preventing technological development and restricting the competition between the competitors was birthed.

The EU Commission is also investigating the claim that BMW, Daimler, Volkswagen, Audi and Porsche, which are commonly referred as the "Circle of Five," are exchanging information with respect to clean vehicle technologies through various meetings held amongst them. The EU Commission is specially concentrating on two emission systems used in the European Union. Whilst the SCR  (Selective Catalytic Reduction)  system is used to decrease harmful nitrogen oxide oscillation in diesel passenger vehicles, the system called OPF  (Otto Particulate Filters)  decreases the harmful particles' oscillation in gasoline passenger vehicles.

If the BMW, Daimler and VW groups have formed an agreement to restrict technical development, this will be in violation of Article 101 of the Lisbon Treaty, through an agreement or a concerted action. In the relevant announcement of the EU Commission, it is also stated that at this stage, there is no clear evidence that these manufacturers used deceptive tools to mislead exhaust emissions tests, or that there was a consensus to this end amongst the said automakers. However, this is undoubtedly one of the first issues to be examined in the investigation phase.

Whilst the EU Commission's main claim in the scope of the investigation concerns emission control systems, it is alleged that the automakers are also exchanging information on other matters, as well. For example, it is claimed that the mentioned undertakings are exchanging information on technical matters, such as common technical standards on automotive spare parts, as well as procedures for vehicle tests. In addition, it is known that the mentioned enterprises held various meetings on technical issues, such as sun roof and cruise control systems. It is also claimed that the Federal German automakers expanded their coordination to areas related to vehicle safety, such as crash tests, and shared their knowledge and experience in this area in a common pool.

Conclusion

The Diesel Emission Scandal, which started in 2015, radically changed the future plans of the relevant market's players, particularly the German Automakers, eespecially with respect to the developments in the USA and Germany, which are quite remarkable. In the USA, the settlement negotiations, on behalf of millions of consumers, continue6. Recently, this issue is more current, in Germany. For example, the Braunschweig Prosecutor's Office levied an administrative fine on the VW Group of EUR 1 billion7. VW announced that it would not object to this penalty, and accepted its responsibility. The Prosecutor's Office stated that between 2007 and 2015, approximately 10.7 million vehicles, worldwide, have installed software that manipulates emission rates. In addition, the price paid by the VW Group for the Diesel Emission Scandal reached EUR 25.5 billion. In addition to the compensation paid to the consumers, this amount includes the administrative fines that were paid.

In May, 2018, Hamburg was the first major city that introduced restrictions on the entry of diesel vehicles into the city8. Diesel vehicles were banned, and warning signs were placed in various parts throughout Hamburg9. In April, 2019, the Diesel Ban will enter into force in Cologne and Bonn10. It was decided to apply various bans on diesel vehicles in other cities, such as Berlin, Frankfurt, Gelsenkirchen, Essen, Mainz and Stuttgart11. In short, the Diesel Emission Scandal is rapidly growing and deepening.

The EU Commission's investigation on the Diesel Emission Scandal is a challenging process, as it will have to distinguish the negotiations between the automakers on technical issues, from information exchange, which is an infringement of competition law. Although the rules of competition law allow cooperation between enterprises for the purpose of technical development, this does not include infringements of competition law. The EU Commission will have to examine a very interesting claim of an infringement of competition law on the basis of the investigation, particularly, the restriction of competition through the prevention of technical development. Thus, this will be the precursor of new developments in competition law.

Footnotes

1 See also for detailed information,  https://www.bbc.com/turkce/ekonomi/2015/09/150922_volkswagen_emisyon   (Access date: 28.11.2018).

2 See also for detailed information,  https://www.epa.gov/enforcement/volkswagen-clean-air-act-civil-settlement#civil   (Access date: 7.12.2018).

3 http://europa.eu/rapid/press-release_IP-18-5822_en.htm   (Access date: 7.12.2018).

4 http://europa.eu/rapid/press-release_STATEMENT-17-4084_en.htm   (Access date: 7.12.2018).

5 See also for detailed information.  http://europa.eu/rapid/press-release_IP-18-5822_en.htm   (Access date: 7.12.2018).

6 https://www.epa.gov/enforcement/volkswagen-clean-air-act-civil-settlement#civil   (Access date: 7.12.2018).

7 https://www.morgenpost.de/wirtschaft/article214571605/VW-muss-in-der-Dieselaffaere-eine-Milliarde-Bussgeld-zahlen.html   (Access date: 10.12.2018).

8 https://www.zeit.de/mobilitaet/2018-05/diesel-fahrverbote-hamburg-stickstoffbelastung   (Access date: 10.12.2018).

9 http://www.spiegel.de/auto/aktuell/diesel-fahrverbote-in-hamburg-ab-31-mai-a-1209050.html   (Access date: 10.12.2018).

10 https://www.faz.net/aktuell/wirtschaft/diesel-affaere/diesel-fahrverbote-in-koeln-und-bonn-von-april-2019-an-15880711.html   (Access date: 10.12.2018).

11 https://www.adac.de/rund-ums-fahrzeug/abgas-diesel-fahrverbote/fahrverbote/dieselfahrverbot-faq/   (Access date: 10.12.2019).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions