German car-maker Volkswagen has been ordered this morning by the Federal Court of Australia to pay A$125 million (near $86.2 million) in fines for making false statements about its cars to Australian consumers.
The making of false statements by businesses to consumers is forbidden by the Australian Consumer Law.
Although Volkswagen is primarily known as a car maker, its product range includes pick-ups, buses and heavy trucks.
Volkswagen imported more than 57,000 vehicles into Australia between 2011 and 2015.
The vehicles had specialized software installed that caused them to produce lower nitrogen oxide emissions when being tested in the laboratory. This was called “Mode 1”. However, the software could detect, in “Mode 2” when the car was being driven normally on the road. In Mode 2 the amount of emissions were significantly higher than in Mode 1.
Volkswagen engineers designed the emissions cheating software in 2006. However, by 2014, independent scientists and U.S. regulators had noticed discrepancies between European and U.S. models and also between laboratory and various live road tests.
The scandal broke when the U.S. Environmental Protection Agency issued a violation notice to Volkswagen alleging that the auto-maker had breached the U.S. Federal Clean Air Act.
A recall campaign was begun by Volkswagen in 2016 and it is now facing legal and regulatory action around the world.
The Australian Competition & Consumer Commission, a local regulator, brought a legal action in Australia against the company. Commenting on the deception, ACCC chairman Rod Sims, said, “essentially, Volkswagen’s software made its diesel cars, utes and vans operate in two modes. One that was designed to test well and another that operated when the vehicle was actually being used and which produced higher emissions. This was concealed from Australian regulators and the tens of thousands of Australian consumers driving these vehicles”.
Today’s fine imposed in Australia is the biggest ever fine imposed for breaches of Australian Consumer Law.
“This penalty reflects a trend of ever higher penalties for breaches of Australian consumer law. Today’s $125 million in penalties were imposed under the old penalty regime of up to $1.1 million per breach. Under laws that came into effect later last year, maximum penalties are now the higher of $10 million, three times the profit or benefit obtained or, if this cannot be determined, 10 per cent of turnover,” Sims said.
Today’s court orders were made against the German company Volkswagen AG; no orders were made against its Australian subsidiary. The orders also appear to bring to an end the various regulatory actions against Volkswagen and its subsidiaries in Australia.
However, that is not the end of all legal action in Australia as the existing private class action lawsuits are separate and remain ongoing.
