ACCC and Volkswagen reach 'dieselgate' settlement

The Australian consumer watchdog has settled a drawn-out case with Volkswagen's Australian subsidiary over allegations the car-maker fitted vehicles with emissions cheating devices.

A week after Volkswagen Group Australia settled five major Australian class action lawsuits, agreeing to pay owners of affected vehicles $1400 each, the Australian Competition and Consumer Commission (ACCC) has reached an in-principle agreement that will be hashed out in the Federal Court next week.

Details of the agreement between the ACCC, Volkswagen and Audi will remain confidential until the hearing next Thursday (October 3), but a financial penalty will be involved.

The ACCC first brought its Federal Court civil action in September 2016, when it sought significant penalties along with corrective advertising from Volkswagen for what it described as “extraordinary conduct of a serious and deliberate nature”.

Volkswagen originally pledged to fight the case.

The class action lawsuits that settled in Australia last week are set to cost VW between $87 million and $127 million before court costs. However, a member of last week’s class action settlement told The Australian Financial Review he hoped the ACCC case would secure an admission of guilt from Volkswagen, after the class action case did not.

Volkswagen Australia expects the ACCC settlement to be complete before year’s end, while the class action will carry out to sometime in 2020.

About 100,000 consumers in Australia were said to be affected by the ‘dieselgate’ scandal, which applied to diesel models built between 2008 and 2015 fitted with VW’s EA189 engine. They include the Amarok, Caddy, Eos, Golf, Jetta, Passat, Polo and Tiguan.

The ACCC originally alleged 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.

The software caused the vehicles to produce lower nitrogen oxide (NOx) 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.