ACCC takes VW to court

The Australian Competition and Consumer Commission (ACCC) has instituted legal proceedings in the Federal Court against Volkswagen AG and its Australian subsidiary over the Dieselgate scandal, alleging they engaged in "misleading or deceptive conduct".

The nation's top consumer watchdog also claims Volkswagen "made false or misleading representations and engaged in conduct liable to mislead the public in relation to diesel vehicle emission claims".

The ACCC alleges that between 2011 and 2015 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.

The ACCC alleges both VW AG and Volkswagen Group Australia (VGA) "engaged in misleading conduct by representing that the vehicles complied with Australian and European standards and all Australian regulatory requirements when, because of the defeat software, that was not the case".

It says that, using information provided by VW AG, VGA marketed the vehicles in Australia as being environmentally friendly, clean burning, low-emission and compliant with stringent European standards when this was not the case under normal driving conditions.

“The ACCC alleges that Volkswagen engaged in multiple breaches of the Australian Consumer Law by concealing software in their vehicles to cheat emissions testing and misleading consumers about the vehicle’s compliance with standards and emission levels during on-road conditions,” said ACCC Chairman Rod Sims.

“Consumers rightly expect that their vehicle’s emissions would operate as advertised during their day-to-day use and we allege that this was not the case with more than 57 000 vehicles sold in Australia by Volkswagen over a five-year period.”

“These allegations involve extraordinary conduct of a serious and deliberate nature by a global corporation and its Australian subsidiary misleading consumers and the Australian public. We expect higher standards of behaviour from all companies that supply to Australian consumers,” Mr Sims said.

The ACCC is seeking declarations, pecuniary penalties, corrective advertising, findings of fact and costs.

In response, VGA today issued a statement saying it "does not think that the court action announced today by the Australian Competition and Consumer Commission provides any practical benefit to consumers because software solutions for cars affected by the voluntary recall are expected soon".

About 90,000 Volkswagen, Audi and Skoda vehicles are affected by the Dieselgate emissions issue in Australia, the majority of them VWs including the Amarok, Golf, Polo, Passat, Tiguan, Jetta, CC, EOS and Caddy.

Despite emerging about a year ago, so far only the Amarok ute has been recalled to fix the problem, with less than half of the 8694 affected vehicles fixed since February.

Two weeks ago, VGA blamed the federal government's Department of Infrastructure and Regional Development (DIRD) for the delay in approving a recall to fix the software in the remainder of affected vehicles.

The German car-maker said it first filed details with the agency for rectification work of a further 70,000 vehicles more than two months ago.

DIRD is yet to approve any further recalls and told motoring.com.au at the time that it requires more information from the car-maker because VW's initial submission did not address all matters around the recall.

“This case is a particularly complex rectification process,” said a DIRD spokesperson last month. "The emissions system in a vehicle is technically very complex, and significant test information is required to ensure that any emissions cheating software is removed.

“Any fix that changes the emissions control system has the potential to have negative impacts on the vehicle, especially in relation to fuel consumption and longevity of parts.

“This information is technically complex and the department has had to return to Volkswagen and approach vehicle regulators in other countries to obtain sufficient information to make an informed decision in the best interests of Australian vehicle owners.”

Today VGA reiterated its statement that "software solutions" for 70 per cent of affected vehicles have been submitted to the DIRD and that it "expects approval of these imminently and for all remaining vehicles before the end of this year".

VGA says the software upgrade that is already being implemented in Amarok utes was tested and shown to conform to all relevant Australian standards as a condition of federal government approval, and that it was in the best interests of its customers for DIRD to approve similar recalls on the remaining affected vehicles.

“The best outcome for customers whose vehicle is affected is to have the voluntary recall service updates installed,” said VGA managing director Michael Bartsch today.

“This takes 45 minutes. It is free of charge. We will be contacting owners of affected vehicles to arrange an appointment with their dealer.”

VGA, which stresses it is an Australian registered company that indirectly employs more than 3000 staff in 103 independent dealerships, says it is reviewing ACCC's claims and will defend class action suits brought by private plaintiffs in the Federal Court. The case resumes tomorrow in Sydney.