Volkswagen loses dieselgate appeal

UPDATED 13/04/2021 9:00am: Volkswagen AG will consider its options following yesterday's Federal Court ruling, saying in a statement to carsales: "Volkswagen AG remains firmly of the opinion that the penalty of $75 million agreed in principle with the Australian Competition and Consumer Commission to resolve the regulatory proceedings in the Federal Court was a fair amount. Volkswagen AG will review the decision of the Full Federal Court and consider its options further.”

Original article published 12/04/2021: Dieselgate continues to bite Volkswagen.

The Federal Court has dismissed an appeal by Volkswagen AG against a $125 million penalty for making false representations about compliance with Australian diesel emissions standards.

In dismissing the appeal, the court upheld the penalty and ruled it “was not excessive, let alone manifestly excessive”.

The biggest ever fine for breaches of the Australian Consumer Law (ACL) was handed down against the German car-maker in December 2019.

It came after Volkswagen had gone to the Federal Court jointly proposing with the Australian Consumer Commission (ACCC) a $75 million fine. But the penalty was bumped to $125 million and VW appealed in February 2020.

Previously, the highest automotive fine handed out under ACL was to Ford for $10 million over its handing of issues with its PowerShift dual-clutch gearbox.

Volkswagen was fined because it admitted to making false representations when seeking to import more than 57,000 diesel vehicles between 2011 and 2015, and when listing those vehicles on the Australian government’s Green Vehicle Guide website.

Volkswagen did not disclose that the vehicles were fitted with two-mode software, which caused them to operate in one mode for the purposes of emissions testing and another when being driven.

If tested in that second mode, the vehicles would have breached Australian emissions standards.

“Volkswagen misled consumers and regulators about whether the diesel vehicles complied with environmental standards,” ACCC Chair Rod Sims said in a press release.

“It deprived consumers who may have deliberately sought to buy a low emissions vehicle, of the ability to make an informed decision.

“The ACCC was prepared to settle its proceedings against Volkswagen because it considered that the proposed penalty of $75 million was significant and appropriate in the circumstances which included Volkswagen’s admission of liability. However, this is ultimately a decision for the Court to make.”

Separate to this court action, VW reached a settlement with two dieselgate class actions in Australia in 2019 and paid out up to $127 million, amounting to about $1400 per vehicle.

Volkswagen AG is the global parent of local distributor Volkswagen Group Australia.

The dieselgate scandal first broke in September 2015 and prompted massive legal response from governments and private citizens globally. By mid-2020 it was estimated to have cost VW more than $US33 billion ($A43b).