ACCC Update on VW Vehicle Testing Defeat Devices

Tuesday 6 October 2015 @ 10.45 a.m. | Legal Research | Trade & Commerce

The Australian Competition and Consumer Commission (ACCC) has provided an update on its investigation into Volkswagen Group (VW) for possible use of “defeat devices” in Australia, following significant public interest.

The German auto maker has said it will repair 11 million vehicles following revelations that the devices were fitted to diesel vehicles, but its local arm has yet to confirm whether Australian motorists will be affected.

Volkswagen has set aside 6.5 billion euros ($7.2 billion) to help cover the cost of the defeat devices case, but the final bill could potentially be much higher.

What is a “defeat device”?

Defeat devices can be used to make vehicles perform better in testing than in real world operations.

When the cars were operating under controlled laboratory conditions - which typically involved putting them on a stationary test rig - the device appears to have put the vehicle into a sort of safety mode in which the engine ran below normal power and performance. Once on the road, the engines switched from this test mode.

Volkswagen Australia will be subject to immediate legal action if it doesn't come clean over its emissions-cheating when testing in a meeting held with the Federal Government and the ACCC.

Statement from VW Australia

The local branch of the car-maker said in a statement released on 3 October 2015:

“Volkswagen Group Australia (VGA) met with the relevant government authorities yesterday to advise them of its strategy in Australia to address concerns that have been raised around the world regarding the diesel emissions issue. In its first step, effective immediately VGA has temporarily suspended the sale of affected vehicles fitted with 1.6 or 2.0-litre EA189 diesel engines. The suspension will remain until the emission issues are addressed in those vehicles.”

The ACCC’s Reaction

Commenting in a recent ACCC Media Release, the ACCC Chairman, Rod Sims said:

“This enforcement investigation is a priority for the ACCC. We are very concerned about the potential consumer and competition detriment from this alleged conduct … First, using defeat devices is specifically prohibited under the Australian Design Rules, which are picked up as Australian Consumer Law (ACL) [contained in Sch 2 to the Competition and Consumer Act 2010 (Cth)] mandatory safety standards … As the enforcer of the ACL, the ACCC can take action against any corporation that has breached mandatory standards ... Secondly, cars are a big purchasing decision and claims that relate to environmental benefits or fuel efficiency can influence consumer choice … Businesses must be able to substantiate any claims they make. The ACCC will be seeking marketing materials from VW Group and will not hesitate to take action if consumers were exposed to false, misleading or deceptive representations.”

Possible Penalties for the Breaches

The maximum penalty per breach of the ACL is $1.1 m for a corporation. VW Australia is yet to clarify if it has supplied cars or car components into the Australian market that use defeat devices.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

Sources:

Related Articles: