BUSINESS

FTC set to review alleged cartel by German carmakers

By Korea Herald
  • Published : Jul 31, 2017 - 17:21
  • Updated : Aug 1, 2017 - 10:04
A Seoul law firm has requested the nation’s antitrust agency look into allegations that German carmakers colluded on diesel control and other parts for decades, raising concerns such a cartel could have restricted the principle of free market competition here.

Ha Jong-sun, a lawyer at Barun Law Firm, said Monday that he had filed a petition against five German car brands operating here for an investigation. The list included Volkswagen, Audi, Porches, Mercedes-Benz and BMW.

A spokesman at the Fair Trade Commission said it has received the letter, but declined to comment on whether it plans to open a formal investigation. Such cases have been handled by FTC’s international cartel department, he said, adding that the agency is entitled to probe possible colluding cases by foreign companies and their products manufactured or produced overseas, if it has inflicted any damages to South Korean market.

(Yonhap)

If found to have colluded, the FTC can slap penalties of up to 10 percent of their revenues, and file complaints with the prosecution. But it is unclear whether the local offices or those in the headquarters are responsible in cartel cases discovered overseas, the official added.

The rationale behind the Korean lawyer’s petition is that Korean consumers had to pay around 5 million to 10 million won ($4,470-$8,940) more for German diesel cars than gasoline-powered vehicles, despite how the carmakers allegedly saved manufacturing cost by reducing the size of fluid tanks to save space -- a key point in the fake-emissions case.

“They sold illegal cars that gained approval by cheating on emissions system at a high price here,” he said.

Ha told The Korea Herald that he is preparing to bring cases to the civil court against BMW and Mercedes-Benz, in addition to the ongoing legal battles against Volkswagen and Audi. He has led civil cases against Volkswagen and Audi on cheating emission case from last year.

“Though the class action suit is not recognized in the South Korean court, we’ll have many groups of people stepping up for legal actions in a series of trials,” he said.

The move came as authorities in Germany and the European Commission have begun reviewing information from a local magazine that suggests the five carmakers may have colluded for decades to prevent competition.

According to Der Spiegal, the five German car manufacturers started to collude in the 1990s on their technology, costs, suppliers and strategies by holding a series of secret meetings. They may have worked to coordinate emissions controls in diesel engines, particularly the size of tanks for AdBlue fluid for diesel vehicles, known as a core component in the fake-emissions case that has rattled Volkswagen since last year, the report claimed.

The German magazine reported the five companies had agreed to manufacture an 8-liter tank to reduce costs and save space for the trunk to gain an upper hand in competition with gasoline-powered vehicles. But the tank, which should be at least 19 liters to enable selective catalytic reduction systems that reduce nitrogen oxide from diesel engine, was not enough to rein in emissions, it said. And the five may have collaborated on software manipulation methods for diesel engine development, the Germany weekly reported. Volkswagen and Daimler have refused to comment, while BMW outright denied the allegations.

The cartel allegation appears to thrust the German auto titans into a deeper quagmire, as the US Department of Justice has reportedly begun informally looking into the case.

Meanwhile, an official at BMW Korea denied the allegation, though its local office had no official comment on the case brought to the FTC. Mercedes-Benz Korea could not be immediately reached for comment.

By Cho Chung-un (christory@heraldcorp.com)