Emissions cheats face tiny fines in some EU states
By Peter Teffer
EU states have failed to create a consistent legal environment to deter cross-border car companies from using emissions cheating software.
The penalties, which member states themselves agreed to put in place, range from a couple of thousand euro's to several million, EUobserver has found in an investigation.
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Moreover, it emerged that the European Commission has struggled for years to persuade national administrations to send basic information to Brussels about what member states have done to stick to their end of the agreement.
Possible criminal charges were not enough to deter Volkswagen Group (VW) from cheating on emissions tests - this we know after Germany's industrial giant admitted last year it had used so-called defeat devices to achieve better test scores in the laboratory.
But member states' letters uncovered by a freedom of information request, and a table tucked away in the appendix of an EU commission document, provide tangible proof that Europe's penalties can hardly be called dissuasive.
Some countries, including Germany, did not bother to formally inform the Commission about its implementation of the penalty provision until a few months ago - seven years too late.
Last month, non-governmental group Deutsche Umwelthilfe (German Environmental Aid) sent the Commission a complaint that the German government had “failed to fulfil [its] obligation”.
The group wrote that the only option Germany has to punish Volkswagen under its criminal code was by way of a fine of maximum €5,000.
“This sanction is neither effective, proportionate, nor dissuasive,” wrote Jurgen Resch, one of the group's two managing directors.
The three adjectives originate directly from the relevant legislation: Regulation 715/2007.
This piece of text, agreed in 2007 by member states and the EU parliament, states in article 13: “Member states shall lay down provisions on penalties applicable for infringements by manufacturers of the provisions of this regulation”, which included the use of defeat devices - equipment designed to defeat the purpose of the emissions control system.
“The penalties provided for must be effective, proportionate and dissuasive,” it said.
The biggest potential fine for using defeat devices, as far as EUobserver has been able to establish, is in Belgium, where an offender could face between €1 million and €7 million. In second place comes the Czech Republic, where the maximum fine is €1.85 million.
In Spain, the potential fine is €600,000. In Ireland, €100,000.
In Austria however, the potential fine is €5,000 and in Slovenia €4,000. In Cyprus it is only €1,000 - 0.1 percent of the low end of Belgium's fine range.
In nine of the EU's 28 member states, this website was so far unable to establish the level of penalties. This is not due to a lack of effort on behalf of this website.
In fact, the EU commission itself has had difficulties establishing the fines member states had put in place.
In January the Commission published a new legislative proposal to reform the type approval process. It was accompanied by a staff working document, which included a table with results of a commission survey.
After the VW scandal, the commission also wrote to all EU countries.
“Commission would like to ask member states to provide information about their national measures implementing this obligation, in particular about the level of penalties as well as information about the application of this provision,” it said.
However, the response was lacklustre.
Only seven member states gave an actual figure, while 12 member states only gave comments like “implemented in national laws” and “in the Motor Vehicle Act”. Nine EU countries apparently did not respond.
Business as usual
A snub towards Brussels?
Well, yes, but also business as usual.
A freedom of information request filed by EUobserver uncovered a register of letters sent from national capitals to Brussels on this subject.
All member states missed the 2 January 2009 deadline by which they were supposed to have notified the commission of putting penalties in place.
Only Finland, Denmark, Ireland, and Hungary notified the commission that year. Then things fell silent.
In February 2013, four years after the deadline, the EU commission's services sent member states another request to provide the information. The following month, 18 letters were sent to Brussels, although four came from the countries that had already notified the commission.
So in 2013, the commission was only informed of the implementation of penalties by half of the member states.
But the commission apparently did not immediately follow up, since the next request it sent was dated 29 February 2016.
To date, only two member states have not yet formally informed the commission: Portugal and Greece, although Portugal did respond via the informal request post-dieselgate.
Were the fines effective, proportionate and dissuasive?
According to the commission, they weren't - which is why it has proposed to introduce an EU-level fine of €30,000 per vehicle, in the case the national authority has failed to impose a decent fine.
Consider that VW in the first quarter of this year had a net profit of €2.3 billion, and you understand why for competition cases, the commission calculates its fine as a percentage of annual turnover.
However, according to a US expert on company compliance, even high financial penalties might not prove persuasive enough.
"What we have learned here in the US is that financial penalties paid by a corporation, in the end, do not provide sufficient deterrence from wrongdoing," said Michael Volkov in an e-mail. "In some cases, a cost-benefit analysis, balancing the penalties, will result in an actor making the wrong choice — to violate the regulations."
He added that jail time for corporate officials is a much more likely deterrent.
Lack of clarity
For many of the EU fines, it is unclear whether they are the penalty for the entire infringement, or per vehicle, which in the case of VW and its 8 million affected cars, makes a huge difference.
The Slovak Republic, in a letter last April, clarified to the commission that it's fine (€2,000 to €16,596) would apply to the infringement as a whole, not per vehicle.
However, as Sweden told the commission, some member states believed their national legislation “probably does not apply to manufacturers abroad”.
It is not 100 percent clear from the legislation, but several experts told this website that they think a car manufacturer that has used an illegal defeat device, like VW, will only be able to be prosecuted in the country whose national authority gave the stamp of approval.
In the EU, the certification process is concentrated in a handful of member states.
In 2014, 32 percent of all type approvals, including most of VW's, were issued in Germany; 20 percent in France; and 17 percent in the United Kingdom.
As these countries have not yet given the consent to the commission for the relevant documents to be released, it is unclear what these three governments formally told the commission what the fine in their countries is.
Call to readers: If you have knowledge about the relevant penalty in your country, and it is not yet listed in this article, please contact us so we can update this article