Sunday, 17 July 2016

Dieselgate lies...

Car weekly Autoexpress reports that Volkswagen Audi Group have been on the receiving end of an ear-bashing from EU officials for refusing to pay compensation to 'dieselgate' owners in the EU.

  "... members of the European Commission have struck out at the German carmaker, demanding it to pay equal compensation to affected owners outside the US. 

European Commission commissioner Elzbieta Bienkowska said: "Volkswagen should voluntarily pay European car owners compensation that is comparable with that which they will pay US consumers with. Treating consumers in Europe differently than US consumers is no way to win back trust."

 Speaking before the Environment, Food and Rural Affairs Committee, Paul Willis, Managing Director of Volkswagen Group UK, said: “To pay compensation there has to be a loss, and at this stage I see no reason for there to be a loss. Our engineers tell us there will be no difference in fuel consumption or driveability. “So the only other area is on the question of residual values. I, at the moment, have seen no clear evidence of adverse impact on residual values. So when I say that there is no loss, then there is also no need for compensation.” 

 Yet VW may not be off the hook completely. The UK Government has stated that if evidence of consumers suffering from falling residual values or vehicle performance emerges, VW would be liable to compensate owners. 

 Transport spokesman Viscount Younger of Leckie said: "The Competition and Markets Authority has not opened a formal investigation but is continuing to assess whether there is evidence of consumer harm."

Now there isn't really a legal mechanism for the governments of the EU of the UK to secure compensation for groups of consumers. Legally speaking, it is generally up to consumers themselves to sue VAG, either themselves or in a class action, so why are the government not pointing this out?

 As for the question of 'loss', it is true that for some legal remedies do require the plaintiff / pursuer to evidence their loss. In the UK however, there is a little known remedy that allows consumers to be awarded punitive damages where the trader has induced them to contract by a 'misleading action'.

 The Consumer Protection (Amendment) Regulations 2014 insert Regulation 27J into the Consumer Protection from Unfair Trading Regulations 2008 - (official guidance here).  This provides for "the right to a discount". To cut a long story short, a court can award the affected consumer a discount of 0%, 25%, 50%, 75% or 100%. The most relevant provisions read as follows:

 (4) Subject to paragraph (6), the relevant percentage is as follows— 

(a)if the prohibited practice is more than minor, it is 25%, 
(b)if the prohibited practice is significant, it is 50%, 
(c)if the prohibited practice is serious, it is 75%, and 
(d)if the prohibited practice is very serious, it is 100%. 

(5) The seriousness of the prohibited practice is to be assessed by reference to— 

(a)the behaviour of the person who engaged in the practice, 
(b)the impact of the practice on the consumer, and 
(c)the time that has elapsed since the prohibited practice took place.

While there is much within the Regulations for m'learned friends to debate, most folk would agree VAG's behaviour has been utterly reprehensible let alone 'more than minor'.  But Regulation 27J(5)(c) may well explain why the government is not very keen to point this remedy out to consumers. After all, we wouldn't want a major German company to actually go bankrupt would we?


Lola said...

I think that an excessive of bureaucratic rule making - with no-one can ever truly comply - always leads to people gaming the rules, because they have to. And sometimes they get caught.

Mark Wadsworth said...

SL, while what VW did was clearly very naughty and in breach of lots of stuff, I don't see how customers can sue them for damages.

If VW had lied about fuel consumption, then it's simple. Somebody who bought a car on the assumption that it does 50 mpg when actually it only does 40 mpg has clearly suffered a loss - higher fuel costs and/or lower second hand value - and ought to be compensated.

But CO2 emissions? Many argue that they are unhealthy for "the planet" but there is no direct cost to the owner of the particular car.

L fairfax said...

I really hope that this is used as a threat in the Brexit negotiations.
A subtle way of saying "We get a bad deal, VW goes bankrupt!"

Steven_L said...

L, climate rules certainly seem that way

MW, We're talking about nitrous oxide emissions, a proven carcinogen. You really don't think a half-decent lawyer (supported by half decent witnesses who want some damages) could advocate the consumer would not have purchased had they known what VW had done?

Because that's all that matters - did the misleading action on the part of VW cause the consumer to contract. Would the consumer have contracted had they known the car was emitting an illegal concentration of carcinogens? If that is the case, then punitive damages can follow.

Lf - I don't think they credibly can, I'm sure the lawyers won't wait for a nod from number 10. If VW have settled with anyone they will have insisted on confidentiality. I honestly don't know if anyone has sued them, but I would have done if I had been affected.

Lola said...

S L. I agree about the carcinogens. How come everyone else used Add Blue but VW had found another way around it? It was obvious that something wad going on. either VW had cracked it and the others hadn't, or....?