German financial authorities to investigate major car makers over suspected cartel

The Federal Financial Supervisory Authority (BaFin) for Germany has confirmed with German newspaper, Handelsblatt, that they will indeed be “examining whether VW and Daimler respected their duty to inform markets following their allegedly reporting themselves to the authorities” of alleged wrongdoing.

On top of that, Volkswagen and Daimler have reportedly admitted to colluding amongst themselves and other carmakers to discuss sensitive business topics. In exchanging such information and advice, the car makers may be guilty of creating a cartel, which is prohibited in EU law as they can be harmful to the market and its consumers.

Volkswagen, Daimler and BMW

BMW are also in the spotlight for reportedly joining ‘working groups’ with VW and Daimler, whereby a select few senior employees would reportedly meet to discuss things like pricing their cars, where they buy their parts from and for how much, and even how to “cheat” or otherwise deal with emissions laws (apparently).

It’s believed by some that the latter topic was how the emissions scandal began in the first place: car makers allegedly discussing how to get away with not paying for expensive AdBlue tanks that can reduce Nitrogen Oxide emissions.

Unless any clear admissions are made, we can only speculate on what is reported.

Revelations about potentially underhanded activity led to carmakers’ stock prices reportedly dropping without any warning. Under financial laws, companies may need to inform investors of things like this that could impact their share prices. Investors are putting their own money into these carmakers and their interests must be protected. In this case, it seems that Volkswagen, Daimler and BMW could expect another wave of legal action for failing to inform investors of activity that could land them in hot water.

Volkswagen have already paid out over £15 billion for the emissions scandal over multiple lawsuits, penalty fines, settlements and investment schemes. Is there more to come?

New laws and higher penalties

Recent changes in German financial laws mean that a penalty fine of up to 5% of the company’s annual revenue could be issued against Volkswagen and Daimler. Last year, Volkswagen reported an annual revenue of over £163 billion, leaving the company potentially open to a maximum penalty of around £8.2 billion for this fine only.

The penalty fine will likely go to a national treasury, rather than to the wronged investors. The cartel allegations may well open a whole new can of (expensive) worms.

Sanctions remain uncertain

The German version of our Financial Conduct Authority have not confirmed whether any sanctions should be given under old or new legislation over cartels. The reportedly prohibited meetings were apparently carried out over a decade discussing technical details, marketing strategies and purchasing.