Whereas in the US VW admitted its wrongdoing and set aside billions of dollars for car owners, European consumers are being left high and dry. VW claims that there is no need to compensate European consumers since according to them they did not suffer losses in the sense that the value of their cars did not take a hit.
VW’s unwillingness to compensate European cars owners, or to provide information or help to customers has angered the European Commission: “More than half a year into our dialogue, VW has not delivered on key demands from consumers” said Commissioner Jourová.
The European Commission alone, however, is powerless, since it lacks the power to sue VW. Indeed, the power of enforcement does not reside with the EU but lies with national authorities.
The Commission accuses VW of breaching two sets of EU law: the “Unfair Commercial Practices directive” which prohibits misleading advertising and the “Directive on certain aspects of the sale of consumer goods and associated guarantees” which requires goods to be “in conformity with the sale contract for at least the first 2 years after the purchase”.
In order to increase the pressure on VW, the European Commission initiated a “Joint Enforcement Action” between the 28 National Consumers Authorities which met in Brussels on the 7th of March. The Dutch officials agreed to take the lead.
A joint action is a process under EU law whereby national authorities team up to act against a company. VW could face litigation in national courts in Europe for alleged breaches of EU Law. National authorities will contact VW to expose their claim and will wait for the company’s answer before acting. The scope of each authority’s action varies between the different Member States according to their national law: some can fine the company without judicial process and others will have to take the matter to their local courts.
This procedure has the advantage of giving VW a chance to redress the damages done by this breach of EU law (with a settlement, avoiding formal legal proceedings) and to put the pressure on VW to act.
Brussels will provide back-office support to the initiative, notably by “assisting the authorities on coming to a final joint legal assessment”. The Joint Enforcement Action does not require the agreement of all 28 national authorities for it to be launched. The MSs who want to act will join the action and will sign a joint letter to VW.
After this announcement by the European Commission, VW reminded the public that it had already offered European consumers a solution and that half of them have taken VW up on the agreement proposed by VW. The company underlined that the European vehicles, unlike those sold in the US, are legally roadworthy and warned that this action could “deter the rest from getting their cars fixed”.
Read the Financial Times article here
Read the Financial Times article here
Read the Reuters article here