Several German automotive manufacturers stand accused of illegal business practices – namely colluding and forming cartels to stem regulatory policies and overpower competition – and could face billions of euros in fines if the allegations are proven in court, reports Automotive News.
Word of illicit business practices among German auto companies first broke late July in the German weekly Der Spiegel, which outlined attempts by Volkswagen and Daimler to gain leniency with authorities by admitting guilt to the collusion accusations. BMW, among other automakers and automotive supply companies, has also been named as a fellow conspirator.
The German ministry responsible for investigating illegal cartel action has confirmed it has been handed information suggestive of collusion.
Germany has a long tradition of cartel action within heavy industry, and this cooperation and central planning between large companies has been correlated to the explosive growth of the German economy throughout history, particularly due to the sharing of the burden of research and development, which can benefit several companies as they vie for position in the global market.
“Cartels were believed to be a form of economic organization far superior to unrestricted competition,” wrote Wilfried Feldenkirchen, a German historian, in a 1992 study of German competition policy.
Muddying the waters is the political position of the ruling Merkel administration, which needs to address the allegations of illegal business practices without damaging the automotive industry in Germany, which plays a critical role in its greater economy.
An investigation is forthcoming, but if reports of illegal and prevalent cartel action amongst German automakers is proven true, billions of euros in fines could be issued, shaking the very foundation of the German automotive industry.