Volkswagen to Face EU Fine

08 May 2001

Auto manufacturer Volkswagen is set to receive a multi-million deutschmark fine from the European Union’s Competition Commission for preventing its German dealers from selling the Passat model at a discount.

According to reports in Handelsblatt, a colleague of competition commissioner Mario Monti revealed that “the case has been completed,” with an eight-figure deutschmark fine likely to be imposed on the carmaker after the Commission’s consultation with national antitrust experts at the end of May.

The allegations date back to 1996 and 1997, when VW launched the new Passat range. The Commission has obtained three letters written by the company’s marketing director – who has since stood down – telling dealers they could not sell the new marque at a discount and encouraging them to report any others who did.

It is thought that the alleged dictation of prices was a result of VW’s desire to position the Passat in the upper mid-range car sector, away from cheaper family cars such as its Skoda Octavia. According to one VW insider, the three letters were written “out of concern about the poor profitability of German dealers.” The auto maker has since said its dealers are free to set their own prices.

The EC fine will be VW’s second in three years, after Monti’s predecessor Karel van Miert imposed a DM200m penalty for preventing the import into Germany of cheaper vehicles from Italy.

News Source: Handelsblatt (Germany) [07-May-01]