Facing U.S. storm, VW set for easier ride in Europe on emissions scandal

Sat Jan 9, 2016 2:38pm EST
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By Barbara Lewis and Kirstin Ridley

BRUSSELS/LONDON (Reuters) - Volkswagen (VOWG_p.DE: Quote) is unlikely to face U.S.-style fines in Europe over its emissions scandal because of a softer regulatory regime and its home country Germany's determination to protect its car industry, EU sources and legal experts say.

The carmaker has been embroiled in crisis since last September, when it admitted it had cheated U.S. emissions tests using software known as "defeat devices".

The U.S. Justice Department is suing the German company for up to $46 billion for allegedly violating environmental laws - though some legal experts expect the final settlement to be far lower.

Other countries have also acted - Brazil and South Korea, for example, have both imposed fines of well over $10 million on VW for cheating on emissions.

But although VW says 8.5 million of the 11 million vehicles world-wide that contain banned software are in Europe, no European national authority has ordered any penalties so far.

EU sources and lawyers say it would be surprise if the firm received any significant fines in the European Union.

While the bloc outlawed defeat devices in 2007, there are no defined penalties for using such software to mask emissions. Under U.S. law, by contrast, carmakers must identify and describe any emissions control devices, meaning they can be pursued for omission or wrongful declaration, widening the scope for punitive action.

EU states are also reluctant to mete out tough financial penalties, because of an unwritten rule in the 28-member club that some national interests are sacred, according to the EU sources - and Germany's car industry has traditionally been one of them.   Continued...

The Volkswagen Chattanooga Assembly Plant in Chattanooga, Tennessee November 4, 2015. REUTERS/Tami Chappell