Department of Transport finds all cars tested break emission limits

The global issues concerning false emission readings in motor cars widened this week, as a number of high profile motor car manufacturers were in the news.

The UK Government published the findings of its emissions testing programme, launched after the recent discovery that the Volkswagen group (VW group) had fitted “cheat” or “defeat” devices to its motor cars to pass the emissions test programme.

The tests did not detect any cheat devices or other forms of test manipulation as used by the VW group. However, the tests did reveal that for all manufacturer’s vehicles nitrogen oxide emissions were higher in real world conditions and on a test track than they were in laboratory conditions. Results varied considerably between different makes and models.

There is no suggestion of dishonesty on the part of anyone at present. However, if a company has mislead consumers over emissions, fraud by false representation under section 2 of the Fraud Act is a potential charge if dishonesty can be proved.

On the same day, the VW Group and US officials reached an agreement under which the company would offer to buy back almost £500,000 diesel cars that are fitted with the software. In addition, the company also agreed to a compensation fund for owners. It is not clear at this stage whether the deal will resolve either the US DOJ’s civil claim against the company, or any of the ongoing criminal prosecutions around the world.

In France, manufacturer Peugeot Citroen was raided by officers from France’s general Directorate for Competition Policy, Consumer Affairs and Fraud Control. This followed raids earlier in the year on France’s other giant motorcar manufacturing company, Renault.

In Japan, Mitsubishi Motors admitted that it manipulated test data to overstate the fuel efficiency of 625,000 cars. After raids by government officials, the share price slumped by 40%, amounting to losses of $3.2bn over three days. The emergence of this scandal resulted in the US regulator seeking information from Mitsubishi.

The potential response from UK authorities was considered in an earlier blog post in September 2015. Since then, the only public announcement by the government has been the publication of findings by the Department of Transport, and the announcement that real driving emission tests will be introduced from 2017.

The issue of vehicle emissions shows a striking similarity with the banking scandal of 2008-09, where misconduct and misleading information is identified at one company, investigations reveal such practices are far more widespread, and ultimately there is limited action by either regulators or law enforcement bodies.

Practical Law David Bacon

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