The Volkswagen diesel emissions investigation continues to move rapidly.

  • The US Environmental Protection Agency, has suggested Volkswagen could face penalties of up to $24 billion.
  • Media has reported that the US Justice Department’s Environmental and Natural Resources Division has launched a criminal investigation (although this is not directly confirmed) and regulators in Europe, Canada and Asia are said to be investigating.
  • The Chief Executive of Volkswagen, Martin Winterkorn, has resigned.

There has yet to be any comment from any UK regulator or prosecutor in relation to Volkswagen. Until further investigation or admissions become public, it remains to be seen whether the problem identified in the US and parts of Europe has reached the UK. However, given the high profile nature of the case, some agencies in the UK must be considering whether to open an investigation.

An interesting question will be which, if any, UK agency tackles the Volkswagen matter.

The UK’s Environment Agency has considerable powers of investigation under the Environment Act 1995. However, it is questionable whether their remit covers misrepresentation as to vehicle emission levels, and there is currently no suggestion that any emission levels were illegal, just not as low as asserted.  The EA have never reportedly taken on a matter as potentially vast and complex.

One of the questions for any investigation is what, if any, criminal offence has taken place. Use of the Fraud Act 2006 has been somewhat underwhelming since it came into force, but it creates separate fraud offences:

There is no comment on who decided to program vehicles in such a manner, nor whom or what management level within the organisation authorised it. But it is difficult to look beyond financial gain as a motive. If vehicles are sold with devices designed to mislead relevant individuals as to emissions, it could result in entry to otherwise unavailable markets, and individuals deciding to purchase vehicles based on false information. If the 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.

The Competition and Markets Authority could also investigate whether Volkswagen has used false or deceptive marketing. The Consumer Protection from Unfair Trading Regulations 2008 prohibits misleading omissions.

From a practical point of view, any Volkswagen investigation may discreetly raise the limitations of corruption laws within the UK. The Bribery Act 2010 is often described as a strong anti-corruption law, ignoring the fact that it only criminalises one aspect of corruption – bribery. Cheating, deceiving or misleading a regulator are all variously punishable, but there is a gap in UK law for an over-arching criminal offence of corruption not involving bribery and misleading the public at large. Perhaps the Volkswagen investigation will give the legislature food for thought.

We will see the extent to which any Volkswagen investigation reaches UK shores in the coming months.


Practical Law David Bacon

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