German automakers hit with allegations of collusion

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Audi cars are parked in front of the company's headquarters in Ingolstadt, Germany, March 15, 2017. REUTERS/Lukas Barth (Copyright Reuters 2017)

Daimler, BMW and Volkswagen are facing allegations of collusion after a news report claimed the top three German automakers secretly coordinated on pricing and technology.

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BMW shares in Germany dropped 2.6%, while Daimler and Volkswagen fell 3.7% and 2.6%, respectively, in response to the report from German newsmagazine Der Spiegel.

The report on Friday said BMW, VW—including its subsidiaries Audi and Porsche—and Daimler’s Mercedes discussed various technologies and pricing of components through German auto industry committees. The European Union has begun investigating the claims, dating back to the 1990s, and whether they amount to antitrust violations.

Reuters reported on Monday that Volkswagen has scheduled an extraordinary supervisory board meeting for Wednesday to discuss the latest controversy to engulf German automakers.

The Spiegel report follows announcements last week by Daimler that it is recalling 3 million Mercedes-Benz diesels to improve their emissions performance through an update of engine control software, and by Volkswagen's luxury Audi brand that it was doing the same with 850,000 vehicles. Daimler also said it would speed up the deployment of new engines. BMW is offering software updates on 350,000 of its older diesels.

The steps come as a way to head off calls for banning diesel vehicles from some German cities where air pollution levels exceed limits. The German government has summoned local officials and auto executives to a "diesel summit" Aug. 2 to both find ways to reduce emissions and ensure that diesel technology has a future.

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The auto industry is a major employer, and diesels are also considered one way of meeting goals for lower emissions of greenhouse gases blamed for global warming. Diesels emit less carbon dioxide, a major greenhouse gas, but emit more nitrogen oxide, a pollutant that harms people's health.

Diesels came under increased scrutiny after Volkswagen admitted to using illegal software that in the U.S. detected when vehicles were on test stands and turned emission controls on so that the cars passed the emissions test. The controls were turned off in everyday driving, improving mileage and performance. Volkswagen has agreed to more than $20 billion in U.S. civil and criminal fines and settlements, and eight executives have been charged.

Separately, five German automakers - Daimler's Mercedes-Benz, Opel and Volkswagen and its subsidiaries Audi and Porsche - last year agreed to recall a total of 630,000 diesel vehicles in Europe after it was found that real-world emissions often exceeded EU emissions standards. In those cases, engine control software turned off emission controls at certain temperatures to avoid engine damage. That was legal but German regulators have questioned whether the use of the exemption was always justified.

In its report on possible collusion between automakers, Der Spiegel said automakers may have coordinated to limit the size of the tanks holding a urea solution used to reduce diesel emissions of harmful nitrogen oxide. The smaller tanks reduced costs and freed up space in the vehicles, the magazine said.

BMW issued a statement denying that its urea tanks were too small to provide adequate exhaust treatment and said its vehicles' emissions met legal requirements.

The Associated Press contributed to this report.

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