Volkswagen Facing Consolidation Of Collective-action Lawsuits In EU

Collective-action lawsuits against Volkswagen AG (VLKAY) over emissions rigging may be consolidated for up to 20 EU states by the European Commission, the European Union’s executive arm. Volkswagen admitted a year ago that it had installed software in roughly 11 million diesel cars that allowed it to cheat on emissions testing. The collective-action lawsuits are an effort to get compensation for owners of cars affected by the emissions scandal. VW is already refitting affected European cars recalled as a result of the scandal.

The automaker has reached a $14.7 billion settlement with U.S. authorities to cover fines and compensation for the owners of 475,000 affected diesel cars sold in the country. In the U.S., affected Volkswagen owners can receive checks for up to $10,000 as part of the settlement. If VW were to give similar compensation to EU car owners to what it offered in the U.S., it would face a minimum of $40 billion in costs.

For months, the EU Commission called for voluntary restitution to affected Volkswagen customers in Europe. However, VW has rejected demands by the commission for similar compensation to car owners in the EU’s 28 member states. A VW spokesman declined to comment on the matter.

VW has argued that EU law doesn’t have a legal basis for compensation claims such as the ones agreed in the U.S. Neither the commission nor national authorities have the right to impose compensation packages on a company. In a news conference, Vera Jourova, the EU’s justice commissioner, said, “In the European Union the way to damages is more complicated than in the United States.”

Because EU consumers have to seek redress in court, the commission is working with consumer-protection authorities and consumer organizations to coordinate efforts for consumers to file effective suits against the company. A meeting with representatives of consumer organizations is scheduled for Thursday. Another meeting with national consumer-protection agencies is scheduled for Sept. 29.

Most EU member states don’t have a legal framework for collective-action lawsuits like class-action suits in the U.S. Protected by lax EU rules, it looked as if Volkswagen could dodge a costly fallout from the scandal in Europe. So far, the German automaker hasn’t paid a single cent in fines for rigging more than 8.5 million diesel cars sold in Europe to defeat emissions tests. National authorities in many EU countries worry that if the company suffers too much from its financial and legal troubles, their countries could miss out on investment and jobs.