“The European fine on car manufacturers is a ‘courageous and just decision'”

Tribune. Global warming has taken center stage in Europe in recent weeks. Belgium, Germany, the Netherlands and Great Britain suffered catastrophic torrential rains that caused extensive damage and over 200 deaths, while Spain was covered with a heat dome that took raises temperatures to record levels.

These extreme weather events, such as storms, heat waves and droughts, will unfortunately be much more frequent in the future, both in Europe and elsewhere in the world. It is now clear that no one is immune from a disturbed climate. These recent events coincided with the announcement by the European Commission of the plan « Fit for 55 », a set of ambitious measures that constitute the new « Green Deal » European Union, hoping to achieve carbon neutrality by 2055.

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The Commission also settled a collusion case this month involving BMW, Daimler and Volkswagen. Car manufacturers BMW and Volkswagen have agreed to pay fines of 875 million euros for illegally limiting the use of emission reduction technologies on their vehicles. The other large German manufacturer Daimler (Mercedes), which had participated in this agreement but had revealed its existence, was not sanctioned. At the press conference concluding the deal, Commission Executive Vice-President Margrethe Vestager said: “Competition and innovation in the management of automobile pollution are essential for Europe to achieve its ambitious targets for “Green Deal” . And this decision shows that we will not hesitate to take action against all forms of cartel jeopardizing this objective. “

Collusion and consequences on the environment

This declaration therefore assigns an important role to regulators in the implementation of environmental regulations. When we hear about collusion, however, we are more likely to imagine companies that coordinate illegally to maintain high prices to the detriment of consumers. Here, and for the first time, the European Commission concluded that technological choices could also be a ground for collusion.

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The study of this case makes it possible to understand the economic incentives of this collusion and its consequences on the environment (« Colluding Against Environmental Regulation », Jorge Alé-Chilet, Cuicui Chen, Jing-Li, Mathias Reynaert, Discussion Paper n ° 16038, Center for Economic Policy Research – CEPR, April 2021). Specific technologies make it possible to control nitrogen oxide (NOx) emissions from diesel vehicles. The technology called “Selective Catalytic Reduction” (SCR) requires a large amount of Diesel Exhaust Fluid (AUS 32) to neutralize emissions in order to meet European standards.

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