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Thursday, 8 September 2016

Commissioner prompts Member States to pursue VW

The EU's Justice Commissioner, Vera Jourova, is pressing national authorities to investigate whether VW breached consumer protection laws - specifically, those based on the  Directive on Unfair Commercial Practices which prohibits misleading advertising, and the  Directive on certain aspects of the sale of consumer goods and associated guarantees - by stressing the green credentials of cars involved in the Dieselgate scandal.

As well as gathering information on action that Member States are taking themselves, the Commissioner wishes to make individual consumers and consumer groups aware of their rights over the claims. A 2013 Report by the Commission (see the Commission's web page on the Directive here) revealed that the Directive was not being enforced as rigorously as it might be by Member States, and the Commission announced its intention of pushing enforcement - the VW affair provides a superb opportunity to advance that agenda.

Italy has already fined VW €5 million over false advertising claims. Action under the Directive could result in more litigation in all 28 Member States of the EU. So far, VW has not compensated European consumers while it has compensated consumers in the USA. It argues (see this report from Automotive News) that by fixing the problem it will have done all it needs to do and there would be nothing left for which to compensate owners. The company also argues that it has not breached the directives (or, more accurately, national laws based on them). The sales directive requires that goods conform to contract - that they are fit for their purpose, which doesn't look like an easy claim to make in this case, that they comply with description (probably a better bet for a claimant) and perform as they should (again, a better bet than unfitness). VW's statement that they are not in breach sounds, well, bullish. As for the unfair commercial practices directive, it prohibits such practices and goes on:

2. A commercial practice shall be unfair if:
(a) it is contrary to the requirements of professional diligence, and
(b) it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed, or of the average member of the group when a commercial practice is directed to a particular group of consumers.
I wouldn't like to have to argue that claims about VW diesel emissions were not unfair within that definition. But stranger things have happened, and it is unrealistic to think that any manufacturer would admit breaches at this stage. It will only be when cases in Member States' courts start to come up that we will find out whether a breach has really taken place.

See the EU Observer website, this from Automotive News and this article in the Financial Times for more details.

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