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Australian Federal Court refuses to grant VW leave to appeal record fine in emissions cheat case

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Key facts:

In September 2016, the ACCC filed proceedings in the Federal Court in Sydney against Volkswagen AG (VW) and its Australian subsidiary, Volkswagen Australia (VGA), in relation to emissions claims.

In December 2019, the Australian Federal Court ordered Volkswagen AG (VW) to pay AU$125 million in penalties, after it declared by consent that Volkswagen had breached the Australian Consumer Law by making false representations about compliance with Australian diesel emissions standards.

VW admitted to making false representations when seeking to import more than 57,000 diesel vehicles between 2011 and 2015, and when listing those vehicles on the Australian Government’s Green Vehicle Guide website. VW did not disclose that the vehicles were fitted with two mode software, which caused them to operate in one mode for the purposes of emissions testing and another when being driven. If tested in that second mode, the vehicles would have breached Australian emissions standards.

The fine imposed by the Federal Court against VW was the highest total penalty order ever made by the court for contraventions of the Australian Consumer Law. VW appealed the penalty in February 2020, seeking orders that the Court instead impose the AU$75 million penalty amount which had been jointly put to the court by VW and the ACCC.

In April 2021, the Full Federal Court dismissed VW’s appeal, holding that the AU$125 million penalty “was not excessive, let alone manifestly excessive”.

ACCC Chair Rod Sims said “[AU]$125 million is the highest penalty ever handed down for breaches of the Australian Consumer Law. It’s about five times the previous highest penalty, and that reflects just how egregious Volkswagen’s conduct was… This record penalty increases the signal to large corporations that they could face massive penalties for misleading consumers about their products.”

Source(s):

ACCC media release of April and November 2021

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