Yesterday the Australian Competition and Consumer Commission (ACCC) announced that it has instituted proceedings against Volkswagen (VW). The ACCC is pursuing VW for allegedly misleading consumers (in contravention of Australian Consumer Law) around emissions from its diesel cars.
In 2015, VW admitted it had installed software in certain diesel-engine cars that ensured the cars met US standards for nitrogen oxide emissions in testing, but turned off in real road driving conditions. This meant that the diesel engines were dirtier than consumers realised. The affected cars were sold globally, including in Australia.
It has been reported that in the United States, VW has agreed to buy back cars affected by the emissions scandal.
In Australia, affected consumers have been offered corrective software, although just what that software will achieve and how well it will do that is disputed.
The ABC reports VW as saying that “the ACCC’s action did not provide any practical benefit to consumers". VW says this is because “the best outcome for customers whose vehicle is affected is to have the voluntary recall service updates installed.”
The ACCC proceedings may appear to offer little direct benefit for disgruntled VW owners who have purchased cars without the features that were represented to them. However, contrary to VW’s suggestion, those consumers might want more by way of redress than the installation of new software to correct the original problem.
The attractions of low-emission diesel engines that were kinder to the environment may well have been central to affected consumers' decision to purchase the VW car models in question. Without those benefits consumers might have purchased a different car.
Such consumers may be disgruntled by finding their VW is not what they had expected and they may also be facing a reduced resale value of their affected car. They may therefore want compensation for loss of value, lost opportunities and even disappointment and distress.
The ACCC is seeking “declarations, pecuniary penalties, corrective advertising, findings of fact and costs” against VW.
Penalties awarded for breaches of the Australian Consumer Law may be considerable, amounting to A$1.1 million for each contravention. However, any penalties that the court determines VW will have to pay for its alleged misleading conduct will be imposed as a punishment for contraventions of the law, not to compensate affected consumers.
It is interesting that the ACCC does not appear to be relying on its powers itself to seek compensation for disgruntled consumers, or to seek a refund and damages on behalf of consumers for possible failures by VW to comply with the consumer guarantee regime in the Australian Consumer Law.
This may be for the practical reason that it would be difficult for the ACCC in this kind of action to show the required levels of causation and loss on the part of individual consumers that would be required in seeking redress on their behalf.
Nonetheless, the ACCC action is not entirely without benefit to consumers, albeit in a more indirect manner. The action sends a strong reminder to businesses operating in Australia about the need for “fair play” in the Australian market.
Moreover, any findings of fact or declarations may be made by a court in response to the ACCC action may be useful in establishing the alleged baseline wrong in private litigation by VW-owning consumers, including under the class action filed in the Federal Court by law firm Maurice Blackburn seeking financial redress for a group of affected consumers.
Authors: Jeannie Marie Paterson, Associate Professor, University of Melbourne