The European Commission's decision last month to fine Volkswagen E90 million was the most serious evidence yet that the lawmakers are determined to change the way cars are sold in Europe. It was a major victory for those who want to see block exemption abolished or radically changed in 2002.
Although the European Court of First Instance cut the amount by E12 million, the record fine confirmed the perceived severity of VW's policy. The EC said VW had tried to prevent German and Austrian consumers from buying cheaper-priced VW cars in Italy. It cut the fine because it found the Commission could not prove further misconduct by VW after 1996.
The court called the violation 'a serious infringement' of EU laws. The Commission expects to act later this year on similar cases it is building against DaimlerChrysler and Adam Opel. Investigations are still under way into PSA/Peugeot-Citroen and Renault, the competition commission said.
VW faces another investigation into allegations that it forced German dealers to sell the Passat at fixed prices, and threatened them if they tried to discount.
The VW violation, which involved a restriction of Italian sales over a three-year period from 1993 to 1996, underlines the EU's major problems with the block exemption.
The Competition Commission confirmed that:
VW threatened 50 dealers that their contracts would be terminated if they sold to foreign customers and 12 dealerships were actually terminated
The profit margins and bonuses of dealers who sold outside their territories were 'systematically' slashed
Deliveries to Italian dealers were severely rationed.
VW's Italian distributor threatened Italian dealers who sold cars to non-Italians
VW and Audi sent dealers written instructions to lie to foreign customers and 'discourage them by speaking of different specifications and difficulties with the guarantee.' They were not to let them know that they had instructions to this effect from the VW group.