Daimler agrees on a billions comparison in the diesel affair

Daimler pays almost two billion euros in America for a settlement with authorities and representatives of a consumer class action lawsuit. But the criminal investigations, which have been running since 2016, are not affected.

A Mercedes C-Class at the TÜV

Dhe Daimler Group wants to draw a line under its legal disputes over exhaust gas manipulation in North America. As the automaker announced on Thursday evening, it is ready to pay more than two billion dollars to American authorities and class plaintiffs. The aim is to meet all civil and environmental claims related to emissions control systems for certain diesel vehicles in the United States. In total, there are around 250,000 diesel vehicles and vans. “The company has made sufficient accounting provisions for the expected total costs of the comparisons,” said Stuttgart in the evening.

The Board of Management and Supervisory Board of Daimler AG and Mercedes-Benz AG voted on Thursday after weighing all the circumstances in favor of the comparisons. Daimler is taking “an important step” to create legal certainty in various diesel proceedings in the United States, the company said. In this context, Daimler emphasized that it had cooperated fully with the authorities and that this cooperation would continue.

Legal fees and court fees

Various American authorities, including the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB), which also played an important role in uncovering the Volkswagen diesel scandal, are to receive around 1.5 billion dollars (1.27 billion euros) have played. With another 700 million dollars (592 million euros), the Swabian automotive company wants to settle a class action lawsuit with consumers. The competent authorities and a district court in the state of New Jersey have yet to approve the settlements. According to their own information, the Stuttgart managers also expect further expenses, such as lawyers’ fees and court fees.

At Daimler, the amount is currently estimated at a “mid three-digit million euro amount”, so that the requirements from the comparisons should be met. According to its own forecast, the costs will occupy the automotive company’s industrial business over the next three years. The main impact is expected in the next twelve months. Among other things, due to the sharply increasing loads in the diesel cases, the 2019 result slumped drastically. At that time, however, there was also a fine of over 870 million euros, which the Stuttgart public prosecutor had imposed on Daimler.

Like Volkswagen and Fiat Chrysler before, the parent company and the American subsidiary Mercedes Benz USA were accused of manipulating exhaust emissions in diesel vehicles in the United States. Investigations against Daimler have been ongoing in America since 2016 because the diesel models from Mercedes-Benz emitted significantly more nitrogen oxide than the strict environmental laws there allow. The Ministry of Justice and the environmental authorities EPA and CARB accused the group of illegally manipulating its exhaust gas purification system. In the annual report for 2018, Daimler confirmed that it could not be ruled out that the authorities could consider certain functions in Mercedes vehicles to be inadmissible. In addition, consumers in America and Canada banded together in class actions because they felt deceived by the auto company. As in similar lawsuits against Volkswagen and Audi in emissions fraud, they alleged that Daimler had violated competition and consumer protection laws and had enriched itself.

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If the proposal of two billion dollars for the approximately 250,000 affected vehicles comes about, Daimler should come off well. Volkswagen had to pay significantly more in fines and damages in North America in several settlements. In addition, after the exhaust gas manipulation became known in 2015, several employees had to face criminal proceedings before a jury court. Two VW managers were sentenced to prison terms. In contrast, Fiat Chrysler got away with a black eye settlement for over $ 800 million for 105,500 vehicles.

However, the entire automotive industry in Europe could be unfortunate if the European Court of Justice adheres to the specifications of an expert. In her Opinion from the end of April, Advocate General Eleanor Sharpston declared defeat devices in vehicles with diesel engines to be generally not permitted. The consequences of such a judgment would also have a hard time affecting Daimler.