EU Imposes Fines on Automakers for Illegal Cartel Agreements
The European Union has imposed fines of 458 million euros on several automakers for illegal cartel agreements. The highest fine, of around 128 million euros, was imposed on Volkswagen. Mercedes-Benz, the only German automaker not to face a fine, had reported the cartel agreements to the EU and thus was exempt from the penalties.
The fines were imposed due to illegal cartel agreements that prohibited the recycling of vehicles. The EU had required that old vehicles be taken back in 2002, but the automakers, including French and Asian companies, had agreed not to pay the auto dismantlers for the vehicles, as required by the law. They also agreed not to publicly disclose the percentage of recyclable materials in their vehicles.
The automakers claimed that the agreement was necessary to make a profit from the vehicle scraps, but many of the vehicles were exported to Africa before the end of their useful life. Mercedes-Benz, in particular, has a high percentage of exports and even vehicles that end up on German scrapyards are often disassembled and re-exported in containers.
Although the fines may seem high, they are relatively small in comparison to the automakers’ annual profits. Volkswagen, for example, made a profit of 12.5 billion euros in 2024, despite a 30% decline in sales and the fine is only a small fraction of that.
If the automakers are forced to take on a portion of the costs of vehicle recycling, it could have a significant impact on the sale of used electric vehicles, which are already struggling in the European market. The option to export these vehicles to the global south no longer exists, as the infrastructure to support the use of these vehicles is not present in those regions.