Audi Volkswagen Taiwan

1281st Commissioners' Meeting (2016)

Case:

Audi Volkswagen Taiwan violated the Fair Trade Law by posting in car catalogs with regard to quality of product likely to affect transaction decision

Keyword(s):

Exhaust emission standard, EU5, EU6

Reference:

Fair Trade Commission Decision of May 25 (the 1281st Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 105057

Industry:

Manufacture of Motor Vehicles (3010)

Relevant Law(s):

Article 21 of the Fair Trade Law

Summary:

1. Audi Volkswagen Taiwan Co., Ltd. (hereinafter referred to as Audi Volkswagen Taiwan) posted in the Audi A6 Sedan/A6 Avant catalog the wording of "The fuel common-rail high-pressure injection technique developed with Audi's TDI engine performance technology once again enhances the TDI performance...using clean diesel technology to reduce emissions of nitrogen oxides to meet EU6 exhaust emission standards" and also in the Caddy Maxi catalog, "Caddy's environmental protection measures…reducing emissions of other types of exhaust (CO, NOx and particulate matter) and upgrading the emission performance from EU4 to EU5." The wording led consumers to believe the said exhaust emission data had been established as a result of normal and reasonable tests and the exhaust emissions complied with EU5 and EU6 standards. It was false advertising in violation of Article 21 of the Fair Trade Law.

2. Findings of the FTC after investigation:

   Audi Volkswagen Taiwan imported diesel cars equipped with the EZ189 engine on which the software called as "Defeat Device" by the US Environmental Protection Agency was installed to assure the NOx discharged during lab tests could be less than the NOx discharged when the car was running on the road. The software was installed in all the Volkswagen, Audi, Volkswagen CV and SKODA models available in the country. After its sensing element assessed whether the car was in a lab or on the road, the software could apply different control on discharge of NOx and the results of NOx emissions would be different when in a lab or on the road. To improve the situation, Audi Volkswagen Taiwan recalled cars to upgrade the engine control software.

3. Grounds for disposition:

   (1)

   The wording of "The fuel common-rail high-pressure injection technique developed with Audi's TDI engine performance technology once again enhances the TDI performance...using clean diesel technology to reduce emissions of nitrogen oxides to meet EU6 exhaust emission standards" in the Audi A6 Sedan/A6 Avant catalog and "Caddy's environmental protection measures…reducing emissions of other types of exhaust (CO, NOx and particulate matter) and upgrading emission performance from EU4 to EU5" in the Caddy Maxi catalog gave consumers the impression that the exhaust emission figures had been obtained as a result of normal tests and the exhaust emissions complied with EU5 and EU6 standards. In reality, however, Audi Volkswagen Taiwan used the aforementioned software to make assessments. When tests were run in a lab, NOx emissions were reduced to comply with statutory standards and exhaust emission test results were thus inaccurate. Viewed in this way, the wording in the car catalogs misled consumers or concerned parties to believe that the vehicles had been duly tested and the results complied with established standards. In addition, the application of the said software by Audi Volkswagen Taiwan to pass exhaust emission tests was unfair competition for competitors who followed normal procedures and passed exhaust emission tests without using any software to manipulate the exhaust emission figures. Therefore, the claims made by Audi Volkswagen Taiwan had caused wrong perceptions or decisions in consumers or concerned parties. It was a misleading representation with regard to quality of product and able to affect transaction decision in violation of Article 21(1) of the Fair Trade Law.

   (2)

   After assessing the motive and objective of the unlawful conduct of Audi Volkswagen and the improper profits expected, the level of damage incurred to trading order, the duration of such damage, the profits Audi Volkswagen Taiwan obtained from the unlawful conduct, the scale, management condition and market status of the company, the types and numbers of the company's violations in the past, the intervals of such violations and penalties received, as well as the remorse and cooperative attitudes of the company throughout the investigation, the FTC cited the first section of Article 42 of the Fair Trade Law and imposed an administrative fine of NT$5 million on the company.