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India hikes spending, shuns ‘outright populism’ in last pre-election budget

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  • Capex to rise 33% to 10 trillion rupees in 2023/24
  • Govt targets gross borrowing of 15.43 trillion rupees
  • Eyes fiscal deficit of 5.9% in 2023/24, 4.5% by 2025/26

NEW DELHI, Feb 1 (Reuters) – India announced on Wednesday one of its biggest ever increases in capital spending for the next fiscal year to create jobs but targeted a narrower fiscal deficit in its last full budget ahead of a parliamentary election due in 2024.

Prime Minister Narendra Modi’s party has been under pressure to create jobs in the populous country where many have struggled to find employment, although the economy is now one of the world’s fastest-growing.

“After a subdued period of the pandemic, private investments are growing again,” Finance Minister Nirmala Sitharaman said as she presented the 2023/24 budget in parliament.

“The budget makes the need once again to ramp up the virtuous cycle of investment and job creation. Capital investment is being increased steeply for the third year in a row by 33% to 10 trillion rupees.”

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The capital spending increase to about $122.3 billion, which would amount to 3.3% of gross domestic product (GDP), will be the biggest such jump after an increase of more than 37% between 2020/21 and 2021/22.

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Total spending will rise 7.5% to 45.03 trillion rupees ($549.51 billion) in the next fiscal year starting on April 1.

Sitharaman said the government would target a fiscal deficit of 5.9% of GDP for 2023/24 compared with 6.4% for the current fiscal year and slightly lower than a Reuters poll of 6%. The aim is to lower the deficit to 4.5% by 2025/26.

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STEADY ‘MACRO BOAT’

Brokerage Nomura said the budget “prudently pushes for growth, without rocking the macro boat”.

“In the event, the government has presented a good budget. It has pushed for growth via public capex and continued on the path towards fiscal consolidation, without offering much in terms of outright populism.”

Capital Economics said the “absence of a fiscal blowout”, a recent drop in inflation and signs of moderating growth could convince India’s central bank to slow the pace of rate hikes next week.

It said there was still a chance of fiscal slippage as campaigning kicks off for the election, in which Modi is widely projected to win a third straight term.

The finance ministry’s annual Economic Survey, released on Tuesday, forecast the economy could grow 6% to 6.8% next fiscal year, down from 7% projected for the current year, while warning about the impact of cooling global demand on exports.

Sitharaman said India’s economy was “on the right track, and despite a time of challenges, heading towards a bright future”.

India’s real GDP is forecast to grow in the range of 6-6.8% in FY24

Her deficit plan will be aided by a 28% cut in subsidies on food, fertiliser and petroleum for the next fiscal year at 3.75 trillion rupees. The government cut spending on a key rural jobs guarantee programme to 600 billion rupees – the smallest in more than five years – from 894 billion rupees for this fiscal year.

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The government’s gross market borrowing is estimated to rise about 9% to 15.43 trillion rupees next fiscal year.

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CONSTRAINTS

Moody’s Investors Service said the narrower fiscal deficit projection pointed to the government’s commitment to longer-term fiscal sustainability, but that a “high debt burden and weak debt affordability remain key constraints that offset India’s fundamental strengths”.

Among other moves to stimulate consumption, the surcharge on annual income above 50 million rupees was cut to 25% from 37%.

Indian shares reversed earlier gains to close lower on Wednesday, led by a fall in insurance companies after the budget proposed to limit tax exemptions for insurance proceeds, while Adani Group shares tumbled again as it struggles to repel concerns raised by a U.S. short seller.

Since taking office in 2014, Modi has ramped up capital spending including on roads and energy, while wooing investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support.

A lack of jobs for young people, and meagre wages for those who do find work, has been one of the main criticisms of Modi.

Sitharaman also said the government was allocating 350 billion rupees for energy transition, as Modi focuses on green hydrogen and other cleaner fuels to meet India’s climate goals.

($1 = 81.7725 Indian rupees)

Reporting by Shubham Batra, Nikunj Ohri, Shivangi Acharya, Sarita Singh, Nigam Prusty, Manoj Kumar, Rupam Jain and Indian bureaux; Writing by Krishna N. Das; Editing by Kim Coghill, Jacqueline Wong and Gareth Jones

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Taiwan to give cash payouts to citizens in ‘New Year blessing’

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TAIPEI, Jan 4 (Reuters) – Taiwan plans to give cash payouts of nearly $200 to every citizen this year, Premier Su Tseng-chang announced on Wednesday, saying the island’s economic growth will be shared by everyone.

The export-reliant economy, a global tech powerhouse for products including semiconductor chips, grew 6.45% in 2021, the fastest rate since it expanded 10.25% in 2010.

While economic growth is expected to slow in 2022 and 2023, the government has made plans to plough an extra T$380 billion ($12.4 billion) in tax revenue from last year back into the economy to help protect the island from global economic shocks, including subsidies for electricity prices and labour and health insurance.

Su said a total of T$140 billion, part of the tax revenue, would be spent as cash payouts and each citizen would get T$6,000 ($195.61).

“The fruit of economic achievements will be shared by all citizens, from young to old,” Su told reporters, adding the potential payout requires approval from parliament, where the ruling Democratic Progressive Party has a majority.

“We wish to give all citizens a New Year blessing after the beginning of the Lunar New Year,” Su told reporters, referring to the week-long holiday that starts on Jan. 20.

He did not give details of how the government would deliver the payouts.

Taiwan is a major producer of semiconductors used in everything from cars and smartphones to fighter jets. Its economy continued to grow stably during the COVID-19 pandemic in recent years helped by strong chip demand for consumer electronics as more people worked from home.

Taiwan’s central bank in December cut its 2022 estimate for gross domestic product (GDP) growth to 2.91% from its previous forecast of 3.51% in September.

For 2023, it projected GDP would grow 2.53%. The economy grew 4.01% in the third quarter from a year earlier.

$1 = 30.6740 Taiwan dollars)

Reporting By Yimou Lee and Jeanny Kao; Editing by Jacqueline Wong

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Britain bets all on historic tax cuts and borrowing, investors take fright

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  • Kwarteng cuts top rate of income tax in dash for growth
  • Huge increase in UK government debt issuance planned
  • Gilts suffer biggest slump in decades
  • Pound falls to new 37-year low against dollar

LONDON, Sept 23 (Reuters) – Britain’s new finance minister Kwasi Kwarteng unleashed historic tax cuts and huge increases in borrowing on Friday in an economic agenda that floored financial markets, with sterling and British government bonds in freefall.

Kwarteng scrapped the country’s top rate of income tax, cancelled a planned rise in corporate taxes and for the first time put a price tag on the spending plans of Prime Minister Liz Truss, who wants to double Britain’s rate of economic growth.

Investors unloaded short-dated British government bonds as fast as they could, with the cost of borrowing over 5 years seeing its biggest one-day rise since 1991, as Britain raised its debt issuance plans for the current financial year by 72.4 billion pounds ($81 billion). The pound slid below $1.11 for the first time in 37 years.

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Kwarteng’s announcement marked a step change in British economic policy, harking back to the Thatcherite and Reaganomics doctrines of the 1980s that critics have derided as a return to “trickle down” economics.

“Our plan is to expand the supply side of the economy through tax incentives and reform,” Kwarteng said.

“That is how we will compete successfully with dynamic economies around the world. That is how we will turn the vicious cycle of stagnation into a virtuous cycle of growth.”

A plan to subsidise energy bills will cost 60 billion pounds just for the next six months, Kwarteng said. The government has promised households support for two years as Europe wrestles with an energy crisis.

Tax cuts – including an immediate reduction in the Stamp Duty property purchase tax plus a reversal of a planned rise in corporation tax – would cost a further 45 billion pounds by 2026/27, he said.

The government said raising Britain’s annual economic growth rate by 1 percentage point over five years – a feat most economists think unlikely – would increase tax receipts by around the same amount.

Britain also will accelerate moves to bolster the City of London’s competitiveness as a global financial centre by scrapping the cap on banker bonuses ahead of an “ambitious deregulatory” package later in the year, Kwarteng said. read more

The opposition Labour Party said the plans were a “desperate gamble”.

“Never has a government borrowed so much and explained so little… this is no way to build confidence, this is no way to build economic growth,” said Labour’s finance spokeswoman Rachel Reeves. read more

HISTORY REPEATS?

The Institute for Fiscal Studies said the tax cuts were the largest since the budget of 1972 – which is widely remembered as ending in disaster because of its inflationary effect.

The market backdrop could barely be more hostile for Kwarteng, with the pound performing worse against the dollar than almost any other major currency.

Much of the decline reflects the U.S. Federal Reserve’s rapid interest rate rises to tame inflation – which have sent markets into a tailspin – but some investors have taken fright at Truss’s willingness to borrow big to fund growth.

“In 25 years of analysing budgets this must be the most dramatic, risky and unfounded mini-budget,” said Caroline Le Jeune, head of tax at accountants Blick Rothenberg.

“Truss and her new government are taking a huge gamble.”

A Reuters poll this week showed 55% of the international banks and economic consultancies that were polled judged British assets were at a high risk of a sharp loss of confidence. read more

On Thursday the Bank of England said Truss’s energy price cap would limit inflation in the short term but that government stimulus was likely to boost inflation pressures further out, at a time when it is battling inflation near a 40-year high.

Financial markets ramped up their expectations for BoE interest rates to hit a peak of more than 5% midway through next year.

“We are likely to see a policy tug of war reminiscent of the stop-go 1970s. Investors should be prepared for a bumpy ride,” said Trevor Greetham, head of multi-asset at Royal London Asset Management.

Despite the extensive tax and spending measures, the government had decided against publishing alongside its statement new growth and borrowing forecasts from the Office for Budget Responsibility, a government watchdog.

Kwarteng confirmed the OBR would publish its full forecasts later this year.

“Fiscal responsibility is essential for economic confidence, and it is a path we remain committed to,” he said.

($1 = 0.8872 pounds)

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Writing by Andy Bruce; Additional reporting by Kylie MacLellan, Kate Holton, Paul Sandle, Sachin Ravikumar, Alistair Smout, William James, James Davey, Andrew MacAskill, Farouq Suleiman, Huw Jones and Elizabeth Piper; Editing by Catherine Evans and Toby Chopra

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Business

Biden administration leans on Tesla for guidance in renewable fuel policy reform

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June 23 (Reuters) – U.S. President Joe Biden rarely mentions electric car maker Tesla Inc (TSLA.O) in public. But privately his administration has leaned on the company to help craft a new policy to allow electric vehicles (EVs) to benefit from the nation’s lucrative renewable fuel subsidies, according to emails reviewed by Reuters.

The Biden administration contacted Tesla on its first day in office, marking the start of a series of meetings on the topic between federal officials and companies linked to the EV industry over the months that followed, according to the emails.

The administration’s early and extensive outreach reflects that expanding the scope of the U.S. Renewable Fuel Standard (RFS) to make it a tool for electrifying the nation’s automobile fleet is one of Biden’s priorities in the fight against climate change.

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The RFS, which dates back to 2005, is a federal program that requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels. Until now, it has been primarily a subsidy for corn-based ethanol.

The White House’s outreach to Tesla also shows that, despite a public grudge match between Biden and Tesla founder Elon Musk, the Biden team tried early on to involve the carmaker in one of its key policy pushes. Biden has set a target to make half of all new vehicles sold in 2030 zero-emissions vehicles.

The U.S. Environmental Protection Agency, which administers the RFS, is expected to unveil proposed changes to the policy sometime this year, defining new winners and losers in a multibillion-dollar market for credits, known as RINs, that has supported corn growers and biofuels producers for more than a decade.

Early signs are that the administration is leaning toward a rule that benefits carmakers like Tesla, giving them the greatest access to so-called e-RINS, or electric RINs. But the reform could also spread the subsidy to related industries too, like car charging companies and landfills that supply renewable biogas to power plants, according to industry players.

“We have heard through the grapevine that car companies are really, really going to like this rule,” said Maureen Walsh, director of federal policy with the American Biogas Council, speaking at a conference in May. But she added: “We have all been scrapping at that pile.”

The idea of including electric vehicles in the RFS has been under consideration for years, but gained steam as Biden’s transition team zeroed in on EVs as a job-friendly solution to the climate crisis. Transport accounts for more than a quarter of U.S. greenhouse gas emissions.

The White House did not respond to requests for comment.

The EPA said it was consulting “all interested stakeholders” in its RFS policy review.

The current RFS requires oil refiners to blend ethanol and other biofuels into the fuel pool or buy RINs from those who do. That policy has spurred an economic boom in Farm Belt states. But it has also angered environmental groups who say the extra corn production damages land and water while prolonging the era of the internal-combustion engine.

Friends of the Earth, an environmental group, has voiced disapproval over an e-RIN program. The group sees the RFS as a policy that has failed to increase production of new generation lower-carbon fuels, while also harming the environment. It also sees expanding the program as a slippery slope toward increasing the use of feedstocks for wood and wood waste, which can generate electricity.

“The RFS should be reformed to tackle giveaways for dirty corn ethanol. It shouldn’t be expanded to include new giveaways for factory farming and woody biomass,” said Friends of the Earth spokesman Lukas Ross.

TURN TO TESLA

On the morning of Biden’s presidential inauguration in January 2021, EPA staffer Dallas Burkholder emailed a top Tesla lobbyist, Rohan Patel, to set up a meeting on how to incorporate electric cars into the RFS, according to the documents reviewed by Reuters. They scheduled a meeting for a week later, records show.

Since then, the Biden EPA has had additional meetings on the topic with Tesla, groups representing biogas producers like Waste Management Inc (WM.N) and Republic Services Inc (RSG.N) and charging station companies like ChargePoint Holdings Inc (CHPT.N), according to the documents.

The EPA has also set up at least one meeting with White House staff members, including climate adviser Ali Zaidi, to discuss the reforms, according to the emails.

The Biden White House has been an unapologetic supporter of the EV industry, pinning much of its climate hopes on getting more electric cars on the road. The bipartisan infrastructure bill that passed last year included $7.5 billion for new EV charging stations and Biden has sought to reinstate expired tax credits to help consumers pay for new vehicles.

Even so, Tesla’s CEO, Musk, has often been at odds with the White House, sending out harsh tweets directed at Biden. In February, Biden publicly acknowledged the role of Tesla in EV manufacturing, after Musk repeatedly complained about being ignored. read more

WHAT EVERYONE WANTS

Tesla is seeking changes to the RFS that will allow it to earn renewable fuel credits based on kilowatt hours driven or similar metrics, according to two sources familiar with the plan. The company has also explored partnerships with biogas-producers to give them leverage in whatever market emerges from the new rule, the sources say.

Tesla did not respond to requests for comment for this story.

Members of the car-charging industry, meanwhile, are also pushing for a share.

Matthew Nelson, a lobbyist with Electrify America, a charging company trade group, wrote to the EPA in October and told them that e-RINs would do more to enable Biden’s 2030 goals of 500,000 charging stations and 50% EV sales than any other policy, according to the emails. He added that charging companies need the credit to compete with gasoline.

The United States currently has about 48,000 charging stations, concentrated around coastal regions, according to Department of Energy data.

Biogas producers, like landfills, also want credits, arguing they provide renewable fuel to the grid that generates the power for electric vehicles.

Biogas-derived electricity is already eligible for generating RINs. But the EPA has never approved an application from the industry because it has yet to determine the best way to trace the power entering EVs back to its origin.

In 2020, landfill gas generated about 10 billion kilowatt hours of electricity, or 0.3% of U.S. utility-scale power.

“We feel that implementing the electricity program in the RFS aligns well with the Biden administration’s climate goals,” Carrie Annand, executive director of the Biomass Power Association, wrote to the EPA, according to the documents.

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Reporting by Jarrett Renshaw in Philadelphia and Stephanie Kelly in New York
Editing by Richard Valdmanis and Matthew Lewis

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World

WTO strikes global trade deals after ‘roller coaster’ talks

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  • Deals reached on food, health and fishing
  • Formerly defiant India joins consensus
  • Package seen boosting credibility of WTO

GENEVA, June 17 (Reuters) – The World Trade Organization agreed the first change to global trading rules in years on Friday as well as a deal to boost the supply of COVID-19 vaccines in a series of pledges that were heavy on compromise.

The deals were forged in the early hours of the sixth day of a conference of more than 100 trade ministers that was seen as a test of the ability of nations to strike multilateral trade deals amid geopolitical tensions heightened by the Ukraine war.

Delegates, who had expected a four-day conference, cheered after they passed seven agreements and declarations just before dawn on Friday.

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Director-General Ngozi Okonjo-Iweala told them: “The package of agreements you have reached will make a difference to the lives of people around the world. The outcomes demonstrate that the WTO is in fact capable of responding to emergencies of our time.”

Earlier she had appealed to WTO members to consider the “delicate balance” required after nearly round-the-clock talks that have at times been charged with anger and accusations.

The package, which the WTO chief called “unprecedented”, included the two highest profile deals under consideration – on fisheries and on a partial waiver of intellectual property (IP) rights for COVID-19 vaccines.

The accord to curb fishing subsidies is only the second multilateral agreement setting new global trading rules struck in the WTO’s 27-year history and is far more ambitious than the first, which was designed to cut red tape.

At one stage, a series of demands from India, which sees itself as the champion of poor farmers and fishermen as well as developing countries, appeared set to paralyse talks but accommodations were found, trade sources said.

The WTO’s rules dictate that all decisions are taken by consensus, with any single member able to exercise a veto.

‘LOT OF BUMPS’

“It was not an easy process. There were a lot of bumps, just like I predicted. It was like a roller coaster, but in the end we got there,” an exhausted but elated Okonjo-Iweala told a final news conference.

The deal to ban subsidies for illegal, unreported and unregulated fishing or fishing of an over-fished stock has the potential to reverse collapsing fish stocks. Though pared back significantly, it still drew approval.

“This is a turning point in addressing one of the key drivers of global over-fishing.” said Isabel Jarrett, manager of The Pew Charitable Trusts’ campaign to reduce harmful fisheries subsidies.

Okonjo-Iweala said it was the first step after 21 years of talks towards what she hoped would be a more comprehensive deal.

The deal on a partial IP waiver to allow developing countries to produce and export COVID-19 vaccines has divided the WTO for nearly two years, but finally passed. It has also drawn the fiercest criticism from campaign groups that say it barely expands on an existing exemption in WTO rules and is too narrow by not covering therapeutics and diagnostics.

“Put simply, it is a technocratic fudge aimed at saving reputations, not lives,” said Max Lawson, co-chair of the People’s Vaccine Alliance.

One agreement also reached was to maintain a moratorium on e-commerce tariffs, which business says is vital to allow the free flow of data worldwide. read more

Overall, many observers said the deals should boost the credibility of the WTO, which was weakened by former U.S. President Donald Trump’s crippling of its ability to intervene in trade disputes, and set it on a course for reform.

European Trade Commissioner Valdis Dombrovskis said the WTO meeting had clinched outcomes of global significance despite unprecedented challenges.

“The profound divergences here amply confirm that a deep reform of the organisation is urgently needed, across all its core functions,” he said, adding he would work to get it agreed at the next ministerial conference due in 2023.

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Writing by Emma Farge and Philip Blenkinsop; Editing by Richard Pullin and Raju Gopalakrishnan

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Business

Tesla decides against state aid for German battery plant as Musk opposes subsidies

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A view shows the entrance to the construction site of the future Tesla Gigafactory in Gruenheide near Berlin, Germany, August 12, 2021. REUTERS/Hannibal Hanschke/File Photo

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  • Tesla withdraws application for state funding
  • All subsidies should be eliminated, Musk tweets
  • Car plant construction progressing well – economy ministry
  • Regional funding application still underway

BERLIN, Nov 26 (Reuters) – Tesla (TSLA.O) said on Friday it has withdrawn its application for state aid for its planned battery factory near Berlin as CEO Elon Musk declared the electric vehicle maker opposed all subsidies.

The European Union in January approved a plan that included giving state aid to Tesla, BMW (BMWG.DE) and others to support production of electric vehicle batteries and help the bloc to reduce imports from industry leader China.

Tesla was expected to receive 1.14 billion euros ($1.28 billion) in EU funding for its battery plant in Gruenheide, Brandenburg under the plan, with a final decision likely by the end of the year.

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“Tesla has informed the Federal Ministry of Economics and the Brandenburg Ministry of Economics… it is withdrawing its IPCEI application for state funding for the battery factory in Grünheide,” a Tesla spokesperson said, referring to European subsidies allocated to so-called ‘Important Projects of Common European Interest’.

Construction plans for the plant would not be affected by the decision, the spokesperson said.

“It has always been Tesla’s view that all subsidies should be eliminated,” Musk posted on Twitter in response to a tweet by another user after Tesla said it had withdrawn its funding application.

“But that must include the massive subsidies for oil & gas. For some reason, governments don’t want to do that…,” Musk added, deviating from the subject of the factory grant.

Tesla itself is investing 5 billion euros in the battery plant, according to German economy ministry estimates.

Meanwhile, construction of a car production site alongside the battery plant, which Tesla has begun building under pre-approval permits while it awaits final approval from the regional government, has made good progress in the last few weeks, a spokesperson for the federal economy ministry said.

The electric vehicle maker also applied in November 2020 for regional funding from Brandenburg, according to the regional government’s website.

A Brandenburg economy ministry spokesperson said this application had not been withdrawn.

The amount Tesla applied for is undisclosed, but investments worth over 100 million euros are generally given 6.8% of their value, the website says.

The latest round of online consultations for the public to express environmental and other concerns about the car factory and battery plant closed last week and Tesla CEO Elon Musk has said he hopes to formally begin production by the end of the year and then ramp up as quickly as possible.

Musk has made his irritation for German laws and processes known, saying in a letter to authorities in April that the country’s complex planning requirements were at odds with the urgency needed to fight climate change. read more

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Reporting by Christian Kraemer, Nadine Schimroszik, Victoria Waldersee, editing by Thomas Escritt and Susan Fenton

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Business

Texas city to offer Samsung large property tax breaks to build $17 bln chip plant

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The logo of Samsung is seen on a building during the Mobile World Congress in Barcelona, Spain February 25, 2018. REUTERS/Yves Herman

Sept 6 (Reuters) – The city of Taylor, Texas – one of two locations in the state under consideration by Samsung Electronics (005930.KS) for a $17 billion chip plant – plans to offer extensive property tax breaks if it is chosen by the South Korean tech giant.

Taylor is competing with Austin, Texas to land the plant which is expected to create about 1,800 new jobs. Samsung has also said it is looking at other potential sites in Arizona and New York.

Other potential sites have yet to disclose planned tax breaks.

A proposed resolution posted on the city’s website shows that for the land Samsung will use, it is set to be offered a grant equivalent to 92.5% of assessed property tax for 10 years, 90% for the following 10 years and then 85% in the 10 years after that.

Other measures include a 92.5% tax waiver on new property built on the site for 10 years and the repayment of development review costs.

The proposed resolution will be considered on Wednesday by the Taylor City Council and Williamson County Commissioners.

The Taylor site is located about 25 miles (40 kilometres) from Austin. It is about 1,187.5 acres (4.81 square kilometres)in size, much bigger than the Austin site. Samsung last year purchased more than 250 acres in Austin, which is in addition to 350 acres it owns that includes its sole U.S. chip factory.

If Samsung decides on Taylor, it plans to break ground by the first quarter of next year with production due to start by end-2024, a document previously filed with Texas state officials has said. [nL4N2OS0M5

Reporting by Joyce Lee; Editing by Edwina Gibbs

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Business

EU fines Volkswagen, BMW $1 bln for emissions cartel

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  • Sets precedent by applying antitrust law to technical talks
  • Daimler gets off fine after blowing whistle on cartel
  • VW considering taking legal action
  • BMW says cleared of suspicion of emissions cheating

BRUSSELS, July 8 (Reuters) – The European Commission fined German carmakers Volkswagen and BMW a total of 875 million euros ($1 billion) on Thursday for colluding to curb the use of emissions cleaning technology they had developed.

The case, separate to the so-called ‘Dieselgate’ scandal over software designed to cheat on vehicle emissions tests, sets a precedent by extending the application of European competition law to technical-level talks between industry players.

In this case, talks held a decade ago centred on design standards for AdBlue, an additive used to cleanse nitrogen oxide from the exhaust gases produced by diesel-powered cars.

“This is a first,” European Union antitrust chief Margrethe Vestager told a news conference in Brussels. “We have never had a cartel whose purpose was to restrict the use of novel technology.”

Under a settlement, Volkswagen (VOWG_p.DE) will pay a fine of 502 million euros and BMW (BMWG.DE) 373 million euros. Daimler, also part of the cartel, was not fined after revealing its existence.

Vestager said the German carmakers, which included VW units Audi (AUDVF.PK) and Porsche (PSHG_p.DE), had possessed the technology to reduce harmful emissions more than required under EU law but avoided competing to do so.

“So today’s decision is about how legitimate technical cooperation went wrong. And we do not tolerate it when companies collude,” said Vestager.

The EU had narrowed the original scope of its investigation to ensure its charges stuck.

IS TECHNICAL COLLUSION POSSIBLE?

Vestager said that all of the parties had agreed to settle the case and “have acknowledged their role in this cartel”.

Volkswagen, however, said it was considering whether to take legal action, saying the penalty over technical talks about emissions technology set a questionable precedent. read more

“The Commission is entering new judicial territory, because it is treating technical cooperation for the first time as an antitrust violation,” Volkswagen said, adding that the fines had been set even though no customers had suffered any harm.

The nub of the carmakers’ complaints boil down to whether setting common technical standards amounts to anti-competitive behaviour – or whether indeed it makes it easier for an industry as a whole to embrace new technology.

The Commission said in its 2019 charge sheet that the German carmakers had colluded to restrict the size of AdBlue tanks between 2006 and 2014, thus making the urea-based additive less convenient to use.

BMW noted in its defence that it had been cleared of suspicion of using illegal ‘defeat devices’ to cheat emissions tests. read more

“This underlines that there has never been any allegation of unlawful manipulation of emission control systems by the BMW Group,” BMW said in a statement.

In the Dieselgate scandal, VW admitted to using such defeat devices, leading to more than 32 billion euros ($38 billion) in vehicle refits, fines and legal costs for the Wolfsburg-based carmaker.

($1 = 0.8460 euros)

Editing by John Chalmers, Douglas Busvine, Maria Sheahan, Elaine Hardcastle

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