Why VW didn’t have to compensate Europeans

A US federal judge has given a preliminary green light to Volkswagen’s US$ 14.7 billion ( RM60.2 billion) settlement for cheating on emission tests. This means US owners of VWs fitted with “defeat devices” will get about twice the market value of their cars in a buyback, and the 482,000 vehicles themselves will probably be scrapped. Meanwhile, in Europe, the owners of 8.4 million cars will get nothing.

There are two ways to look at this. One is to conclude that Europeans are unfairly being denied compensation because of the European Union’s failure to protect consumers and Volkswagen’s political power as a major company. The other approach would be to say that the US culture of predatory litigation and stringent environmental regulation have handed half a million drivers an undeserved windfall. Neither view is quite correct. VW has admitted that it equipped its cars with illegal defeat devices – but only in the US. In Europe, which has almost identical laws regarding such devices, it has dodged the admission – and largely gotten away with it.

Earlier this month, the British Parliament’s Transport Select Committee released a report explaining how this was possible:

“The question of whether VW broke the law in the EU needs to be answered urgently. Throughout our inquiry we sought to identify who was responsible for resolving that dispute. We did not receive a defi nitive answer. The Secretary of State was initially relaxed about describing VW’s software in the terms of an “illegal” defeat device. — Bloomberg