The Australian Competition and Consumer Commission has instituted proceedings against Volkswagen in the Federal Court of Australia. Between 2011 and 2015 Volkswagen installed -- but didn't disclose the existence and operation of -- "defeat" software, which controlled the operation of the vehicles' exhaust gas recirculation system.
The software caused the vehicles to produce lower nitrogen oxide (NOx) emissions when subject to test conditions in a laboratory, but switched to a different mode under normal on-road driving conditions resulting in significantly higher NOx emissions being produced by the vehicles.
The ACCC claims Volkswagen engaged in misleading conduct by representing that the vehicles complied with Australian and European standards and all Australian regulatory requirements when, because of the defeat software, that was not the case.
Volkswagon also marketed the vehicles in Australia as being environmentally friendly, clean burning, low emission and compliant with stringent European standards when this was not the case under normal driving conditions.
"The ACCC alleges that Volkswagen engaged in multiple breaches of the Australian Consumer Law by concealing software in their vehicles to cheat emissions testing and misleading consumers about the vehicle’s compliance with standards and emission levels during on-road conditions," ACCC Chairman Rod Sims said.
"Consumers rightly expect that their vehicle's emissions would operate as advertised during their day-to-day use and we allege that this was not the case with more than 57 000 vehicles sold in Australia by Volkswagen over a five-year period."
"These allegations involve extraordinary conduct of a serious and deliberate nature by a global corporation and its Australian subsidiary misleading consumers and the Australian public. We expect higher standards of behaviour from all companies that supply to Australian consumers," Mr Sims said.
The ACCC is seeking declarations, pecuniary penalties, corrective advertising, findings of fact and costs.
The Volkswagen cars involved are the Amarok 2.0 litre (2011 to 2012), Caddy 1.6 and 2.0 litre (2010 to 2015), Eos 2.0 litre (2009 to 2014), Golf 1.6 and 2.0 litre (2009 to 2013), Jetta 1.6 and 2.0 litre (2009 to 2015), Passat 2.0 litre (2008 to 2015), Passat CC 2.0 litre (2008 to 2012), Polo 1.6 litre (2009 to 2014), Tiguan 2.0 litre (2008 to 2015) and CC 2.0 litre (2011 to 2015).
The Australian Design Rules implement international standards that regulate the emission of NOx from motor vehicles. NOx can cause respiratory illnesses and is particularly harmful to vulnerable consumers such as the young, the elderly, and those with pre-existing respiratory conditions.
In February 2016, Volkswagon announced a recall (initiated in October 2015) for affected Amarok vehicles to be fixed. Volkswagon is seeking approval from the Department of Infrastructure and Regional Development to do the same for affected vehicles across all brands.
Private class actions seeking redress for consumers affected by this conduct are currently before the Federal Court in relation to Volkswagen, Audi and SKODA branded vehicles.