Billion-Dollar Deal With Daimler Finalized in Emissions-Cheating Case

The German automaker stood accused of making smaller steps in Volkswagen’s tracks, manipulating its machines to skirt U.S. pollution standards.

(Image by Free-Photos from Pixabay via Courthouse News)

WASHINGTON (CN) — German automaker Daimler, parent company of American Mercedes-Benz, will pay $1.5 billion to resolve charges over its connection to the global diesel emissions-cheating scandal following approval of the settlement Tuesday by a federal judge.

The settlement in Washington involves not only the U.S. Department of Justice but the Environmental Protection Agency, the California Air Resources Board and the California attorney general. Daimler has agreed to pay $875 million in civil penalties, plus $70.3 million in other penalties, in addition to fixing all the vehicles it has already sold. 

U.S. District Judge Emmet J. Sullivan said the settlement was fair, reasonable and in the public interest. 

“Each party was represented by experienced counsel and engaged in settlement negotiations that lasted more than three years,” Sullivan explained in his opinion for the Washington court. 

Not counting the 174,000 vehicles it imported, Daimler stood charged with outfitting some 250,000 U.S.-built vehicles between 2009 and 2016 with software that could cheat emissions testing, as the diesel engines didn’t meet state and federal standards.

The software was only detected following the 2015 Dieselgate scandal in which so-called defeat devices were found in some 11 million vehicles sold worldwide by Volkswagen, 500,000 of which were sold in the U.S.

Volkswagen has paid some 30 billion euros (more than $35 billion) in fines to date. In Detroit, one former Volkswagen executive and an engineer were even sentenced to prison.

Daimler meanwhile was fined 870 million euros ($1.03 billion) in Germany for violating emission regulations. Its U.S. settlement requires undertaking projects that will mitigate the pollution damage. It must also carry out periodic testing on the rigged vehicles, and adopt corporate compliance measures aimed at discouraging future cheating. 

“The substantial financial penalties provided for in the consent decrees also send a strong deterrence signal to other manufacturers who may consider installing undisclosed AECDs or defeat devices in their vehicles,” Judge Sullivan wrote.  

When the settlement was announced in September, the EPA called it the second largest civil penalty in the history of the Clean Air Act. 

The settlement does not mean that Daimler admits liability, which it has denied. 

“The company has cooperated fully with the U.S. authorities and continues to do so,” Mercedes-Benz spokesman Robert Moran said in an email. 

Moran also said that, unlike other diesel settlements, the consent decrees in this settlement do not require an external compliance monitor. 

The EPA, Department of Justice, California attorney general’s office and California Air Resources Board did not respond to requests for comment. 

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