Volkswagen makes costly mistake

May 24, 2021

Late last year, the Federal Court imposed a penalty of $125 million on Volkswagen AG for contravening the Australian Consumer Law.  This penalty was the highest penalty ever ordered by the Court for breaches of the Australian Consumer Law.

The offending conduct by Volkswagen related to false representations made by the German automotive manufacturer in relation to the emissions made by its vehicles, and in particular in relation to its compliance with the Australian diesel emission standards.

Volkswagen sought to appeal the decision and to have the penalty reduced to $75 million, as agreed with the Australian Competition and Consumer Commission.  Earlier this month, the full Federal Court dismissed Volkswagen’s appeal and upheld the $125 million penalty, referring to the very serious nature of the contraventions by Volkswagen.

In 2018, legislation was passed to significantly increase the maximum penalties that may be imposed by a Court for breaches of the Australian Consumer Law, from $1.1 million per contravention, to the greater of:

  • $10 million;
  • Three times the value of the benefit received; and
  • 10% of annual turnover in the preceding 12 months.

Businesses should review their compliance with the Australian Consumer Law, including closely monitoring any statements made in advertising materials.  If you’re unsure about the requirements or require assistance implementing a Consumer Law compliance program, the Kalus Kenny Intelex commercial team is here to help.