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News > International
Court OKs $86M fine for VW
July 6, 2000: 6:48 a.m. ET

Panel hits Europe's No. 1 carmaker with fine for strong-arming Italian dealers
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LONDON (CNNfn) - A European court slapped a record 90 million ($86 million) fine Thursday on Volkswagen AG, Europe's biggest automaker, for illegally strong-arming its Italian dealers over a three-year period. The fine was less than the 102 million that European Commission officials had sought.

The European Court of First Instance backed the Commission's decision in January to fine Volkswagen for seeking to restrict sales by Italian dealers in its distribution network to customers from other European Union member states. Cars sold in Italy became cheaper for buyers from outside the country as the value of the Italian lira sank.

The 90 million fine is the largest ever levied by an EC executive body. The court said the fine was lower than the one the commission had sought because the violations appeared to occur between 1993 and 1996. It said graphicthe Commission didn't properly show the violations occurred after that.

"This decision today followed at least partially the argument of Volkswagen and reduced the fine to 90 million from 102 million," said Volkswagen in a statement. "Volkswagen will examine whether it will appeal in the time frame of two months."

The Commission said at the time that VW, its Audi unit and their Italian distributor had over a decade "systematically" rejected orders from foreign customers seeking to take advantage of lower Italian car prices.

Prior to monetary integration behind the new "euro" currency, those dealers took advantage of a weak Italian lira to sell cars to non-Italian-based customers, in particular to those from Germany and Austria. The lira was especially weak in 1992 after the currency withdrew from the European exchange rate mechanism, which tied several national currencies to one another.

The EU accused Volkswagen of imposing supply quotas on those dealers and putting in place a "bonus system" to discourage them from selling to customers from abroad.

EU rules allow carmakers to sell through dealers that offer only one manufacturer's products, but make it illegal to prevent dealers selling to individuals or companies acting on their behalf who want to take advantage of variations prices within the 15-nation bloc.

The Commission said it had found "written evidence" during 1995 raids on Volkswagen and Audi and their distributor Autogerma, based in the northern Italian town of Verona, of pressure exerted on dealers to refuse cross-border orders.

Its investigation had concluded that a dozen dealers had their contracts terminated for not respecting Volkswagen's instructions, and 50 had been warned of the risks they took if they sold to customers from abroad.

The EU executive is currently probing similar allegations against other car manufacturers.

Shares of Volkswagen (FVOW) edged up 0.2 percent to 41.10 in Frankfurt Thursday morning. Back to top

-- from staff and wire reports

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.