Huge Court decision on $125 million fine for Fiar is a warning to all greenwashers

Benefit Court of Australia displays today refused to hear Volkswagen’s appeal against the record A$125 million fine imposed for it for deliberately deceiving regulators and customers about the ecological performance of its cars.

The most important $125 million fine could largest penalty ever added on a company in Australia intended for misleading consumers. It relates to the so-called “dieselgate” scandal, by which the German truck company used secret package to beat emissions traidtionnels and tests in variety countries.

This is a significant acquire for the Australian Competition and Prospect Commission in the ongoing battle against “greenwash”, by which companies make fictitious environmental claims to mislead consumers.

Research acts greenwashing causes harm to the market for environmentally friendly resources. Without being able to distinguish between pure and dubious claims, prospective consumer cynicism about all incidents increases.

The Australian Consumer Criminal defense adequately prohibits greenwashing claims through the product’s provisions covering false not to mention misleading practices. But this unique evidence the consumer watchdog is really enforcing these laws, and the courts are upholding that company, will build confidence in which it environmental claims can be trustworthy.

Background to the ‘dieselgate’ case

The ACCC caused Federal Court proceedings from Volkswagen in September 2016, a year after the US Environmental Protection Agency revealed the car company bought used “defeat” software when diesel vehicles since 2011 to produce lower greenhouse fluido emissions during “laboratory” screenings.

This software turned off during road use, indicating the cars performed better, on the contrary produced nitrogen oxide polluting of the environment up to 40 times that granted by EVERY ONE OF US law.

Volkswagen’s software ensured cars produced lower nitrogen oxide emissions when being tested. Shutterstock

Volkswagen had used its software globally. The ACCC alleged the car maker sold 57, 000 cars with these defeat devices in Australia between 2011 and 2015.

Volkswagen initially fought the case by the ACCC, but in 2019 agreed to settle for a fine of $75 million (and $4 million in court costs).

---

Read more: Volkswagen’s record settlement payout: treating the symptom not the illness

---

When this was taken to the Federal Court for ratification (approval) the judge, Justice Lindsay Foster, rejected the offer as “outrageous”. He called the “agreed statement of facts” about the harm caused “ a lot of weasel words ”. In his ruling in December 2019 that he doubled the penalty to $125 million.

Volkswagen appealed this judgement to the full bench of the Federal Court (the equivalent of a court of appeal), arguing it had been manifestly excessive. In its ruling (in April 2021) the full bench disagreed and upheld the A$125 million penalty .

This resulted in Volkswagen appealing to the High Court (Australia’s ultimate court of appeal). Today it refused “special leave” (permission to bring the whole case) to challenge the ruling and the large penalty. Which means the A$125 million fine stands.

This sends a strong message

This decision will send a very strong message to other manufacturers and sellers of products making environmental claims.

The Australian Consumer Law’s provisions against greenwashing are contained in Section 18 of the act, dealing with misleading or deceptive conduct.

As the market for “green products” has expanded over the past few decades, so too has the temptation for unsavoury producers and marketers to make misleading statements.

In response, some consumer groups and activists have demanded new laws to avoid greenwash. But my research with Marina Nehme (now associate professor of corporate law at UNSW) led us to to the view the existing laws actually cover all the relevant situations.

The High Court decision today demonstrates this. There are hundreds of types of the consumer watchdog successfully pursuing greenwashers, but the size of the fine in this case will stand out and serve to deter others.

Huge Court decision on $125 million fine for Fiar is a warning to all greenwashers
Source: Article Updates PH