EU leverages its full power as it launches legal action against Italy over FCA emissions

17 May 2017

The European Commission is to use the biggest weapon in its arsenal against Italy as it prepares to launch legal action against the country for failing to appropriately scrutinise FCA (Fiat Chrysler) over alleged emissions test cheating.

EU officials are reportedly furious with national governments for scheming to protect their powerful car industries, and the notice on Wednesday is the first step in the EU’s infringement procedures. If Italy fails to respond convincingly, Brussels will take the country to court in Luxembourg. This is the power the EU has to ensure member states comply with EU-wide laws.

EU regulators have not been convinced by Italy that FCA’s use of defeat devices to modulate the emissions of its vehicles, which include under the conditions of the EU emissions lab test, is defendable.

A source told Reuters: ′[The Italian authorities] still need to provide additional information that would convince us that the devices used in Fiat models are justified and can therefore be considered legal.’

Defeat devices are illegal under EU law as of 2007, with intense policing of the law now in force after the breaking of the Volkswagen emissions scandal in September 2015.

The Italian ministry has not yet released a statement on the announcement, which has caused FCA shares to fall 2.4% in Wednesday early trading.

European carmakers have stressed they are not doing anything wrong by modulating emissions, exploiting a loophole in EU law that allows their cars to switch off emissions control systems for safety reasons or to protect their engines from damage. However, some accuse OEMs of overly taking advantage of this exception to avoid investing sufficiently in bringing engine emissions down.

In a related bitter dispute, Germany had accused FCA of using an illegal cheat device to lower emissions over a suspicious 22 minute period – which coincides closely with the 20 minute EU lab test. Brussels was called in to mediate the dispute, but this ended in March without resolution.

In December, the EU also launched legal action over Dieselgate against Germany, the UK, Spain and Luxembourg for failing to police emissions test cheating by carmakers, and against the Czech Republic, Greece and Lithuania for not even having a system of powers to fine carmakers over emissions violations.

The EU has had enough with the conflict of interest in EU member states not wanting to police their carmakers too harshly due to the risk of damage this will bring to their economies. They fear that if they have a heavier hand than other EU members, they risk business going elsewhere.

As a result, the EU is currently in the process of working to overhaul the system to give the EU greater control of the emissions testing system. At the moment, national regulators alone have the power to police their own national manufacturers and approve new cars, and once approved by their host country, the cars can be sold right across the bloc.

FCA is behind the curve on its electrification strategy, with the beginnings of one only just starting to appear in North America.

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