EU Antitrust Law Handcuffs Automotive Engineering

A European Commission ruling against German car makers may have far-reaching implications for the way engineers in automotive approach their craft.

Episode Summary:

A recent, hefty European commission fine against German auto industry heavyweights Daimler, BMW, and Volkswagen Group has the potential to severely impact the way professional engineers design automotive and other products in the future. The commission ruled on and engineering collaboration between the three companies regarding exhaust emission technologies for diesel engines between 2009 and 2014. It seems like a simple antitrust case, but the implications run far deeper.

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Transcript of this week’s show:

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It’s another day and another scandal for German automakers. It’s not just Volkswagen this time, but it is about diesel engine emissions. The European Commission has levied a whopping €875 million fine against Daimler, BMW and Volkswagen Group over those companies’ emissions technology engineering collaboration over a five-year period from 2009 to 2014.

The commission alleges that the engineering collaboration included agreed limits to tankage volume for the urea solution aftertreatment additive needed by all modern selective catalytic reduction diesel emissions systems. The commission also alleges that the companies conspired to restrict the development of technologies that could have reduced emissions to levels below EU mandated standards. It sounds like a simple antitrust case doesn’t it? Well, it isn’t. This ruling may in fact be very dangerous to companies and individual engineers working on new technologies inside the automotive industry and in other sectors too.

The first part of the ruling, about tank volume and range limitations, works against one of the most important forces needed for widespread adoption of any new technology: standardization. At the turn of the last century, a lack of standardization in things like fasteners and even sockets and receptacles for domestic use created a nightmare scenario for end-users, who are locked into specific vendors, a little like the Apple and Android environment today. If a light bulb failed, you had to buy a specific replacement. If you bought a toaster, the plug might not fit into the receptacle. It was recognized early, and globally that this lack of standardization would hobble development of sectors like household electrical appliances in the automotive industry, and as a result, standards were set. And leading corporations were the key drivers behind that standardization.

It’s irrational for the European Commission to conclude that a lack of competitiveness in additive tank volumes represents a restraint of trade, but I think it’s really just the excuse for the real attack on automotive engineering: the emission standards. When governments regulate activities, whether it’s a household fuse or an airliners’ flight control system, they set a standard to which manufacturing companies engineer their products. VW, Daimler and BMW developed a technology which met the EU NOx standards. But the Commission has ruled that because the automakers had the potential to develop technologies that are much cleaner than the EU standards, they had a legal obligation to field of those technologies.

This is regulatory creep in the extreme: it’s not enough to meet a government standard, but if it’s possible to exceed it, this ruling states that engineers must do so. In the real world, there are costs for every gram of CO2, every part per million of NOx, CO and unburned hydrocarbons that are remediated. No manufacturer can rationally be expected to incur costs to build products that far exceed government regulations, especially if there’s no evidence that consumers are willing to pay for it.

And the resulting legal chill this will have on design engineers means that creative minds hat think of better ways to do things now have a choice to pitch their idea, with an email and paper trail and risk liability later, or keep the good ideas to themselves, perhaps whispered to colleagues over the water cooler. Engineering is a team sport, and a basic principle of designing things that are better, faster is collaboration. The more the better. I’m sure the European Commission meant well, but like all government agencies, they appear to be oblivious to the potential long-term harm that seems to happen every time the lawyers inject themselves into the engineering process.

If the EU wanted tougher diesel standards, they should have set them, not punished companies after the fact for doing not something they were not legally required to do. Government regulation frequently works the opposite the way it’s intended to work. This is an example, and there is a more tragic one: the Boeing 737 Max.& In that case, Boeing engineered a system to accommodate an arcane FAA standard, and hundreds of people are dead as a result. The people making the rules can’t know what damage they do, and there’s no way to know what innovation doesn’t happen because of the legal chill of regulatory agencies’ indiscriminate actions. Common sense needs to be added to the regulatory process. I suggest that the regulators start by actually talking to engineers.

Written by

James Anderton

Jim Anderton is the Director of Content for Mr. Anderton was formerly editor of Canadian Metalworking Magazine and has contributed to a wide range of print and on-line publications, including Design Engineering, Canadian Plastics, Service Station and Garage Management, Autovision, and the National Post. He also brings prior industry experience in quality and part design for a Tier One automotive supplier.