FTC plans to file suit, fine Volkswagen Korea

[THE INVESTOR] South Korea’s antitrust agency has decided to press criminal charges against the former and current executives of Volkswagen Korea for deceiving customers with false advertisements in the German automaker’s emission rigging scandal. It also plans to fine the automaker a maximum of 88 billion won (US$ 77.02 million).

The Fair Trade Commission has sent the assessment report to VW Korea, stating it has decided to sue 10 executives, including Johannes Tamer, the CEO of Audi Volkswagen Korea, over running false advertisements, local news reported on July 20.

The agency has looked into VW’s advertisements from 2009 to 2015, which touted “clean diesel” vehicles with low emissions that are environmentally friendly. It also promoted that the cars meet the Euro 5 emission standards, which were later found to be all false when the automaker manipulated software of its diesel vehicles to cheat on emission tests. 

The FTC will hold a hearing session first for VW Korea to explain itself. It will then convene a general meeting in September to make a final decision on necessary punitive and administrative measures.

The regulator will likely fine VW up to 88 billion won, as the maximum fine for false advertisements is 2 percent of the total sales of affected units. According to the prosecutors, 125,522 units in Korea were affected by the emission scandal. When calculating each units with the average price tag of 35 million won, the total sales is estimated to be 4.4 trillion won.

Separately, the Ministry of Environment plans to stop sales and cancel the registration of VW’s vehicles that cheated on emission tests. With more than a staggering 60 percent of VW cars in Korea hit by the ministry’s measure, some industry watchers say the move may be designed to eventually kick the German brand out of the market for good.


By Ahn Sung-mi (sahn@heraldcorp.com)