Merkel backs class-action lawsuits for diesel car owners

Chancellor Angela Merkel’s support for collective lawsuits could force Volkswagen (VOWG_p.DE) to offer to compensate owners of diesel cars in Germany as it has done in the United States over manipulated emissions tests.

VW offered billions of dollars to US customers after its cheating of emissions tests came to light two years ago.

It has so far rejected any payments for the owners of 8.5 million affected vehicles in Europe where different legal rules weaken the chances of customers winning compensation.

“We will probably soon move to (discuss) the legal test case so that one can also bring about class action lawsuits which I support in principle,” Merkel said in a TV debate on Sunday night, her strongest endorsement to date of a change in German law.

“It’s completely clear that the car industry must be held responsible for what it has done,” she added in the debate with Social Democrat (SPD) challenger Martin Schulz before the Sept. 24 election.

Merkel criticized a draft law on the issue submitted by the SPD as “too bureaucratic”, but said she was open to starting discussions on the matter as early as Monday.

A government spokesman said it was not clear whether the chancellor’s comments would herald a new pre-election push to agree a common stance on the matter between Merkel’s Christian Democrats and Schulz’s Social Democrats, who currently govern in a grand coalition.

“Car executives have cheated,” Schulz said during the debate. “With legal test cases we could treat consumers in a similar way as also in other countries.”

The diesel emissions scandal has cost VW, the world’s largest carmaker, as much as $25 billion in fines and compensation payments.

Merkel did announce plans on Monday to double to 1 billion euros ($1.2 billion) a fund aimed at cleaning up urban transport infrastructure to try to prevent bans of diesel cars in some German cities.

The government has come under pressure for not doing enough to crack down on vehicle pollution and for being too close to powerful carmakers.

The issue has become a central campaign topic ahead of the election, prompting the government to summon car bosses to a summit last month to discuss how to cut pollution.

Under the US legal system, lawyers can file a suit for one client and have it certified as a class action for those in a similar situation.

In Germany, by contrast, each plaintiff must file individually and pay legal fees upfront, a system criticized by consumer lobbies as hostile to claimants.

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