Mercedes fined $12.5M over misleading statements (official judgement)
Good friends of AutoExpert, Mercedes-Benz Australia, have been handed a chunky financial penalty by the Federal Court of Australia. This is what happens when corporate carmakers treat consumer law with indifference...
The Federal Court's latest automotive-related judgement was handed down on September 8. It is a thing of beauty and a joy to behold.
If you read the whole court file, Judge Middleton from the federal court has issued a comprehensive 77 paragraph reaming to Mercedes-Benz Australia for being rather naughty over the recent Takata airbag recall, of which I'm sure you have heard.
A sizeable $12.5 million dollars is payable by Mercedes Australia, to the Commonwealth, by October 2nd (2022) - and I’m guessing it’s most probably coming out of the Christmas party budget.
Although, it could have even come from the boardroom swear jar which, as I understand it, was overflowing recently.
Plus, there’s an additional lazy 100k by way of legal compensation to the ACCC to assist with the narcoleptic watchdog’s legal costs.
You can view the full Federal Court judgement on this case here >> or download the original case file and webpage here >>
Makes you wonder how long until Mercedes-Benz head office (in sunny Mulgrave) finds a way to recoup the $12.5 million… Image: GoogleMaps.
All up, rather a hefty touch-up, you'd have to say, and you might be asking what offences exactly did Satan's official car maker commit here?
Well, they kind of downplayed the risk to owners of vehicles cursed by Takata on 27 separate occasions, over about 20 months. But who's counting, apart from the Federal Court and the ACCC, of course.
The totality of transgression was hardly a one-time thing - 23 times they basically said in writing (always a mistake) that the whole Takata inconvenience was more or less just a “precaution”. Four times they imputed that Takata beta inflators in other manufacturers vehicles had not had any faults or caused any accidents, injuries or deaths. Whoopsie-daisy!
By comparison, and for balance, this is how BMW handled the recall>>
The admitted contravening conduct was not deliberate, reckless, systematic or covert, and was a result of the conduct of five contractors engaged by Mercedes senior management. Contractors: both a blessing and a curse. More of a curse in this case it seems, but it appears not to be some malicious, deliberate plot by Dr Evil for world domination. Nobody was injured, Mercedes didn't profit out of this and nothing like that took place. It’s just another example of ambient corporate mismanagement.
This unfortunately optimistic position of Mercedes-Benz Australia, following the fine work of its five specialist contractors, turns out to be a contravention of Section 127, Paragraph 1 of Australian Consumer Law and courts really hate that, when the ACCC wakes up and draws things of this nature to their attention.
The maximum penalty payable here was actually about $217 million. Missed opportunity, in my view.
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However, Judge Middleton did see fit to give Mercedes-Benz a rather significant bulk-buy discount of more than 200 million dollars off.
You might think they got off lightly, therefore, but the way these civil penalties work, according to the judgement, is it's mainly because A. the purpose of the penalty is to prevent some other similar corporate suit from deciding that this kind of conduct is okay and B. it kind of just has to be sufficiently high for Mercedes not to regard the penalty as an acceptable cost of doing business.
You might wonder what exactly is the point in financial penalties if they are not a significant dent in a company’s bottom line, kinda like the ‘If a tree falls in the forest’ philosophical debate. Although, I don't think courts detain themselves with these moral dilemmas too much, they do have to make a fair ruling on costs:
Federal Court judge Middleton, in paragraph 52 from the judgment, does leave you feeling noticeably confident, don’t you think?
He continues:
Judge Middleton again, from paragraph 53 that time, saying exactly what needs to be said to carmakers like Mercedes-Benz which have a track record of not thinking long and hard before making the wrong decision regarding consumers.
Many car makers, not just Mercedes, certainly in my estimation including Jeep, Land Rover, Volkswagen, Nissan etc seem to think that consumer law is only for the kind of junk you might buy at Bing Lee or JB Hi-Fi: toasters, blenders, laptops, maybe the refrigerator. It’s like they’re stuck in 2010, perpetually. It’s as if Consumer Law still doesn’t exist and car dealers and car makers rule the roost. No wonder Senator Deborah O’Neill ripped strips of Mercedes >>
Silly me, but you would have thought that particular penny has had abundant time to drop for the car industry on this by now, seeing as we've had these laws on the books for nearly 12 years and they've all got in-house corporate council. Come on.
Perhaps they just enjoy being ignorant, ruthless bastards. Accountants are funny like that.
Poor Mercedes. They’ve been working so hard at fleecing rich wankers, and then this comes along. In addition to their annual sales stalling and plummeting ever since they burned their dealers by initiating fixed prices. BMW says thanks, by the way. Then 80 of their fine upstanding dealers slapped them with a 650 million dollar lawsuit - which is ongoing at this point.
Mercedes-Benz Australia just can’t take a break these days. Funny, that.
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