Volkswagen takes one-two punch in Australia with fine, lawsuit

By Rashmi Ashok and Aby Jose Koilparambil

(Reuters) - Volkswagen AG <VOWG_p.DE> took two raps in Australia on Friday as a court slapped a A$125 million ($86 million) fine on the German car maker as part of a global emissions cheating scandal and a regulator launched a civil lawsuit against a unit.

The federal court fined Volkswagen a record sum for breaching Australian consumer law by making false representations about compliance with the country's diesel emissions standards. The fine exceeded the A$75 million the company said it had agreed to with the Australian Competition and Consumer Commission (ACCC).

Volkswagen said it was undecided on whether to appeal the court decision and would make an announcement in the coming weeks.

The penalty follows revelations that Volkswagen was using prohibited engine-control software to pass pollution tests. The company has already paid billions of dollars in legal costs around the world.

ACCC Chair Rod Sims told reporters on Friday that the fine imposed on Volkswagen was just a taste of what companies could expect in the future.

The agency would use its new expanded powers to punish illegal activity with the largest fines possible and penalties of more than A$100 million would not be unusual, he said.

"Volkswagen AG firmly believes that the penalty of A$75 million agreed in principle with the Australian Competition and Consumer Commission to resolve the regulatory proceedings was a fair amount and is carefully reviewing the Court's reasons for deviating from that amount," a company spokesman said in an emailed statement.

Separately, the country's corporate watchdog, the Australian Securities and Investments Commission (ASIC), said it started civil penalty proceedings in a federal court against Volkswagen Financial Services Australia Pty Ltd for not making appropriate checks before giving out 49,380 loans to consumers.

ASIC said that the unit, which operates nationally to provide borrowers with consumer loans to purchase new and used cars, did not make required inquiries into borrowers' living expenses or if the loans were unsuitable for them.

These instances of breaches in lending laws occurred between Dec. 20, 2013 and Dec. 15, 2016, ASIC said. The maximum penalty for one contravention equates to A$1.7 million ($1.2 million) in the period till July 31, 2015, and to A$1.8 million for a contravention in the period after that, the watchdog said.

ASIC said proceedings will commence on a date to be determined by the court.

A spokeswoman for the unit said it takes its compliance obligations seriously and that it was cooperating with ASIC.

($1 = 1.4512 Australian dollars)

(Reporting by Rashmi Ashok and Aby Jose Koilparambil in Bengaluru and Wayne Cole in Sydney; Additional reporting by Tom Westbrook in Sydney; Editing by Christopher Cushing and Muralikumar Anantharaman)