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BMW loses $158 million Swiss fine appeal

It hasn’t been the best week for BMW. On Thursday, South Korea said it was fining the company for flouting emission rules and on Friday, a Swiss court confirmed a fine of $158 million for breaking competition laws.

German car manufacturer BMW has lost an appeal against a $158 million (€136 million) fine imposed on it by a Swiss court after it was found to have blocked Swiss residents buying its cars elsewhere in Europe.

Originally imposed in 2012, the fine came about after the Swiss competition authority WEKO investigated several complaints from Swiss car buyers that they had been stopped from buying BMWs in other European countries, with the Bavarian company's intention being to divert prospective customers into the far more expensive Swiss market.

Switzerland's competition authority was told by more than 20 customers with Swiss addresses that they had been prevented from buying cars at BMW dealerships outside of Switzerland, many of them in Bavaria in southern Germany, where prices were as much as 25 percent lower than in neighboring Switzerland.

The authority ruled five years ago that BMW had deliberately instructed dealerships outside of Switzerland not to sell to Swiss residents, a clear violation of Swiss competition law.

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BMW appealed the ruling but on Friday, the Swiss Federal Supreme Court announced that it rejected the appeal on October 24.

'A clear violation of Swiss competition law'

"BMW was not allowed to say to its dealers you have no right to sell in Switzerland," Patrik Ducrey, deputy director of WEKO, said following Friday's announcement.

"This was a clear violation of Swiss competition law. It closed the Swiss market to foreign suppliers, prevented fair pricing in Switzerland and put Swiss consumers at a disadvantage."

The court made clear in its judgement that the German car manufacturer acted with the intention of maintaining high prices in Switzerland, one of the most expensive automobile markets in the world where sales of luxury models are high.

Two fine days

News of the hefty fine completes a miserable week for BMW. On Thursday, the South Korean environment ministry said it intends to impose a combined fine of 70.3 billion won ($63.1 million) on BMW, Mercedes Benz and Porsche for violating emission rules.

BMW accounts for the vast bulk of that proposed fine and will have to pay 60.8 billion won ($54 million) for "falsifying" documents on emission test results and also for not seeking approval before modifying emission-control elements of its vehicles before selling them in South Korea.

The Swiss and South Korean fines combined mean BMW must pay out a total of $212 million.

BMW said it is "faithfully cooperating" with the South Korea government. However, the company has declined to comment on the verdict of the Swiss court.

Read more: BMW's new e-car strategy

There had already been bad news on Tuesday when the company reported that its net earnings shrank by 1.8 percent in the third quarter  of 2017 year on year to €1.8 billion ($2.1 billion), well short of investors' expectations.

The carmaker's share price dipped on the results, temporarily being the worst-performing stock on the German blue-chip index, the DAX-30. The company claimed the poor results were connected to the fact that it was "investing substantially in tomorrow's mobility."

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aos/kd (Reuters, AFP)

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