The European Commission said Friday that Volkswagen, BMW and Daimler broke antitrust rules by acting together to delay the introduction of two emissions cleaning systems between 2006 and 2014.
Margrethe Vestager, the bloc's top competition official, said in a statement that companies can cooperate to improve their products, but they cannot agree not to compete on quality.
"We are concerned that this is what happened in this case," she said. "As a result, European consumers may have been denied the opportunity to buy cars with the best available technology."
Regulators accused the carmakers of colluding at their annual "circle of five" technical meetings, which are attended by BMW, Daimler, Volkswagen and its subsidiary brands Audi and Porsche.
The Commission said that one of the technologies affected by the scheme would have reduced harmful nitrogen oxide emissions from diesel cars. The other was designed to filter emissions in gasoline vehicles.
"Restricting competition on innovation for these two emission cleaning systems ... denied consumers the opportunity to buy less polluting cars," the EU regulator said in a statement.
The Commission said the carmakers would get an opportunity to respond to its preliminary conclusion. The companies face fines of up to 10% of their annual worldwide sales.
Mercedes-Benz owner Daimler (DDAIF) said it has been "cooperating extensively" with the Commission and does not expect to be fined. BMW (BMWYY) and Volkswagen (VLKAF) did not immediately respond to a request for comment.
The reputation of Germany's flagship manufacturing industry is still suffering from a scandal that erupted in 2015 when Volkswagen admitted to rigging millions of diesel engines to cheat on emissions tests.
The revelation trashed confidence among consumer and regulators in diesel technology and cost Volkswagen tens of billions of dollars in recalls, legal penalties and settlements.
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