France Sets Renault Probe -- WSJ

By Nick Kostov

PARIS -- French prosecutors have opened an investigation into Renault SA on suspicion of emissions fraud, blunting the auto maker's efforts to distance itself from the scandal that engulfed German rival Volkswagen AG.

The Paris prosecutors office said it has assigned three magistrates to probe whether the French auto maker engaged in fraudulent practices that made its diesel-powered vehicles "dangerous to human and animal health."

Renault on Friday denied using so-called defeat devices -- trickery used by Volkswagen -- to cheat on emissions tests and said it complies with French and European rules.

The prosecutors' action, which builds on an investigation carried out last year, marks the first time a French auto maker has faced a criminal probe in the mushrooming emissions scandal. The probe doesn't target Japan's Nissan Motor Co., which has a development, procurement and production alliance with Renault.

Last year, France's antifraud authority began an emissions investigation into Renault and other car makers after Volkswagen admitted using defeat devices to dupe laboratory emissions tests. The antifraud authority searched Renault's headquarters; an engineering facility in Lardy, south of Paris; and a technical center in Guyancourt, west of the French capital. The regulators discovered abnormal levels of nitrous oxide from some of Renault's diesel engines, and in November passed those findings on to state prosecutors to determine whether any action should be taken.

It was large discrepancies between laboratory and on-road testing that first tipped off U.S. investigators that Volkswagen used emissions-cheating software.

During the past week, Volkswagen formally admitted to criminal wrongdoing in its diesel-emissions cheating in the U.S. and agreed to pay $4.3 billion in criminal and civil fines. Separately, on Thursday, U.S. regulators accused Fiat Chrysler Automobiles NV of using software on some of its diesel vehicles that allowed them to skirt pollution restrictions, an accusation the company has denied.

The flurry of moves against automobile makers has shaken the industry and suggests systemic weakness in the European Union's regulatory regime. The recent action also offers ammunition to the criticism that national governments protect their local industrial champions at the expense of the 28-nation bloc's rules and citizens' welfare.

Even after admitting to rigging engines, Volkswagen hasn't been charged with any wrongdoing in the EU and insists its actions weren't illegal there. The EU's executive arm called the U.S. allegations against Fiat Chrysler "worrying," but has launched no action of its own, saying member states had refused to grant it the authority to do so.

--William Boston and Eric Sylvers contributed to this article.

Write to Nick Kostov at Nick.Kostov@wsj.com

(END) Dow Jones Newswires

January 14, 2017 02:47 ET (07:47 GMT)

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