"Using defeat devices is specifically prohibited under the Australian Design Rules, which are picked up as Australian Consumer Law (ACL) mandatory safety standards," ACCC chairman Rod Simms said. Volkswagen's emissions crisis has rocked the entire car industry. Credit:Krisztian Bocsi "As the enforcer of the ACL, the ACCC can take action against any corporation that has breached mandatory standards." It could be the biggest fine in Australia's automotive history, after the tax office hit Toyota with a $247 million bill in 2010. Toyota Australia was fined for a practice known as transfer pricing, which occurs when a multinational car maker moves profits between countries by changing the prices of vehicles and parts, breaching taxation laws in Australia. Volkswagen's Australian subsidiary has been unable to respond to calls from the government to provide "urgent clarification" on whether its cars sold locally have been caught up in the biggest scandal of the car maker's 78-year history.

A spokesman for Volkswagen Australia said it was still waiting to hear from the car maker's head office in Germany. "At this stage, we are unable to comment on the local situation as we are still awaiting details with regards to our market," the spokesman said. Car sales by manufacturer in Australia from January to July 2015. Source: PPB Advisory The company admitted last month that it used software to beat emission tests in labs on cars sold in the US. It is facing fines of up to $US18 billion ($25.7 billion) from the US Environmental Protection Agency, which alleged the affected diesel engines spewed as much as 40 times the legal limit of pollutants when they were on the road. The potential $1.1 million fine for one breach in Australia compares with the US's maximum penalty of $US37,500 ($53,152) per violation.

About $US25 billion has been wiped from Volkswagen's market value since the scandal broke, as a growing list of countries demand to know if the car maker also cheated the system in their jurisdictions. On Thursday the company said it would refit the affected diesel engines in what is expected to be a recall of possibly 11 million cars. "Under the action plan, Volkswagen and the other group brands whose vehicles are affected will present the technical solutions and measures to the responsible authorities in October," the German company said in a statement. "In a first step, the customers affected will be informed that the emissions characteristics of their vehicles will be corrected in the near future. All vehicles are technically safe and roadworthy." In Australia, the scandal could potentially affect more than 40,000 diesel engine cars that Volkswagen has sold in the country since 2009. Even if the ACCC was to fine the car maker just a fraction of the potential $1.1 million per breach maximum. say $10,000 a car, that would still amount to a $400 million penalty, dwarfing the €38.1 billion ($60.4 billion) in sales the company generated from the entire Asia Pacific region in 2014.

But any fine could be considerably less than the maximum penalty because the Federal Court would rule on what constituted a breach and the eventual amount. For example, the court fined supermarket chain Coles $2.5 million in April for falsely advertising thousands of loaves of bread as being "baked today, sold today" and at times "freshly baked in store". Mr Sims said he was "very concerned about the potential consumer and competition detriment" from Volkswagen's behaviour. "Cars are a big purchasing decision and claims that relate to environmental benefits or fuel efficiency can influence consumer choice," he said. "Businesses must be able to substantiate any claims they make. The ACCC will be seeking marketing materials from VW Group and will not hesitate to take action if consumers were exposed to false, misleading or deceptive representations."