By Alissa de Carbonnel
BRUSSELS (Reuters) - The European Union started legal action on Thursday against seven countries including Germany and Britain for failing to police emissions test cheating by carmakers after the Volkswagen (DE:VOWG_p) scandal.
Amid mounting frustration in Brussels over what it sees as governments colluding with the powerful car industry, the European Commission is wielding the biggest stick it has - potentially going in court - to try to force nations to clamp down on diesel cars spewing health-harming pollution.
German officials - who say EU law is poorly framed - had been skeptical Brussels would take on the EU's leading power and by far its biggest carmaker at a time when the unity of the bloc is being challenged by eurosceptics and Britain's vote to leave.
Thursday's cases are a sign the EU executive, under pressure from the European Parliament, is keen to prove its worth to voters.
Germany, Britain, Spain and Luxembourg stand accused of not imposing the same kind of penalties Volkswagen (VW) has faced in the United States over its use of illegal software to mask nitrogen oxides (NOx), blamed for respiratory illnesses and early deaths.
The Commission also accuses Berlin and London of refusing to share the details of suspicious findings revealed by national investigations into the "dieselgate" scandal - without which it cannot carry out a supervisory role.
"This goes far beyond Volkswagen," said an EU source, adding that officials had more cases planned in a drive to force cars spewing up to five times legal NOx limits off roads.
The German Transport Ministry rejected accusations of inaction, and said Germany was the only EU country that had taken steps to prevent the future use of illegal software which hides the true level of pollutants emitted by diesel engines.
"The European Commission has received a proposal to change the relevant regulation and to adopt new technology that improves the quality of the emission control system," the spokesman wrote in an email.
Thursday's notice is the first step in what is known as infringement procedures, allowing the EU to ensure the bloc's 28 nations abide by agreed EU-wide regulations. Member states have two months to respond.
If they fail to do so satisfactorily, the EU may take them to the EU court in Luxembourg.
SHORTCOMINGS
In a system the Commission is now seeking to overhaul, national watchdogs approve new cars and alone have the power to police manufacturers - though once approved in one country, vehicles can be sold across the bloc.
Highlighting the system's shortcomings, the Commission said another three countries - the Czech Republic, Lithuania and Greece - do not have provisions in national law allowing for fines for carmakers in case of breaches.
The European Consumer lobby (BEUC) hailed the cases, saying not enough had been done to protest European citizens - a year since U.S. authorities caught VW cheating and won compensation for consumers there. "It is a strong rebuke of Germany and other countries' inaction," said BEUC head Monique Goyens.
But the Commission faces a tough fight. Its proposal for a shake-up of rules on new car approvals has been watered down by member states, documents seen by Reuters show.
So far, despite probes revealing that several carmakers use techniques to conceal the true level of exhaust emissions in laboratory tests, no country has issued heavy penalties.
"All of them are still protecting their national interest," said Bas Eickhout, a Green member of the European Parliament.
So-called "defeat devices" to cheat emissions tests have been illegal under EU law since 2007.
But EU carmakers - who employ some 12 million people in the bloc - say they are not doing anything wrong because there is an exemption allowing them to turn off emissions control systems if that is needed to protect engines.
Germany has said EU law is poorly framed, allowing for the loophole. However, it has asked the Commission to mediate in its dispute with Italian carmaker Fiat Chrysler, which it accuses of using an illegal device to scale back emission controls after 22 minutes - just longer than regulatory tests.
Europe's Industry Commissioner Elzbieta Bienkowska has repeatedly said the letter of EU law is clear and called on member states to respect its spirit.