Mercedes Benz to pay $5.5 million to settle Arizona diesel ad case

© Reuters. FILE PHOTO: The Mercedes-Benz logo is seen at the Odeonsplatz, in front of the Theatine Church, ahead of the Munich Motor Show IAA Mobility 2021 in Munich, Germany, September 6, 2021. REUTERS/Wolfgang Rattay/File Photo

By David Shepardson

WASHINGTON (Reuters) -German automaker Mercedes Benz and auto supplier Robert Bosch LLC have agreed to pay a total of about $6 million to resolve a lawsuit over diesel advertising claims, the U.S. state of Arizona said on Friday.

Under the proposed settlement, Mercedes Benz will pay $2.8 million in consumer restitution, and each qualifying Arizona consumer will receive up to $625 per vehicle, Arizona Attorney General Mark Brnovich said.

"Arizona demands truth in advertising to assist consumers in making the most informed decisions for themselves," he said.

Mercedes Benz, which denied the allegations and made no admissions, will also pay $2.7 million in penalties, and Robert Bosch LLC, which also said it had not admitted liability or wrongdoing, will pay $525,000 in penalties, Arizona said.

"With the settlement, the company takes another step toward resolution of various diesel proceedings... and avoids further costs of litigation and lengthy court actions," Mercedes Benz said in a statement.

Bosch confirmed the settlement related to the engine control units for certain Mercedes diesel vehicles.

In 2020, Mercedes Benz agreed to pay $2.2 billion to resolve a U.S. government diesel emissions cheating investigation and claims from 250,000 U.S. vehicle owners.

The settlement included an $875 million civil penalty levied under the Clean Air Act and $546 million to fix the polluting vehicles and offset excess emissions.

A Justice Department investigation into the Mercedes emissions issue remains open and a number of U.S. states have ongoing environmental and consumer protection investigations, the company said in its annual report in March.

Mercedes Benz, then known as Daimler AG (ETR:MBGn), agreed in 2020 to pay 250,000 owners up to $3,290 each to get polluting vehicles repaired.

Diesel vehicles have come under harsh scrutiny in the United States since Volkswagen AG (OTC:VWAGY) admitted in 2015 to installing secret cheating software on 580,000 U.S. vehicles.

VW paid more than $30 billion to resolve investigations and buy back vehicles.

Earlier this month, Bosch agreed to pay $25 million to resolve California's probe into its role in the diesel emissions scandals at Volkswagen (ETR:VOWG_p) and Fiat Chrysler Automobiles.

In August, the U.S. business of Fiat Chrysler, now part of Stellantis, was sentenced after pleading guilty to criminal conspiracy and paid nearly $300 million to resolve a multi-year U.S. Justice Department diesel-emissions fraud probe.