DaimlerChrysler to pay $1.2 million pollution penalty

DETROIT -- DaimlerChrysler AG has agreed to pay $1.2 million to settle allegations that its Mercedes division failed to notify authorities about faulty air pollution controls in vehicles, the U.S.. Justice Department and Environmental Protection Agency said today.

The EPA said Mercedes had failed to promptly notify it about defects in the air pollution controls installed on a number of models from 1998-2006 model years.

In response to the investigation, Mercedes began voluntary recalls for two of the defects and offered an extended warranty coverage on a third defect, at an estimated cost of about $59 million, the justice department and EPA said.

A call to a Mercedes spokeswoman was not immediately returned.

Under the terms of the deal, Mercedes will be required to improve its emissions defect investigation and reporting system, at an estimated cost of $1 million per year, according to the two agencies.

The vehicles involved in voluntary recalls and extended warranties have defective catalytic converters or defective air pumps, the two government agencies said.

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