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France deepens dispute over Mercedes sales ban

The logo of Mercedes Benz is seen on top of a car factory against the background of an overcast sky in the central Hungarian town of Kecskem
The logo of Mercedes Benz is seen on top of a car factory against the background of an overcast sky in the central Hungarian town of Kecskem

By Laurence Frost and Christiaan Hetzner

PARIS/FRANKFURT (Reuters) - France took formal steps on Friday to outlaw sales of several Mercedes models, upping the stakes in a standoff over parent company Daimler's use of a refrigerant banned by the European Union.

The government vowed to maintain a sales freeze on the Mercedes A-Class, B-Class and CLA after the German luxury carmaker contested the move in court.

Registrations "will remain forbidden in France as long as the company does not to conform to European regulations", the environment ministry said in an emailed statement.

France has halted sales of Mercedes cars assembled since June 12 because of Daimler's refusal to stop using the air-conditioning coolant R134a, banned from new vehicles since the start of the year. The blocked models account for most of the brand's French business and 2 percent of global deliveries.

An administrative court had ordered France on Thursday to re-examine the case after Daimler argued that the sales freeze had not followed the correct EU "safeguard" procedures.

Daimler reacted angrily to Friday's announcement, calling it "absolutely incomprehensible" and vowing further legal action.

The dispute centers on a German decision to let Daimler continue using R134a - a global-warming gas 1,400 times more potent than carbon dioxide - because of safety concerns about the replacement chemical R1234yf.

GERMAN SIDESTEP

The European Commission has warned Berlin of possible action over the move by its KBA motoring authority to re-certify the new Mercedes vehicles under earlier approvals granted for older models. That decision sidesteps the requirement to use R1234yf, made by Honeywell and Dupont.

The EU's "mobile air conditioning" directive bans R134a in vehicles approved for sale since the start of 2011, but those certified earlier have until 2017 to comply.

The auto industry agreed to adopt the Honeywell coolant after extensive testing, but Daimler broke ranks last year and said its own tests had identified unacceptable risks.

Both chemicals may ignite when in contact with extremely hot surfaces or engine parts, releasing toxic hydrogen fluoride gas, but the Honeywell coolant can do so at slightly lower temperatures.

German Transport Minister Peter Ramsauer has urged Brussels to let Daimler continue using the banned coolant until the KBA completes further crash-test analysis in coming weeks.

However, safeguard procedures allow EU governments to halt sales of the Mercedes cars until Brussels decides whether their KBA certification complies with European law.

National authorities can block sales when they suspect an "incorrect application" of EU regulations and when the vehicles would "seriously harm the environment", according to the rules.

"This safeguard procedure will be put into effect immediately," the French environment ministry said on Friday.

France's sales freeze has so far prevented the delivery of 4,518 vehicles, 2,704 of which have already been sold to waiting customers, Daimler said in a legal filing this month.

The carmaker said it would now return to court to contest the sales freeze on the grounds that the chemical being phased out does not pose a serious environmental threat.

With more than three years to go before its elimination, "virtually all new and used cars on European roads are equipped with the proven and safe refrigerant R134a", Daimler said in its statement.

(Editing by James Regan and David Goodman)

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