Australia's consumer watchdog Wednesday launched court action against Volkswagen and its subsidiary Audi over an emissions cheating scandal, claiming they engaged in misleading or deceptive conduct.

The Australian Competition and Consumer Commission (ACCC) alleged Audi had installed so-called defeat software to produce lower levels of harmful nitrogen oxides during testing than under normal driving conditions.

It said that Audi Australia marketed up to 12,000 cars as complying with stringent European standards when this was not the case.

Parent company Volkswagen designed and supplied the engines and software to Audi AG for installation, the commission added in a statement initiating Federal Court action.

"Consumers expect that there is some relationship between the performance of the car as set out in the sales brochure and their day to day on-road use," said ACCC chairman Rod Sims.

"We allege that the installation of software which allows the vehicle to meet testing standards but then causes the vehicles to operate differently on the road, and associated representations about the vehicle and its performance, breach the Australian Consumer Law."

The watchdog is seeking pecuniary penalties and corrective advertising.

Skoda-branded vehicles -- owned by Volkswagen in Australia -- were also affected but the ACCC chose not to pursue them, noting its smaller sales volumes.

The latest action followed court proceedings launched by the ACCC against Volkswagen and its Australian subsidiary last year, which relates to the same alleged conduct.

In that lawsuit, the commission claimed that more than 57,000 vehicles sold in Australia between 2011 and 2015 did not operate as Volkswagen advertised.

Since then, Volkswagen and Audi have announced voluntary recalls to update the software.

Volkswagen had no immediate comment but Audi Australia said the court action "does not provide any practical benefits to consumers as the approved technical measures for the vast majority of cars affected by the voluntary recall are either already available or are imminent".

"Audi Australia is reviewing the claims made by the ACCC," it added.

The Dieselgate scandal erupted in September 2015 when Volkswagen admitted it had installed so-called "cheat" software in 11 million diesel-engine cars worldwide.

The scandal damaged the company's reputation, and forced it to set aside more than 22 billion euros (US$ 23 billion) to deal with fines and demands for compensation.

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