The European Commission alleges automakers worked together to 'restrict competition on the development of technology to clean the emissions of petrol and diesel passenger cars'.
The so-called "circle of five", which included engineers from Audi and Porsche, are said to have "coordinated their AdBlue dosing strategies, AdBlue tank size and refill ranges ... with the common understanding that they thereby limited AdBlue-consumption and exhaust gas cleaning effectiveness".
AdBlue is a urea solution injected into a selective catalytic reduction system to reduce oxides of nitrogen (NOx) from diesel engine emissions.
They also "co-ordinated to avoid, or at least to delay, the introduction of OPF [Otto particle filters] in their new (direct injection) petrol passenger car models".
Regulators conducted raids on all three automakers in 2017 after a tip off from Daimler.
In a statement, Margrethe Vestager, commissioner in charge of competition policy, said: "Companies can co-operate in many ways to improve the quality of their products.
"However, EU competition rules do not allow them to collude on exactly the opposite: not to improve their products, not to compete on quality. We are concerned that this is what happened in this case and that Daimler, VW and BMW may have broken EU competition rules.
"As a result, European consumers may have been denied the opportunity to buy cars with the best available technology. The three car manufacturers now have the opportunity to respond to our findings."
The three automakers have each been handed a statement of objections, which they need to respond to either in writing or in person.
If, at the end of the process, the commission finds there is "sufficient evidence of an infringement" of the EU's anti-trust rules, they can be fined up to 10 per cent of their annual worldwide turnover.
In 2018, BMW had a global turnover of €97 billion ($153 billion), Daimler €167 billion ($263 billion), and the Volkswagen Group €174 billion ($275 billion).
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