Canberra, Oct 1 (IANS): Volkswagen Group could have to pay billions of dollars worth of fines in Australia, after the nation' s consumer watchdog announced it was investigating the car manufacturer on Thursday.

The Australian Competitions and Consumer Commission (ACCC) confirmed it would be investigating the company's use of "defeat devices" which cheat emission tests in its diesel cars, in a scandal which Volkswagen has said could affect up to 11 million cars worldwide, Xinhua reported.

ACCC chairman Rod Sims said if found guilty, Volkswagen Group, which owns Audi among other, smaller manufacturers, could face a penalty of up to $776,000 per breach.

Sims said the ACCC would be enforcing Australian Consumer Law (ACL) in its investigation.

"Using defeat devices is specifically prohibited under the Australian Design Rules, which are picked up as ACL mandatory safety standards," he said in a statement on Thursday.

"As the enforcer of the ACL, the ACCC can take action against any corporation that has breached mandatory standards."

Sims said Volkswagen Group might have knowingly misled consumers with the faulty environmental readings, meaning the ACCC would be forced to "take action".

Volkswagen Australia is yet to clarify whether or not it supplied its cars with the emission control devices to the local market.

Sims told the Australian Broadcasting Corporation (ABC) that he was "frustrated" with Volkswagen Group, indicating that if they were not forthcoming with information soon, the ACCC would be forced to intervene.