Those rules are only there to keep new car companies from becoming competition to the existing car industry. Once you are big enough, they don't really apply.
Given there was a recall, a $1B fine, and a judgement that VW must refund customers the full cost of the car, they clearly do apply. Saying people must be imprisoned is moving the goalposts.
Elaborate? Germany issued recalls and is forcing VW to pay back full price of the car, in response to USA issuing rebates larger than what Germany originally did, and South Korea sent people to prison. It looks like everywhere punished them.
Everyone that has been convicted has been convicted to probation for some minor or major fines. People don't get the full price back but can sue* to get the car bought back at a reduced value depending on the age and kilometers driven.
* there has been some work to get something similar to a class action law suit against VW going but it's hardly the same severity or consumer protection like in the US.
Just because EU has weaker consumer protection in areas it actually matters than USA (preferring performative legislation such as GDPR, but I digress) doesn't mean the rules don't apply. They just don't apply to the severity you personally think is fit.
edit: Downvote me all you like but just look at what for example VW did in the emissions scandal. Not like anyone went to jail for that. https://en.wikipedia.org/wiki/Volkswagen_emissions_scandal