Some European car firms have said that they should have the chance to pay a fine if they cannot meet rules to cut carbon dioxide emissions (CO2).
Mr Verheugen's views were revealed in the Bild am Sonntag newspaper.
Polluting industries are increasingly having to cut emissions, as governments try to tackle global warming.
New rules
Car firms have feared stricter emissions targets could make it harder to compete.
They have also voiced concerns that if they are forced to stop making certain models of vehicles, this could lead to serious job cuts.
But the Commission has rejected such arguments.
"The Commission has decided that its legislative proposal should not distort competition among the producers. This cannot be reconciled with payments of compensation."
EU rules forcing car manufacturers to reduce emissions from new vehicles are set to be issued by mid-2008.
But the European Automobile Manufacturers' Association (ACEA) wants the rules to come into force no earlier than 2016.
As well as improved technology the EU says better infrastructure, wider use of biofuels and taxes would help reduce CO2 emissions from vehicles.