I don’t see the issue in that though. If the target was to keep the average emission down across the entire country and if inefficient brand A decided to merge with efficient brand B to keep the average down that seems like it still adheres to the spirit of the law

Seems more like it meets the letter of the law.

The spirit was surely be too accelerate efficiency by ensuring all manufacturers improve. That has been negated; reducing the necessary efficiency for some manufacturers just because others are doing well.

It's like if you allowed multiple people to mix blood samples for a DUI check. Sure, there'd have to be less drinking over all, but some would still be drunk af and the effectiveness of the law would be greatly reduced.

Yeah it's not really "gaming" anything.