(Adds Daimler reaction)
By David Shepardson
WASHINGTON, Feb 23 (Reuters) - Two Democratic U.S. senators on Friday urged Attorney General Jeff Sessions to thoroughly investigate Daimler AG after a media report alleged the automaker used potentially illegal software to pass diesel emissions tests, according to a letter seen by Reuters.
German newspaper Bild am Sonntag had reported on Sunday that U.S. investigators probing the Mercedes-Benz parent found that its cars were equipped with software which may have helped them to pass diesel emissions tests, citing confidential documents.
The report cited emails from Daimler engineers questioning whether these software functions were legal.
Senators Edward Markey and Richard Blumenthal said recent reports "raise serious questions as to whether Daimler AG deceived federal regulators and U.S. consumers and endangered public health."
They added prosecutors should take "appropriate action against the company, including criminal charges against company executives if warranted."
A Daimler spokesman said Friday the German automaker has "been fully cooperating with the U.S. authorities for more than two years and provided comprehensive transparency."
Diesel vehicles have been under heightened scrutiny since Daimler rival Volkswagen was forced to pay billions of dollars in fines after admitting in 2015 to using software to evade exhaust tests by manipulating emissions to disguise excess pollution.
The U.S. Environmental Protection Agency in February 2016 requested information from Mercedes-Benz to explain diesel emissions levels. Daimler said in April 2016 the Justice Department had asked it to investigate its emissions certification process.
A Justice Department spokesman did not immediately comment.
Daimler has said in financial filings it faced ongoing investigations by U.S. and German authorities into excess diesel emissions that could lead to significant penalties and recalls.
Software-based engine management systems are illegal if they are not declared to U.S. regulators and if designed to evade anti-pollution tests.
In Europe, carmakers have legally made use of a "thermal window," a temperature threshold allowing carmakers to throttle back emissions management systems to protect the engine from damage.
The Justice Department sued Fiat Chrysler Automobiles NV in May, accusing it of illegally using software that led to excess emissions in 104,000 U.S. diesel vehicles sold since 2014. The government is seeking "substantial" civil penalties to settle the lawsuit.
German prosecutors searched Daimler premises in May 2017 as part of an ongoing fraud probe related to false advertising and possible manipulation of exhaust-gas after-treatment in diesel cars.
Stuttgart prosecutors said on Monday two Daimler employees were being investigated as part of the probe.
In May, Daimler said it had dropped plans to seek U.S. approval to sell 2017 Mercedes-Benz U.S. diesel vehicles. The company faces ongoing U.S. lawsuits from investors. (Reporting by David Shepardson; Editing by Meredith Mazzilli and Jonathan Oatis)