As we saw tonight, VAR in its current incarnation is preposterous. As it stands, and this is where Peter Walton is so blatantly and willfully ignorant, only clear and obvious mistakes can be overruled.
In essence, whatever decision the ref makes for the two pens can't be overruled, because the error is not clear & obvious. So if the ref gave the pen against Nico, it shouldn't be overruled. There is an argument that the pen is valid ( a tenuous one, but there you go). Equally, if the ref doesn't give the pen, it can't be overruled. Same with the second pen. There was no role for VAR in either case.
What is really bizarre is that City's first goal was reviewed for a foul by Laporte. Incidents leading to goals apply only in the attacking phase. How can a defensive header in your own half be deemed part of the attacking phase?
VAR tonight was not used in the way it is intended. The only valid conclusion is that the VAR officials did not know what they were doing.