Competition: Commission welcomes changes to BMW’s distribution and servicing agreements
European Commission - IP/06/302 13/03/2006
Brussels, 13th March 2006
The European Commission has closed its investigation into BMW’s distribution and servicing agreements following changes to bring them into line with the Commission’s car distribution block exemption Regulation 1400/2002 (see IP/02/1073). The changes introduced by BMW ensure that BMW dealers and repairers are not restricted in selling or servicing cars of competing brands (multi-branding) and that all repair-shops who fulfil the necessary quality standards can become members of the authorised network. A similar case involving General Motors has also been closed (see IP/06/303).
Competition Commissioner Neelie Kroes commented: “I welcome the constructive steps taken by BMW which will allow opportunities for innovative car retailing and more competitive after-sales services, thereby benefiting consumers across the EU”.
The changes relate to two main areas: restrictions on multi-brand selling and servicing, and barriers to access to the authorised repairer network. The Commission action will contribute to proper implementation and correct interpretation of the car block exemption Regulation by the whole sector.
Multi-brand sales and servicing
With regard to multi-brand sales and servicing, various provisions in the contracts were hindering BMW dealers and repairers from using their existing facilities to sell or service cars of competing brands, without having to unnecessarily duplicate investments. BMW has clearly accepted that its dealers and repairers use their premises for multi-brand distribution and servicing. BMW has also clarified that dealers and repairers can use generic (multi-brand) IT infrastructure and management systems, including accounting methodology and accounting framework and that they are not required to disclose to BMW commercially-sensitive information on their business with other brands. This provides dealers with the opportunity to be innovative and more efficient, so that consumers can benefit from better commercial conditions.
Access to repairer network
BMW’s servicing contracts contained a range of requirements going beyond what is exempted by the car block exemption Regulation. BMW has now reduced the minimum capacity requirements to what is objectively necessary for ensuring high quality repair and maintenance services, and has abandoned all quantitative requirements that had the effect of directly limiting the number of authorised repairers in a given area. In addition, a new “opening clause” states that repairers are free to source all workshop equipment, tools and IT hardware and software from alternative suppliers provided that equivalent functionality and quality is assured. BMW now also allows cooperation by authorised repairers to jointly warehouse and purchase spare parts. These adjustments and clarifications ensure that local demand can determine where repair outlets open, so that consumers can benefit from qualified after-sales services in their proximity and competition between authorised BMW repairers.
The Commission also took note that certain discriminatory practices against “stand-alone” repairers (i.e. garages who do not sell new BMW cars) were abandoned by BMW during the proceedings. This included, in some Member States, the omission of stand-alone authorised repairers from the directory of official BMW repairers on BMW’s website, the on-board service booklets and from the navigation systems installed in BMW cars.
In June 2003, the European BMW Dealers’ Association lodged a complaint with the Commission against several aspects of BMW’s distribution and servicing agreements concluded in the EU following the adoption of the BER in 2002. The Commission investigated the complaint and raised a number of issues with BMW, after which BMW implemented a set of adjustments to, and clarifications of, its distribution and servicing agreements. These were communicated, at the end of January 2006, to over 2500 BMW and Mini dealers and repairers in the EU.
The complaint by the European BMW dealer association was not founded in all aspects. In particular, arguments relating to a perceived lack of contractual fairness of certain contract provisions and practices did not raise concerns under the relevant competition rules. Such practices may, however, raise issues under applicable national law, including rules on the protection of weaker contract parties.
Following the Commission action, the European BMW Dealers’ Association has withdrawn its complaint.
See also MEMO/06/120 for more details.