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IP/08/810

Brussels, 28th May 2008

Antitrust: Commission report on car block exemption shows that competition has improved

Conditions for competition have improved in recent years on the markets for both new cars and repair and maintenance according to an evaluation report just adopted by the European Commission on the block exemption Regulation governing the application of EC Treaty rules on restrictive business practices (Article 81) to motor vehicle distribution and repair agreements (Regulation 1400/2002).

Competition Commissioner Neelie Kroes said: "Buying and running a car are big expenses for consumers, so we need to make sure that the right rules are in place to help competition to work properly. That’s why I am eager to receive comments on this report that will help us understand how best to design the competition rules for the sector in the future".

Block exemptions create safe harbours for categories of agreements, relieving the contracting parties from the need to individually analyse those agreements to see whether they fall foul of EU rules on restrictive business practices (Article 81). The motor vehicle block exemption puts in place such a safe harbour for car and commercial vehicle distribution and servicing agreements, and follows the Commission's modern effects-based approach, according to which policy is driven by a careful analysis of how competition actually works on a given market. In 2002, it was felt that there were a number of problems specific to the sector that required a narrow block exemption with detailed rules, so the car sector could not then be brought within the general regime applying to vertical agreements between companies.

The Report shows that on the market for the sale of new vehicles, competition between car manufacturers has become more intense and that the Single Market in the sector appears to be functioning better than in the past. This increase in inter-brand competition is mainly due to factors other than the Regulation, such as manufacturing over-capacity, technological innovation and closer integration of markets.

On the repair and maintenance markets, independent repairers now have better access to technical information; thanks to Commission enforcement action (see IP/07/1332). Meanwhile, the number of authorised repair outlets has increased, because - in line with general competition policy - manufacturers (whose networks have high market shares as regards the repair of their vehicles) must let everyone into their networks providing that quality criteria are met. Suppliers of spare parts have maintained their competitive position vis-à-vis the vehicle manufacturers' own spare parts distribution channels.

The Report concludes that the general framework of the block exemption has had positive effects overall. However, many of the detailed sector-specific provisions, like those allowing dealers to run showrooms without repair shops, have proven unnecessary, and some may have been counter-productive. For instance, the higher (40%) market share threshold below which quantitative selective distribution agreements may benefit from the exemption may have skewed manufacturers' choice towards a uniform distribution model. In addition, over-prescriptive rules in areas such as multi-brand vehicle sales and the opening of additional sales outlets may have encouraged the introduction of more onerous dealership standards, thereby making distribution more expensive, to the detriment of consumers. Other provisions, such as those obliging manufacturers to give independent repairers access to technical information, have been effective, but will in the future be superseded by rules in other EU policy areas (namely the Council Regulation on vehicle emissions 715/2007). The Report therefore suggests that car owners might benefit from improvements in competition if less complex rules were to apply to the sector. The form and content of the future regime will be decided in the next stage of the review process.

Today's Report is the result of a fact-finding exercise launched in 2007, including questionnaires to stakeholders, studies and external statistical databases. The Report is accompanied by working papers which contain more extensive descriptions of the data collected and of the arguments on which the Report itself is based.

The Report is the first step in a procedure that will decide on the regime applicable to the car sector after the Regulation expires on 31 May 2010. It does not make proposals as to the future.

The Report and the working paper will be available at:

http://ec.europa.eu/comm/competition/sectors/motor_vehicles/news.html

The Commission invites interested parties to submit their observations on the Evaluation Report until 31 July 2008 by e-mail to Comp-car-sector@ec.europa.eu, quoting reference number HT-1021 — Evaluation Report on the motor vehicle block exemption.


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