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Brussels, 22 July 2009

Antitrust: Commission proposes future competition law regime for motor vehicle sector

The European Commission is setting out policy orientations for the future legal framework for motor vehicle distribution and after sale services agreements after the expiry of the current Block Exemption Regulation (BER) in May 2010. The policy orientations, on which comments are requested, are outlined in a Communication adopted today which draws a basic distinction between issues arising in the primary market for the sale of new vehicles, where it has found no indications of significant competition shortcomings in the EU, and those which may affect consumers in the so-called "after market" (after-sales service and repairs), where competition is less intense. The Commission's policy orientations recognise that the general rules on vertical restraints (i.e. agreements between firms at different levels of the production and distribution chain) can protect the primary market and, at the same time, aims at improving the protection of competition in the aftermarket. The Commission acknowledges the need for a smooth transition with regard to the primary market and announces its intention to propose to extend the respective provisions of the current Regulation for three years.

Competition Commissioner Neelie Kroes said: "It is important to give the automotive sector, one of the most important sectors in the EU, legal certainty and predictability as to the future competition law regime. This holds even more true in times of crisis. That is why I favour a new framework which will make it easier for market players to respond to rapidly changing market circumstances while better safeguarding consumer interests".

Block exemptions create safe harbours for categories of agreements, relieving companies from the need to individually analyse whether those agreements comply with EU rules on restrictive business practices ( Article 81 of EC Treaty) . The motor vehicle sector (both passenger cars and commercial vehicles) is subject to a specific block exemption, Commission Regulation 1400/2002, which will expire on 31 May 2010.

The objectives underlying Regulation 1400/2002 remain valid. However, the Commission has not found indications of significant competition shortcomings in the EU primary market (sales of new vehicles) but rather structural overcapacity and falling real prices. The future competition law framework in this sector should therefore not impose regulatory constraints which might increase distribution costs and are not justified by the objective of protecting competition on the market.

In the light of these market conditions, the Commission proposes to align the rules applying to the primary market to the general competition rules on vertical agreements. It underlines, however, the need to introduce safeguards in the form of guidelines against any possible closing off of new entrants, price discipline imposed by manufacturers, or market segmentation through territorial protection or impediments to cross-border sales, in order to ensure at least as much competition in these areas compared to the situation under the current Regulation. As investments in the primary market are often brand-specific and made in the long term, there is a specific need for a smooth transition. The Commission therefore announces its intention to propose to extend the provisions of the current Regulation relating to the primary market for a period of three years.

It is particularly important to protect competition in the aftermarket as it is less competitive due to its brand-specific nature but accounts for some 40% of consumer expenditure on cars. The Commission intends to apply the general competition rules in conjunction with sector specific guidelines and/or an additional, more focused sectoral block exemption Regulation. These will address core aftermarket issues, such as independent operators' access to technical information, access to spare parts and access to the network of authorised repairers, but also tackle new issues which have become more prominent in recent years, such as the misuse of warranties aimed at excluding independent repairers.

Today's Communication is the result of a review exercise launched in 2007. Following an in-depth market survey, the Commission evaluated the impact of the current block exemption on industry practices and the effects of those practices on competition in the EU markets in a report published on 28 May 2008 (see IP/08/810 ). This report prompted numerous comments from a wide range of stakeholders, including vehicle manufacturers, dealers and authorised repairers, the independent motor trade, consumers, national authorities and lawyers.

On the basis of the evaluation report and the ensuing consultations and discussions, an impact assessment report has outlined a number of policy options for the future regime. It is available, together with the Communication at:

Interested parties can submit observations on the proposed policy options by 25 September 2009 to , (reference number HT-1021 — Communication).

See also MEMO/09/348 .

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