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Neelie Kroes

European Commissioner for Competition Policy

Closing remarks at roundtable to discuss future of the Car Block Exemption

Roundtable to discuss future of the Car Block Exemption
Brussels, 9th February 2009

Ladies and gentlemen,

I realise that these are difficult economic times for many of you, and I really appreciate your having taken the time to come to Brussels to discuss the future of the car block exemption.

For some of you, the current crisis may mean that this topic is not at the top of your list of priorities, but particularly in times of crisis it is important to plan for the long term. The rules that we are to discuss today will be vital for the long term health of this industry, and vital for long term benefits to motorists.

I asked you all to this meeting because I need to make a proposal as to the future of the car block exemption. I have heard a range of opinions on "what's best", and I have not yet made up my mind. I hope that today, through discussion and debate, that some of the issues will become clearer.

I am very happy that David Gow, of the Guardian newspaper, has agreed to moderate today’s discussion. I know that he will be delighted if you say something controversial which you think that I do not want to hear.

Today's meeting comes at a difficult time for the sector. With the rapid changes in demand and currency movements and credit difficulties we have seen in these past 12 months – I think you will agree the industry is in a very different place to when we started our review of the Block Exemption.

Of course, what hasn't changed is that we still need a competition law framework that will work in the long-term for the motorist. So, while surviving the crisis and the long-term future of the industry are linked, I wanted today’s discussion to focus on what we need to do to ensure a fair, level playing field over the long term, and I am grateful that that is what we have had.

As you all know, for the past year or so, my department has been carrying out a review of the block exemption due to expire in May 2010. Our evaluation report found that competition in the vehicle sales markets appeared to be working well and that consumers – motorists – were benefiting. Car prices had risen less than the general inflation rate, and price differences between EU Member States had come down.

In working together to build a solid foundation for motor vehicle competition rules, it is important to recognise the role of competition policy in protecting consumer welfare. That goes for how the industry interacts with all our policy instruments: state aid, mergers, anti-trust, and it is non-negotiable. Next to a home, a car is usually the biggest purchase a European consumer will ever make. And in tight economic times related industries such as repairs and spare parts, or lease options, play an increasingly important role in consumer spending decisions. If consumers put off buying a new car, then making sure that the repairs market works well becomes even more important.

And the issue of climate change makes the need for green innovation something we would be negligent to ignore.

So, as policy-makers, we have to take a broad long-term view and trying to understand and prioritise with many competing demands.

Each of you has your own points of view, and your own interests to defend. It is not surprising that you have different prescriptions for what needs to be done. What I have to do is weigh all of the evidence, and decide what is in the best interests of the consumer.

  • What is the best way to ensure that distribution is efficient and effective? There has to be a balance drawn between the interests of everyone involved. And where we draw that line will depend on what is better for the motorist. Will the motorist be better off if the present rules are maintained, or would more freedom for manufacturers or distributors be beneficial? These are not easy questions to answer, but today’s discussions have helped me clarify some points. Of course, this is not just about distribution.

We also need to ask:

  • How do we ensure that independent workshops can remain viable? You will have seen already our distrust of the tying or bundling of products and information in other sectors like technology – we will not allow such problems to arise in the motor vehicle industry. This issue is at the heart of the concerns of many motorists about the review of the block exemption. I understand the concern, but I want to give motorists a cast-iron guarantee: I will not agree to any change to the rules that will make life harder for independent repairers. Access to technical information and alternative brands of spare parts will continue to be necessary preconditions for such workshops to repair these older vehicles, so that they are driven safely, and meet vehicle emissions standards. I am very much in favour of joined-up policy in this area.
  • For example, this also means recognising the environmental consequences of new car sales. Running a car generates only around half the annual carbon emissions that making a new one does. That fact is another reason why markets like repairs and spare parts matter. So while new sales are needed to keep the industry viable, it is a fine balance between that fact and other environmental responsibilities.

Today's meeting has been extremely constructive and helpful, and I want to thank you all for that. There are clearly differences of view.

Vehicle manufacturers often would like to see a more flexible regime based upon the general competition rules that apply to all other sectors. Car dealers, on the other hand, would like the current regulation maintained, in particular to protect them from quick or arbitrary dismissal. Independent repairers are broadly in favour of more flexibility, but are concerned that a future regime should continue to assure access to technical information and spare parts. Some have argued that this is the time for the industry to be given as much freedom as possible to adapt to rapidly changing circumstances, while others are just as forcefully of the view that we should not rock the boat further by changing the rules.

No-one wants to separate people from economics as we deal with this crisis. With 12 million jobs depending directly or indirectly on the motor vehicle sector, I will not take any decision lightly, and I remain open to all reasonable proposals that ensure a level playing field and a strong industry.

And I am optimistic that we can afford to worry about more than tomorrow. One reason I can say that is that I firmly believe there are opportunities as well as problems before us.

Just take a look at this industry's history. General Motors, for instance, was founded immediately after a previous and equally grave crisis known as the Panic of 1907. William Durant used the opportunities generated by that upheaval to set up the world's first automobile holding company producing several brands.

Who is today's William Durant? If we keep our cool, I do not doubt that a worthy successor to that legacy, or several, will emerge.

I have not gone into detail about the current crisis today, but you can of course take for granted that we will not use competition policy to put unnecessary barriers in front of efforts to help the industry survive and adapt.

You just need to be aware that we are being very careful not to allow the wrong crisis prescriptions to damage a fair level playing field in the industry, which would only hurt all stakeholders in the long-term.

I am not tied to any particular outcome, and I am well aware that the situation today is different from when we began this process. So, let me finish by assuring you that we will continue to reflect on how best to design the rules for the medium and long-term, and I am grateful that you have all agreed that we should keep talking, so that we can arrive at a solution that balances the competing interests, and provides the car market that consumers deserve.

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