Businesses involved in the motor industry should review their arrangements with suppliers to ensure compliance with new EU competition rules. The new rules aim to benefit consumers by strengthening the European Commission’s ability to deal with abuses by manufacturers in the motor industry as well as increasing competition between repairers.
The new motor Block Exemption Regulation replaces a previous motor exemption which expired on 31 May 2010. Block Exemption Regulations afford a legal “safe harbour” for certain agreements from the full application of EU competition rules. Failure to satisfy the conditions for exemption does not necessarily mean that an agreement is contrary to competition rules; however, the parties need to review its effects on a case-by-case basis.
The new motor Block Exemption Regulation provides for the application of a separate exemption, the general Block Exemption on vertical agreements (see Legal News June 2010), to the motor industry. Vertical agreements are agreements between businesses operating at different levels of the production/distribution chain relating to the conditions under which parties may purchase, sell or resell goods/services.
In relation to the distribution of motor vehicle spare parts and the provision of repair/maintenance services, this means that from 1 June 2010 both parties must have a market share no greater than 30%. In addition to meeting the general vertical exemption conditions, agreements must not include restrictions placed by car manufacturers on:
- the sale of original spare parts by authorised dealers to independent repairers;
- the ability of suppliers of spare parts, repair tools or diagnostic or other equipment to supply to authorised or independent distributors or repairers or to end-users; or
- the ability of suppliers of spare parts or components to place their trademark or logo on their products.
The new rules endeavour to strengthen repairers’ access to spare parts which should reduce the cost of repairs to consumers. Car manufacturers will no longer be able to make a warranty conditional on having services carried out in authorised garages only (unless repairs are paid for by the manufacturer).
In a related development, agreements for the distribution and sale of motor vehicles will also be subject to the general rules on vertical agreements from June 2013. Again, the key change is the requirement to take into account the market shares of both the purchaser and the supplier which could result in agreements currently exempted falling outside the scope of the exemption. Until 2013, parties may continue to benefit from an exemption provided they comply with the conditions of the 2002 motor vehicle exemption.
Companies should swiftly adapt their business to the new rules in relation to the distribution of spare parts and the provision of repair/maintenance services. Preparations to comply with the new motor rules for the distribution and sale of motor vehicles should be made in advance of the 2013 implementation date.