Car dealers fear reform plans

Commission to reform car-sector antitrust rules but MEPs and car repair firms critical of proposals.

The European Commission will on 26 May reform its anti-trust rules for the car sector despite strong warnings from dealerships that the changes pose a threat to competition.

The rules will cover relationships between car manufacturers, dealerships, repair garages and spare-part suppliers. They will replace legislation dating from 2002 that expires on 1 June.

The car sector has been the subject of its own, specific, antitrust rules since the 1980s, which granted the sector a partial exemption from the EU’s principle of free competition. Governments and the European Commission agreed at the time that the partial exemption was needed to prevent several large manufacturers from building up an unhealthy dominance of the entire sector.

The Commission wants to reduce the protection afforded to car dealers from normal competition rules, on the grounds that this protection is no longer needed and could stunt the healthy development of the market. It also argues that a reform of the rules is needed to increase competition in the repairs market – which was identified as a weakness at the time of the 2002 revision.

Joaquín Almunia, the European commissioner for competition, said earlier this month that “the ability of independent garages to compete with [manufacturer-] authorised repairers is still impaired”. Addressing this would result in better-quality repair services and lower prices, he said. The reform aims to guarantee access for independent garages to branded parts and to technical information from manufacturers.

Mixed response

While the Commission’s plans for the repairs market have been broadly welcomed, its intention to reduce protection for dealerships has been strongly criticised by the European Council for Motor Trades and Repairs (CECRA), which represents that part of the industry. The European Parliament has also expressed strong concerns. Manufacturers, however, have welcomed the plans.

Dealerships are concerned that the Commission’s move will leave them vulnerable to bullying from manufacturers. CECRA has warned that dealers will lose legal protection from unfair contract terms. It is also concerned that manufacturers will be able to coerce dealers into giving up multi-branding (displaying more than one car brand in a showroom), and that this will make it harder for foreign brands to get into the European market.

The association has said that the Commission’s plans could fragment the single market by leaving aspects of the relationship between manufacturers and dealers to be defined by national law.

Charles de Marcilly, CECRA’s director-general, said that an offer from manufacturers to draw up an informal code of conduct with dealers was no substitute for the current rules. “We doubt that a code… [would] be efficient in comparison with the current binding legislation,” he said.

Almunia has said that the legislation will contain sufficient “safeguards” to protect dealers. The Commission will grant dealers a three-year prolongation of the current rules so they have time to adapt to the legal changes.

The Parliament said in a resolution on 6 May that it was “not in favour” of the Commission’s approach towards dealerships and that a non-binding code of conduct would be “ineffective in protecting dealers’ interests vis-à-vis manufacturers”.

Both MEPs and CECRA are calling on the Commission to leave open what should happen after the three-year extension of the current rules.

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