EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 22.7.2009 
SEC(2009) 1053 final 
  
COMMISSION STAFF WORKING DOCUMENT 
Accompanying the  
 
COMMUNICATION FROM THE COMMISSION  
 
The Future Competition Law Framework app licable to the motor vehicle sector 
  
SUMMARY OF THE IMPACT ASSESSMENT  
  
{COM(2009) 388 final} 
{SEC(2009) 1052} 
EN 2   EN EXECUTIVE SUMMARY  
1. BACKGROUND  
1. Motor vehicle manufacturers usually distribute and ensure the repair and 
maintenance of their products through author ised dealer and repairer networks, based 
on bundles of similar vertical agreements which may require assessment pursuant to 
Article 81. Block exemption regulations create safe harbour s for categories of 
agreements that are caught by the prohibition in Article 81(1), relieving parties from 
the need to individually assess whether they  can benefit from the exception provided 
for in Article 81(3). They also contri bute to the coherent application of EU 
competition rules. 
2. "W HY" – THE PROBLEM TO BE ADDRESSED  
2. Motor vehicle distribution and after-sales ag reements are subject to sector-specific 
block exemption Regulation (EC) No 1400/2002 will expire on 31 May 2010. The 
Commission now has to take position as to  what legal framework should apply to 
vertical agreements in th e sector after that date. 
3. Almost all stakeholders agree on the continued need for a block exemption 
regulation, whether general or sector-specific, since this allows them to enter into 
agreements that they can assume to be  in line with EU competition law.  
4. The IA Report takes into account market developments since the current Regulation 
came into force, and in particular, the current crisis. It shows that conditions in the vehicle sales markets differ from those in  the aftermarkets. The former are highly 
competitive, while there are barriers to e ffective competition in the latter which may 
work against consumers' interests. To improve the efficiency of the supply chain, the sector should benefit from a block exemp tion reflecting the different conditions on 
these to markets. 
3. “WHAT”-
 OBJECTIVES OF COMPETITION POLICY FOR THE SECTOR  
5. The general objective of the Commission's pol icy towards vertical agreements is to 
ensure effective supervision of markets, while simplifying administration and reducing firms' compliance costs, in accord ance with Article 83(2)(b) of the Treaty.  
6. As regards effective market supervision, the Impact Assessment Report 
acknowledges that the speci fic objectives underlying Re gulation (EC) No 1400/2002 
remain valid. These can be summarised as follows: 
• Preventing foreclosure of competing ve hicle manufacturers and safeguarding 
their access to the market; 
• Ensuring competition between dealers of the same brand;  
EN 3   EN • Enabling independent repairer s to compete effectively with the manufacturers' 
networks of authorised repairers by ensuri ng undistorted access to technical repair 
information as well as to original and matching quality spare parts by all aftermarket operators;  
• Protecting competition between authorised  repairers by ensuring access to the 
manufactures networks on the basis of qualitative standards;  
• Protecting competition on the spare parts markets by preventing restrictions 
inhibiting spare part producers' access to the aftermarket;  
• Preserving the deterrent effect of Articl e 81 so as to avoid the block exemption 
being used by manufacturers to inhibit independent pro- competitive behaviour by 
authorised dealers and repairers.  
7. Any policy option should only block exempt agreements which fulfil the four 
conditions of Article 81(3), taking in to account the above-mentioned specific 
objectives. At the same time, the scope of  the safe harbour should not be narrowed 
down to such an extent that administrativ e costs for enforcers and compliance costs 
for firms would be unduly increased by the need to individually assess agreements with no net anti-competitive effects. 
4. P
OLICY OPTIONS − THE “HOW” 
8. The Impact Assessment does not consider options which would either worsen the 
drawbacks of the current regime or would not respect Article 83(2)(b). It therefore 
does not assess the potential impact of a more detailed block exemption, which 
would inhibit diversity in retailing formats,  widen the gap with its general policy in 
the field of vertical restra ints, place unjustified constraints on carmakers, and lead to 
increased compliance costs for firms. No r has it considered not having any block 
exemption regulation covering the motor ve hicle sector. This option would seem 
prima facie  undesirable given the existence of more than 120 000 vertical 
agreements for motor vehicle distribution and after-sales services that would otherwise have to be individually assessed by the parties. 
9. Instead, the Commission has focused on fo ur policy options which entail the 
adoption of a block exemption regulation c overing all types of vertical agreements 
for motor vehicle distribution and after-sale s services and which make the benefit of 
the exemption dependent on market share thre shold(s) reflecting the parties' market 
power.  
10. In all four options, the exemption would not  apply to agreements containing certain 
hardcore restrictions (i.e. resale price maintenance, restrictions on passive sales into territories or to customer gr oups allocated to other distri butors, restrictions on active 
and/or passive sales to end users in mark ets where selective distribution is used, 
restrictions on the ability of original e quipment suppliers to sell spare parts to 
independent repairers). Similarly, all four would contain specific conditions 
excluding the benefit of the block exemp tion from non-compete obligations lasting 
more than five years, from obligations pr eventing authorised distributors from selling 
EN 4   EN products of particular suppliers, as well as certain post-term non-compete 
obligations.  
11. However, the four options differ in several ways. 
12. Option 1  is the continuation of the status quo , and is particularly strict as concerns 
the primary market. It would contain sect or-specific clauses removing the exemption 
from obligations restricting dealers’ ability  to subcontract repa ir services, single-
branding obligations irrespective of th eir duration and preventing dealers from 
selling up to three competing brands from  the same showroom, obligations limiting 
dealers' ability to establish additional outlets  or to transfer their dealership to other 
dealers within the same network, non-respec t of certain minimum contract durations 
and/or minimum notice periods, and the obl igation to provide for arbitration.  
13. Option 1 would grant a very wide exemption for the aftermarket, covering qualitative 
selective distribution systems irrespective of  the parties' market share. All such 
agreements affecting competition in the aftermarket would be considered legal, unless they contained restrict ions set out in a “black li st” (e.g. practices restricting 
access by independent repairers to technical information, restrictions on OES' ability 
to sell spare parts to authorised repairers, restrictions on authoris ed repairers' ability 
to sell parts to independent repairers, ob ligations making author ised repairers also 
sell new vehicles). 
14. Option 2  envisages letting the sect or-specific regime lapse, and applying the general 
rules applicable to verti cal restraints, curr ently laid down in  Regulation 2790/1999. 
While the current draft
1 of the replacement regulation keeps most of the provisions of 
Regulation (EC) No 2790/1999, including all fi ve restrictions by object, it introduces 
a number of improvements, (including a 30% th reshold also applicable to the market 
share of the buyer, and specific guida nce for e-commerce), which would not 
substantially change th e analysis of Option 2. 
15. Option 2 would reflect the approach that ve rtical restraints may lead to consumer 
harm only in certain circumstances, in partic ular when inter-brand competition in the 
relevant market is weak, barriers to en try are high and contracting parties enjoy 
significant market power. It w ould therefore imply a less rigi d approach in respect of 
the highly-competitive primary market. For example, non-compete obligations would 
only be excluded if they lasted longer th an five years and prevented dealers from 
selling a second brand. Any foreclosure problems could also be dealt with by 
withdrawing the benefit of  the block exemption.  
16. Location clauses would be covered by the exemption, and issues of contractual 
“fairness” would not be covered by additional conditions. 
17. In the repair and spare parts distribution markets, manufacturers’  networks generally 
have market shares well above Option 2's single market share threshold of 30%. This 
would imply that competition authoritie s could investigate a wider number of 
potentially anti-competitive practices (incl uding practices restricting independent 
operators' access to technical information or  original and/or matching quality spare 
parts). The approach would not be by “by object” (i.e. based on the hardcore list 
                                                 
1 Preliminary draft adopted by the Commission on 8 July 2009  
EN 5   EN approach) but rather “by effect” (i.e. requiring empirical evidence of actual or 
potential consumer harm).  
18. Option 3  builds on option 2, but also provides fo r sector-specific Guidelines on how 
the general rules would apply to the sect or. These would deal with restrictions 
affecting competition in the repair a nd spare parts distribution markets (e.g. 
availability of technical re pair information to independe nt operators, access to the 
authorised repair networks, access to comp eting brands of spare parts), but would 
also give certain clarifications  concerning the primary market.  
19. Option 4  also builds on Option 2 but involv es the adoption of a more focussed 
sector-specific block exemption, which w ould contain all the hardcore provisions 
aimed at protecting aftermarket competition currently set out in Regulation 1400/2002.  
20. In essence, Options 2-4 differ from Option 1 by taking the differing competitive 
conditions on the primary and aftermarkets  into account. They therefore provide for 
a) a less-restrictive approach as concerns the exemption of agreements in the highly 
competitive primary market and b) a narrower exemption in the after-markets through a single market share threshold of 30%. 
5. A
NALYSIS OF IMPACT  
21. Each option has been assessed against four gr oups of criteria. The first relates to the 
specific policy objectives mentioned above in section 3, and measures the options' 
ability to ensure effectiv e protection of competition.  
22. The second group of economic criteria ascertains each optio n's impact in relation to 
(i) firms' foreseeable compliance costs, (i i) SMEs' investment levels and access to 
finance, (iii) the European automotive indus try's competitiveness and (iv) benefits for 
consumers and households.  
23. The third group of criteria is designed to  assess options' likely impact on public 
administration as regards (i) the use of enforcement resour ces, and (ii) consequences 
for the EU budget.  
24. The final group reflects the potential impact s of each option on (i) employment and 
job quality, (ii) public safety and (i ii) health and the environment.  
25. The expected impact has been assessed mainly in qualitative terms, with options 2-4 
scoring from minus three to plus three in respect of each criterion, the point of 
reference being the baseline scenario (Op tion 1). Weightings were also used to 
reflect the importance of each criterion. 
EN 6   EN 6. SUMMARY OF THE ASSESSMENT OF IMPACTS  
26. The main findings of the Impact Assessment Report can be summarised as follows. 
6.1. Economic impacts: criteria related to the protection of effective competition 
27. Options 3 and 4 would improve on Option 1 in addressing competition problems, 
whereas Option 2 would worsen the situation. 
28. In particular, Option 1 and Option 3 score the same as regards the objective of 
protecting competition in the primary market for the sale of new motor vehicles, with 
Option 1 having a slight advantage due to its specific treatment of single-branding 
obligations, but lagging slightly behind as regards innovati on and diversity of 
distribution formats. Options 2 and 4 show a weaker performance due in particular to 
reduced legal certainty as to how certain re strictions on parallel trade would be dealt 
with. 
29. Both Option 3 and 4 would improve the current level of protection of competition on 
the aftermarkets, by enabling more focuse d enforcement in respect of certain 
practices risking the foreclosure of indepe ndent repairers (e.g. misuse of warranties 
by vehicle manufacturers), while offering sustained pr otection against practices 
limiting independent operators' access to technical information. Option 4 scores 
better than Option 3 as regards protecting co mpetition in the spar e parts markets. By 
contrast, Option 2 gives less legal certainty as to how the competition rules will be enforced against restrictions on access to authorised repairer networks, and on the 
supply of competing spare parts. 
6.2. Other economic impacts 
30. Options 2-4 score better than the baseline option with regard to other economic 
impacts, with Option 2 lagging somewhat behind Options 3-4.  
31. Options 3 scores best with regard to impacts on SMEs and on firms' compliance 
costs. By applying the genera l rules, which are far simpler than those in Regulation 
(EC) No 1400/2002, Option 2 would reduce the risk of firms incurring unnecessary 
costs through under- or over-compliance.  Option 3 would improve on Option 2 by 
giving firms guidance as to where the bounda ries of the safe harbour lay, thereby 
decreasing error and litigation costs. Opti on 4 would score between Options 2 and 3, 
since although the over-complex primary ma rket provisions would not be carried 
over, there would be a certain  lack of legal certainty. Er ror and litigatio n costs would 
also be reduced to an extent comparable to Option 3.  
32. None of the options would significantly aff ect the position of SMEs or the promotion 
of entrepreneurism. Options 3 and 4 woul d have a positive impact as regards access 
to essential inputs such as  spare parts and technical information. Option 3 would 
address new issues which may affect SME i ndependent repairers, such as the misuse 
of warranties by car manufacturers, whil e Option 4 scores slightly better on 
improving access to spare parts. 
33. By providing for a more flexible regime, Options 2-4 would allo w a broader range of 
distribution agreements to benefit fr om the block exemption, thus giving 
EN 7   EN manufacturers more room to adjust to  changing economic circumstances, and 
enhancing the overall competitiveness of the EU car industry. 
34. Options 2-4 would be unlikely to raise barri ers to entry for competing manufacturers. 
In-store multi-branding would also bring negligible benefits for consumers. Options 2-4 would increase consumers' choice of repa irers, since they would make it easier 
for the Commission to examine practices that risked foreclosing independent repairers. Option 4 would improve on Options 2 and 3 by including hardcore provisions that would allow authorised repair ers to offer a choice of spare parts to 
consumers.  
6.3. Impact on public administration 
35. Options 2 to 4 score higher than the ba seline option with regard to public 
administration, since they would enable re sources to be better focussed on the most 
serious infringements of EU competition rules.  
36. Option 3 scores highest, since guidelines w ould avoid confusion as to how certain 
issues specific to the moto r vehicle sector would be dealt with unde r the general 
rules. Option 4 would also have a moderate ly better impact than the baseline scenario 
as it would enable the Commission to better focus its enforcement activities on more problematic aftermarket issues.  
37. Options 2-4 would have no impact on the Community budget, since any fines arising 
from better enforcement would simply reduce Member States' contributions. 
6.4. Social and environmental impacts 
38. Options 3 and 4 would improve on the base line scenario as regards social and 
economic impacts. No option would have more  than a minor impact on employment, 
given the loose link between changes in the competition law framework, and any possible variations in the number of empl oyees in the motor vehicle sale and after 
sale service sectors. 
39. By facilitating access to tech nical information in particular, Options 3 and 4 could 
improve public safety and help reduce pollution. 
7. T
HE PREFERRED OPTION  
40. The Impact Assessment shows that Option 3 has the greatest pot ential for achieving 
the objectives identified, and appears to be the option best able to meet the general 
objective of balancing the e ffective supervision of markets against the need to 
simplify administration and minimise complian ce costs. It also be st meets the sector-
specific objectives, and has the most favourab le impact as regards the ensemble of 
the other impact criteria. However, Option 4 comes quite close to Option 3 in terms 
of overall scoring; and it is therefore not possible to state definitively that Option 3 
would have a better impact than Option 4. Either option would have positive implications for competition a nd ultimately for consumers. 
EN 8   EN 8. MONITORING AND EVALUATION  
41. Following the adoption of th e Communication setting out the basic orientation for 
the future competition law regime applicable to the motor vehicle sector, the Commission will continue the consultation process with private and institutional stakeholders and with expert practitioners , and will then draft the legal framework.