EUROPEAN COMMISSION Brussels, 28.5.2021 SWD(2021) 112 final COMMISSION STAFF WORKING DOCUMENT of the Motor Vehicle Block Exemption Regulation Accompanying the document REPORT FROM THE COMMISSION Commission Evaluation Report on the operation of the Motor Vehicle Block Exemption Regulation (EU) No 461/2010

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Table of contents 1Introduction 2Background to the intervention 3Evaluation Questions 4Methodology 5Market developments and enforcement activities in the motor vehicle sector 6The evaluation criteria 7Conclusions Annex 1: Procedural information Annex 2: Key findings of fact-finding study Annex 3: Consultations Annex 4: Public enforcement of the Motor Vehicle Block Exemption Regime Annex 5: Methods and analytical mode Annex 6: Overview of issues identified during the evaluation process Glossary Term or acronym Meaning or definition Commission European Commission DG Competition Directorate-General for Competition of the European Commission EU European Union EUR Euro EEA Agreement Agreement on the European Economic Area EFTA European Free Trade Association VBER Vertical Block Exemption Regulation MVBER Motor Vehicle Block Exemption Regulation VGL Guidelines on Vertical Restraints / Vertical Guidelines SGL Supplementary Guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles / Supplementary Guidelines MVBER regime VBER + MVBER + VGL + SGL NCAs National Competition Authorities OEM Original Equipment Manufacturer OES Original Equipment Suppliers IAM Independent Aftermarket Suppliers RPM Resale Price Maintenance VM Vehicle Manufacturer 1Introduction

Article 101(1) of the Treaty on the Functioning of the European Union (“the Treaty”) prohibits agreements between undertakings and concerted practices that restrict competition, unless, in accordance with Article 101(3) of the Treaty, they contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits. The prohibition in Article 101(1) of the Treaty covers, among other things, agreements and concerted practices entered into between two or more undertakings operating at different levels of the production or distribution chain, and relating to the conditions under which the parties may purchase, sell or resell certain goods or services (“vertical agreements”). Council Regulation (EEC) 19/65 (“the Empowerment Regulation of 1965”) enables the Commission to apply Article 101(3) of the Treaty by regulation to certain categories of vertical agreements and corresponding concerted practices falling within Article 101(1) of the Treaty for which it can be assumed with sufficient certainty that they satisfy the conditions of Article 101(3) of the Treaty. The Commission has made use of this power by adopting general as well as sector-specific measures. Distribution and repair agreements in the motor vehicle sector have long been subject to sector-specific block exemption regulations. The current regime applicable to vertical agreements in the sector consists of the general block exemption rules, as set out in Regulation (EU) 330/2010 (“Vertical Block Exemption Regulation” or “VBER”) and the Guidelines on Vertical Restraints (“VGL”), sector-specific block exemption provisions, as provided for in Regulation (EU) 461/2010 (the “MVBER”), and the Supplementary Guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles (“SGL”). These rules are referred to in this Staff Working Document (“SWD”) as the “MVBER regime”. The MVBER expires on 31 May 2023. Pursuant to Article 7 thereof, the Commission has to draw up an evaluation report on its operation by 31 May 2021. When the evaluation of legislation is based on a review clause in a legal act which obliges the Commission to produce a Commission Report (i.e., one adopted by the College), a SWD should be linked to and support the main Commission Report. This is therefore the SWD evaluating the impact of the MVBER regime on industry practices and the effect of those practices on competition in the markets for motor vehicle retailing and aftersales servicing within the EU. It does not prejudge the final nature or content of any decision that the Commission may take following this evaluation. The SWD is accompanied by six technical annexes. The following sections set out the purpose of the evaluation (Section 1.1), as well as its substantive and geographic scope (Section 1.2). 1.1Purpose of the MVBER evaluation The purpose of the evaluation is to gather facts and evidence on the functioning of the MVBER regime which will serve as a basis for the Commission to decide whether it should let that regime lapse by 31 May 2023, or should rather renew or revise it. As required by the Commission’s Better Regulation Guidelines, the evaluation examines whether the objectives of the MVBER regime were met during the period of its application (effectiveness) and continue to be appropriate (relevance) and whether, taking account of the costs and benefits associated with applying it, the MVBER regime has been efficient in achieving its objectives (efficiency). It also considers whether, as legislation at EU level, the MVBER regime has provided added value (EU added value) and is consistent with other Commission documents providing guidance on the application of Article 101 of the Treaty and related legislation with relevance for vertical agreements in the motor vehicle sector (coherence). The impact of the COVID-19 pandemic is not dealt with in this SWD, given that it is still ongoing, and that its impact was mostly not included in the evidence provided during the evaluation.

1.2Scope of the MVBER evaluation The motor vehicle sector has been subject to a specific block exemption regime since the mid-1980s. This regime has already been revised three times over the last three decades, most recently in 2010. Under the MVBER regime, agreements for the distribution of new motor vehicles were brought under the VBER from 1 June 2013. As to aftermarket agreements, these benefitted from the MVBER from 1 June 2010 so long as the requirements of the VBER were met and provided that they did not contain any of the additional hardcore clauses listed in Article 5 MVBER. The substantive scope of the evaluation therefore comprises four sets of rules: (i) the MVBER itself, which superseded the previous sector-specific block exemption regulation (Regulation (EC) 1400/2002); (ii) the VBER, in so far as it applies to vertical agreements concerning motor vehicles; (iii) the VGL, which provide guidance on the application of the VBER; and (iv) the SGL, which provide guidance on the application of the MVBER and supplement the VGL with regard to the application of the VBER to the motor vehicle sector. The VBER has also been subject to an evaluation, since it expires in May 2022, one year before the MVBER. The outcome of the VBER evaluation will be taken into account in the context of the next steps of the review process of the MVBER regime. The geographic scope of the evaluation includes all EU Member States. Article 101(1) of the Treaty is directly applicable in all EU Member States. By introducing a directly-applicable exemption system in which the competition authorities and the courts of the Member States have the power to apply not only Article 101(1) of the Treaty, but also Article 101(3), Council Regulation 1/2003 introduced parallel competences for both. When assessing the compatibility of vertical agreements in the motor vehicle sector that may affect trade between Member States within the meaning of Article 101 of the Treaty, National Competition Authorities ("NCAs") and national courts are bound by the directly-applicable provisions of the VBER and MVBER. The VGL and SGL, which are binding on the Commission, do not bind NCAs or national courts, but are typically taken into account when assessing the compatibility of vertical agreements in the motor vehicle sector with Article 101 of the Treaty. Against this background, the evaluation of the MVBER regime not only covers the decisional practice of the Commission but also that of the NCAs, as well as the relevant case law of national courts. The three European Free Trade Area (“EFTA”) States (Iceland, Liechtenstein and Norway) are not subject to this evaluation. This is because secondary EU law, such as the VBER and MVBER is not directly applicable in these countries as, to become applicable, first has to be included in the Agreement on the European Economic Area ("EEA Agreement") on the basis of Article 60 of the EEA Agreement, and then incorporated into the national legal orders of the EFTA States. In view of the Commission’s obligation to informally seek advice from experts of the EFTA States for the elaboration of new legislative proposals, it informed the EFTA States of the evaluation of the MVBER regime to provide them with an early opportunity to share their experience in this regard. 2Background to the intervention The following sections provide (i) an overview of the EU competition policy framework for vertical agreements in the motor vehicle sector (Section 2.1); (ii) a description of the current MVBER regime, which constitutes the intervention subject to this evaluation (Section 2.2); (iii) a presentation of the intervention logic (Section 2.3); and (iv) a presentation of the evaluation baseline for the MVBER regime (Section 2.4). 2.1Overview of the motor vehicle block exemption regime

Vertical agreements between actors in the motor vehicle sector at different levels of the distribution chain are found in three main areas: (i) the distribution of new motor vehicles; (ii) the provision of repair and maintenance services; and (iii) the distribution of spare parts. The players involved in these agreements include vehicle manufacturers, authorised vehicle dealers and repairers, parts manufacturers and parts distributors. Other actors, such as independent repair shops, roadside assistance operators, specialist crash repair shops, car glass installers, insurers, finance firms and mobility providers are also affected. Such vertical agreements may give rise to competition concerns and thus require assessment pursuant to Article 101 of the Treaty. Agreements that are caught by the prohibition in Article 101(1) of the Treaty may benefit from the exemption provided for in Article 101(3) of the Treaty, as long as they satisfy the cumulative conditions set out therein. In this regard, block exemption regulations create safe harbours for categories of agreements that are caught by the prohibition of Article 101(1) of the Treaty, relieving the parties from the need to analyse on an individual case-by-case basis whether they can benefit from Article 101(3) of the Treaty. The motor vehicle sector has long been subject to specific block exemption regimes, beginning with Regulation (EC) 123/85, which was successively superseded by Regulation (EC) 1475/95, Regulation (EC) 1400/2002 and the currently applicable MVBER. While sector-specific block exemptions were the norm thirty years ago, in more recent years, the Commission has moved towards general regimes applicable to all sectors, and the motor vehicle sector is now unique in having its own block exemption regime. The last review of the regime applicable to the motor vehicle sector, whereby the currently applicable MVBER superseded Regulation 1400/2002, took place in 2010. This resulted in a major reform, with the sector being brought under the umbrella of the general regime for the first time. However, for the reasons set out below, the MVBER narrowed the scope of the exemption available for agreements in all other sectors under the VBER by listing three additional clauses relating to spare parts, as hardcore restrictions. 2.2Main elements of the 2010 reform The change introduced in 2010 was more pronounced for the primary market, for which the sector-specific rules were abolished altogether, albeit subject to a transition period of three years, to allow market participants time to adapt. The underlying reasoning was the Commission’s finding at the time that there did not appear to be any significant competition shortcomings in new motor vehicle distribution which would distinguish the motor vehicle sector from other economic sectors and which would require the application of rules different from and stricter than those set out in the VBER. At the same time, however, the Commission found that certain characteristics of and persisting competition issues in the motor vehicle aftermarkets still merited some sector-specific rules on top of the general ones. The current regime applicable to vertical agreements in the motor vehicle sector consists of two set of rules: (i) the general block exemption rules, as set out in the VBER, supplemented by the VGL; and (ii) sector-specific block exemption provisions, as provided for in the MVBER, which are supplemented by the SGL (see Section 1.2 above). It should be noted that the SGL also supplement the application of the VBER to the motor vehicle sector. In addition, in 2012, the Commission published a set of frequently asked questions (“FAQ”) on the application of EU antitrust rules in the motor vehicle sector. The aim of the FAQ was to complement the SGL, by helping stakeholders operating in the sector to understand how the Directorate-General for Competition (“DG Competition”) approaches particular issues regarding the motor vehicle markets. Moreover, on 22 July 2009 the Commission adopted a Communication entitled “The Future Competition Law Framework applicable to the motor vehicle sector” (“2009 Communication”) setting out seven areas which were found to be problematic from a competition perspective. The Communication is thus relevant for the specific objectives of the MVBER regime for the purposes of this evaluation. The 2010 reform included, among other things, the following main elements: a.The application of a uniform exemption threshold of 30%, replacing the two different thresholds applicable under Regulation 1400/2002 and the exemption of qualitative selective distribution agreements without threshold; b.The treatment of non-compete / single-branding obligations was brought into line with the general regime for vertical agreements; c.Provisions aimed at safeguarding motor vehicle dealers' sunk costs or regulating purely contractual issues between vehicle manufacturers and dealers were abolished; d.Provisions aimed at promoting certain distribution formats (e.g., the sale of vehicles from different manufacturers within the same showroom, the freedom to sell leasing services, and the freedom to open additional outlets) were abolished; e.Only three of the sector-specific hardcore restrictions previously included in Regulation 1400/2002 were carried over to the MVBER. The rest were either replaced by those in the VBER or abolished altogether; f.In the light of the application of the new exemption threshold to the qualitative selective agreements prevalent in motor vehicle repair, the hardcore provision relating to independent operators’ access to technical information was replaced by a section in the SGL and references to the related provisions that had just been incorporated in the type-approval rules.

The MVBER regime provides for an exemption from Article 101(1) of the Treaty applicable to vertical agreements concerning conditions for the purchase, sale or resale of spare parts for motor vehicles, or repair and maintenance services for motor vehicles, provided that certain conditions are met. First, the agreements must fulfil the requirements for an exemption under the VBER, implying that the market shares of the supplier and the buyer concerned must not exceed the threshold of 30% and that the agreement in question must not include any of the hardcore restrictions listed under Article 4 VBER. The presence of such clauses in an agreement implies that the whole agreement no longer benefits from the block exemption. Hardcore clauses are different from the so-called excluded restrictions listed under Article 5 VBER. The presence of excluded restrictions in a vertical agreement does not imply the loss of the exemption for the entire agreement but only for the clauses constituting excluded restrictions under the VBER. Second, the agreements must not contain any of the hardcore restrictions provided for in the MVBER itself. These restrictions are: (i) the restriction of the sales of spare parts for motor vehicles by members of a selective distribution system; (ii) the restriction, agreed between a supplier of spare parts or repair equipment and a manufacturer of motor vehicles, of the supplier’s ability to sell those goods to authorised or independent distributors, repairers or end users; and (iii) the restriction, agreed between a manufacturer of motor vehicles which uses components for the initial assembly of motor vehicles and the supplier of such components, of the supplier’s ability to visibly place its trade mark or logo on the components supplied. 2.3Intervention logic and objectives In essence, the MVBER regime exempts specific types of vertical agreements in the motor vehicle sector from the prohibition in Article 101(1) of the Treaty. For the purposes of this evaluation, the term “intervention” captures all four instruments making up the MVBER regime. Therefore the “intervention logic” (summarised in Figure 1 below) refers to the application of this regime in its entirety to the motor vehicle sector. The general objective of the intervention is twofold: (i) to preserve the deterrent effect of Article 101 of the Treaty by facilitating the enforcement work of the Commission and also, in view of the decentralised enforcement system, the work of the NCAs and national courts, which no longer have to carry out an individual assessment under Article 101 of the Treaty for vertical agreements in the motor vehicle sector covered by the MVBER regime; and (ii) to help businesses conduct the self-assessment of their vertical agreements, thereby reducing costs. The specific objectives of the MVBER regime are better understood in the context of the wider legal framework that was in place in 2010 for applying Article 101 of the Treaty (and remains in place today), as further explained below: First specific objective - increasing legal certainty: The abolition of the pre-notification system, established by the previous Council Regulation 17/62, and its replacement by a self-assessment system, in the context of which undertakings need to check for themselves whether the agreements and/or specific clauses they (plan to) enter into comply with Article 101 of the Treaty, accentuated the need for legal certainty and guidance on the application of Article 101 of the Treaty. The VBER and the MVBER provide the general framework of the Commission’s interpretation and implementation of Article 101 of the Treaty. Furthermore, the SGL and VGL set out the main elements of the Commission’s interpretation of the MVBER and VBER, as well as the main parameters it would normally take into account when assessing vertical agreements falling outside the scope of the exemption. The SGL and VGL also provide examples of the most common vertical restraints relevant to the motor vehicle sector, thus covering a large part of the relevant market practices. Absent such guidance, undertakings would have to base their self-assessment exclusively on the Commission’s administrative practice and the Union Courts’ case law, which, albeit useful, cannot provide sufficient legal certainty, due to their nature, which is in principle case-specific. Second specific objective - reducing the risk of false positives and false negatives: The Commission’s power to adopt block exemption regulations identifying the categories of vertical agreements in the motor vehicle sector for which it can be assumed with sufficient certainty that they satisfy the conditions of Article 101(3) of the Treaty goes hand-in-hand with the need to reduce errors in the form of so-called false positives (i.e., block exempting vertical agreements that should not benefit from the exemption) as well as the need to reduce errors in the form of so-called false negatives (i.e., leaving vertical agreements outside the scope of the exemption in situations where those agreements should have benefited from the exemption). It should be noted that false negatives (under-exemption) are less harmful than false positives (over-exemption), given that false negatives do not result in situations that are in breach of Article 101 of the Treaty and Regulation (EEC) 19/65, under which the Council has empowered the Commission to adopt block exemption regulations. In general, block exemption regulations aim to reduce the risk of errors in the form of false positives and negatives by means of three types of provisions: (i) the conditions for exemption; (ii) specific types of restrictions that, if present in an agreement, remove the benefit of the block exemption from the entire agreement (hardcore restrictions); and (iii) specific types of restrictions that are not exempted but still allow for the remaining part of the vertical agreement to benefit from the exemption, as long as it is severable from the restrictive clauses (excluded restrictions). A block exemption regime that manages – by the means set out above – to minimise false positives and negatives is, on the one hand, simplifying administration and reducing compliance costs as much as possible by avoiding under-exemption and, on the other hand, ensuring effective supervision of the markets by avoiding over-exemption.

Third specific objective - providing a common assessment framework for national authorities: The decentralisation of the application of Article 101(3) of the Treaty, whereby NCAs were empowered to grant exemptions, gave rise to the need to ensure consistency across the EU and equal footing for companies active in different Member States, by providing a common framework for NCAs and courts when applying Article 101(3) of the Treaty. Fourth specific objective - protecting certain forms of competition in the motor vehicle sector: The need to protect certain forms of competition in the motor vehicle sector was most recently identified and deemed to be of continued validity by the Commission in its 2009 Communication, which preceded the adoption of the MVBER regime in 2010. It listed seven specific policy objectives in relation to “a number of problematic issues”, which at that time were “particularly relevant for the motor vehicle sector”, and stated that such policy objectives underlying Regulation (EC) No 1400/2002 remained valid. The present evaluation includes an analysis of whether each of these specific policy objectives has been achieved in practice and to what extent they have proven to be effective and/or necessary. The seven specific policy objectives include: (i) preventing foreclosure of competing vehicle manufacturers and safeguarding their access to the market; (ii) protecting competition between dealers of the same brand; (iii) preventing restrictions on parallel trade in motor vehicles; (iv) enabling independent repairers to compete with the manufacturers' networks of authorised repairers; (v) protecting competition between repairers of the same brand; (vi) preventing foreclosure of spare parts suppliers; and (vii) preserving the deterrent effect of Article 101 of the Treaty by preventing suppliers from indirectly using pressure and threats to achieve anticompetitive results.



Figure 1: Intervention logic for the MVBER regime 2.4Evaluation baseline The main point of comparison for the evaluation is the hypothetical situation in which the MVBER regime is not in place. In this situation, vertical agreements in the motor vehicle sector would be subject to the same regime as any other vertical agreements, including the VBER and the VGL. The evaluation therefore looks at the functioning of the MVBER regime as compared to a situation in which the assessment of whether vertical agreements in the motor vehicle sector comply with Article 101 of the Treaty would have to be done only in light of other Commission rules, namely the VBER and the VGL, relevant case law at EU and national level, as well as the enforcement practice of the Commission and the NCAs. 3Evaluation Questions This evaluation assesses the MVBER regime against the five Better Regulation criteria, namely effectiveness (Section 6.1), efficiency (Section 6.2), relevance (Section 6.3), coherence (Section 6.4) and EU added value (Section 6.5), using the specific evaluation questions for each. The evaluation questions are in Annex 5. 4Methodology The evaluation consists of an assessment of the functioning of the MVBER regime both from a general perspective, taking into account the intervention as a whole, and more specifically, with regard to the conditions set out in the MVBER regime. The subject of this evaluation is the MVBER, the SGL and the application of the VBER and the VGL to the motor vehicle sector.

This section is structured as follows: Section 4.1 identifies the sources used for evaluating the functioning of the MVBER and the SGL. Section 4.2 describes how the evidence gathered from various sources was processed. Section 4.3 explains the limitations of the analysis carried out and the extent to which they were addressed in the evaluation exercise. 4.1Description and use of the sources In order to assess the functioning of the MVBER regime, evidence from various sources was gathered. These included a public consultation (Section 4.1.1.), two NCA consultations (Section 4.1.2), an external study (Section 4.1.3), spontaneous stakeholder submissions (Section 4.1.4) and evidence gathered through other Commission initiatives (Section 4.1.5). 4.1.1Open public consultation Between 12 October 2020 and 25 January 2021, the Commission carried out a public consultation to gather stakeholder views on the functioning of the MVBER regime. The objective was to gather qualitative and quantitative evidence on all five evaluation criteria from the perspective of stakeholders. The consultation was initially planned to last 12 weeks but the deadline was extended by three weeks to accommodate the COVID-19 outbreak difficulties. The public consultation generated 84 contributions, submitted through the online questionnaire. Seventeen participating respondents also submitted position papers, which largely echoed the issues raised in the contributions to the public consultation. In addition, a consumer association provided some background articles outside of the public consultation framework. The contributions to the public consultation came from a variety of respondents representing different levels of the supply chain, in particular business associations and companies/business organisations, but also motorists’ associations, an academic institution, a non-governmental organisation, a trade union, an EU citizen, and some other stakeholders. The summary report of the contributions to the public consultation was published on both the Better Regulation Portal and the dedicated MVBER review webpage on DG Competition’s website on 16 March 2021 and 17 March 2021 respectively. This summary report is also part of the synopsis report provided in Annex 3. 4.1.2Targeted consultations of NCAs During the evaluation phase, two targeted consultations of NCAs were conducted. The first of these aimed at collecting mostly statistical information about the NCAs’ enforcement activities concerning the MVBER regime. The Commission received 29 contributions, including one from one of the EFTA States. This consultation forms part of the synopsis report provided in Annex 4. The second questionnaire aimed to gather the NCAs’ views about the performance of the MVBER regime against the five evaluation criteria. The Commission received 24 contributions, including one from one of the EFTA States. The information provided by NCAs contributed to the assessment all five evaluation criteria. A summary report of this second consultation was published on the dedicated MVBER review webpage on DG Competition's website on 17 March 2021. It is also part of the synopsis report provided in Annex 3. 4.1.3External study

A contractor carried out an external fact-finding study (“fact-finding study”) for the evaluation with respect to the three aspects of the motor vehicle sector: (i) the distribution of new motor vehicles; (ii) the provision of repair and maintenance services for motor vehicles; and (iii) the distribution of spare parts for motor vehicles. The purpose of the study was to provide a detailed analysis of market developments with respect to three main economic activities in the motor vehicle sector on the basis of 111 indicators (23 qualitative and 88 quantitative). The final report for the study was due on 25 August 2020, but the COVID crisis affected the implementation of the contract. This resulted in: (i) a delay in a survey the contractor carried out in spring 2020 to collect primary data from market participants; (ii) a low response rate to this survey; and (iii) an incomplete interim report. Due to these circumstances, the contractor requested four deadline extensions and, as a result, the final report was not delivered until 9 October 2020 and only covered 49 out of the 111 indicators contracted for. A summary of the key findings of this report is available in Annex 2. 4.1.4Commission monitoring and enforcement practice The evaluation included an analysis of the Commission’s decision-making practice over the last ten years, as well as its informal correspondence with stakeholders in the motor vehicle sector since 2010. The results of this review are incorporated into the synopsis report provided in Annex 4. 4.1.5Spontaneous stakeholder submissions The Commission also received a spontaneous submission from a consumer association that had not participated in the public consultation. In addition, some of the respondents shared position papers to supplement their contributions to the public consultation with additional evidence. These additional submissions were used to enhance the understanding of the positions of the respondents concerned. 4.2Processing and triangulating of the evidence collected Evidence from various sources was analysed and triangulated for the evaluation of the MVBER regime. The main sources of evidence used for the assessment of each evaluation criterion are listed in the table below. The evidence-gathering focused primarily on evidence, views and experiences provided by stakeholders having self-assessed the compliance of their vertical agreements in the motor vehicle sector with Article 101 of the Treaty, as well as NCAs’ experience in the enforcement of the MVBER regime. This was supplemented by the Commission’s monitoring and enforcing experience and the findings of the study.

Sources Criteria Public consultation NCA enforcement consultation NCA consultation on MVBER regime performance Study Commission’s experience Effectiveness ✔ ✔ ✔ ✔ ✔ Efficiency ✔ ✔ ✔ Relevance ✔ ✔ ✔ ✔ Coherence ✔ ✔ EU added value ✔ ✔ ✔ For the assessment of each evaluation criterion, the following approach was used. The assessment started with the results of the public consultation. An in-depth analysis of the feedback received provided a preliminary but comprehensive understanding of the main issues faced by stakeholders as regards the functioning of the current rules. This allowed the Commission services to establish the issues on which stakeholders held common positions, as well as the issues on which their positions diverged. The assessment of the specific issues raised was carried out based on: (i) the examples and the level of detail provided by stakeholders to support their concerns with concrete evidence; (ii) the variety of positions; and (iii) the extent to which different types or groups of stakeholders shared the same view. The results of this consultation provided the stakeholders’ perspective on the effectiveness, efficiency, relevance, coherence and EU added value of the MVBER regime. The evaluation took due account of the fact that the views of businesses operating at different levels of the supply chain might differ with regard to particular aspects of the MVBER regime. The first consultation with NCAs aimed to gather statistical information about their enforcement activities with regards to vertical restraints in the motor vehicle sector. The second consultation aimed to gather the NCAs’ perspective on the performance of the MVBER regime against the five evaluation criteria. The two consultations provided a significant amount of evidence on the most common types of behaviour encountered, as well as the challenges faced by NCAs in applying the MVBER regime. The evidence of the public consultation was compared to and contrasted with the evidence resulting from the consultation of the NCAs. The combination of these sources resulted in a more complete and balanced understanding of the areas where the MVBER regime had not been functioning well, or not functioning as well as it could. The fact-finding study was designed to analyse market developments as regards three main economic activities in the motor vehicle sector. The study allowed to supplement the findings obtained through the abovementioned consultations with specific data and evidence on how the motor vehicle sector has evolved during the period under review. Finally, whenever possible, the findings of the respondents and NCAs consultations as well as the fact-finding study have been supplemented by the Commission’s monitoring and enforcement experience in the area over the last ten years. 4.3Limitations and robustness of findings The analysis of the different evaluation criteria, including the methodology applied and the evidence sources used for that purpose, is subject to the following limitations, the nature of which is described in the sections below: the limited scope of the fact-finding study (Section 4.3.1), limits to the representativeness of stakeholder feedback (Section 4.3.2) and limits to the enforcement experience of NCAs as regards the MVBER regime (Section 4.3.3). None of these limitations prevented the Commission from drawing conclusions from the evaluation exercise. 4.3.1Limited scope of the fact-finding study The contractor used a survey as the primary data source, the launch of which coincided with the escalation of the COVID-19 crisis and the introduction of “lockdown” measures in all countries covered by the survey. Although the Commission granted the contractor several deadline extensions, the final response rate was low, particularly with respect to businesses such as dealers, repairers and parts distributors. As for the methodology, the final dataset was assessed based on its representativeness with reference to the indicators. To overcome the data-gathering limitations, the contractor considered the vehicle manufacturers’ responses in respect of each indicator to be statistically significant when their combined market share reached 30%. For spare parts, the contractor considered it impossible to establish the total value of the market, and instead provided indications of the representativeness of the responses provided, by indicating the combined global revenue in 2019 and the combined number of employees.

4.3.2Limits relating to stakeholder feedback By definition, feedback exercises such as the public consultation, which are subject to voluntary participation, do not necessarily lead to representative results. Although a large variety of stakeholder groups responded to the public consultation, some of these accounted for a higher share of responses than others. In the assessment in Section 6 below, reference is made to specific stakeholder groups whenever the views reported were expressed primarily by one or more such groups rather than being shared by all respondents to the public consultation. However, the evaluation does not disregard diverging views, either within the same or across different stakeholder groups. This approach is also reflected in Annex 6, which presents the different views and issues raised by respondents per area of the rules. In addition, the assessment in Section 6 below is presented on the basis of the views of those respondents to the public consultation which actually gave specific replies to the questions concerned. This means that the views of those respondents replying “don’t know”, “not applicable”, “not relevant” and similar, or leaving their replies blank, are not taken into account where general conclusions are drawn. With regard to the views of NCAs, reference is made generically to “NCAs”, since the purpose is to outline the main points raised without regard to the number of contributions addressing a particular point, or whether or not a particular point of view is shared by all the NCAs. However, for issues on which NCAs expressed clearly diverging views, both sides of the argument are presented. Finally, conclusions are based on those NCAs that expressed a view on a particular point, excluding therefore those indicating that they did not have a view and those that did not reply to a particular question. As for the contributions received from consumers and/or their associations, a consumer association shared some materials outside of the framework of the public consultation, which were used for background purposes in the evaluation. Two other associations identifying themselves as “consumer associations” responded to the public consultation. Analysis of the profile of these stakeholders showed that these appear to represent their motorist members rather than consumers in general, and they or their members also have commercial interests. This limited contribution of consumers to the evaluation is probably explained by two factors. First, the MVBER regime has a technical nature, being primarily aimed at providing guidance to businesses in the motor vehicles sector self-assessing compliance of their vertical agreements with EU competition law. Consumers and consumer associations may therefore be neither aware of the regime’s existence, nor familiar with the way it functions. Second, although the regime has an impact on the prices at which consumers buy products and services in the sector and on the choice of such products and services available to them, consumers are generally not aware of the terms of vertical agreements in the sector. They may therefore not be able to link the prices and other purchase conditions they encounter with the way that the supply chain functions, or to the safe harbour provided by the MVBER regime. To overcome these limitations, ad hoc meetings were held with stakeholders representing diverse interests. 4.3.3Limited experience in the enforcement of the MVBER regime The enforcement experience of both NCAs and the Commission as regards the MVBER regime has been modest, in that although complaints were submitted and cases were pursued, few infringements were detected. Over the period covered by the review, NCAs have reported a total of 156 closed cases concerning vertical restraints in the motor vehicle sector, of which 4% concluded with prohibition decisions. Over the same period, the Commission dealt with 22 cases, of which none resulted in a prohibition decision. To overcome these limitations, the Commission supplemented its enforcement practice with an analysis of the informal submissions concerning the automotive sector received over the last 10 years. 5Market developments and enforcement activities in the motor vehicle sector 5.1Market developments Section 5.1 describes the main market developments, including the conditions of competition, during the period under evaluation.

5.1.1General market developments Since the adoption of the current MVBER regime, the markets have evolved in a number of ways, mainly due to the introduction of new technologies, environmental pressures and the aftershocks of the 2008 financial crisis. Notably, the sector has witnessed: (i) rising protectionism as regards extra-EU trade; (ii) stricter emissions controls and policies aimed at reducing emissions and achieving other environmental goals, such as the EU Sustainable and Smart Mobility Strategy and the Green Deal; (iii) major fluctuations in the price of fossil fuels; (iv) the introduction of high-performance battery electric vehicles and the more widespread use of hybrid technologies; (v) the so-called “Dieselgate” crisis; (vi) increasing use of the Internet as a research tool for consumers and as a means for dealers to expand their geographic reach; (vii) a continued reduction in dealer network density; (viii) an evolution in vehicle typology, with more light commercial vehicles in use to reflect the internet-driven surge in home shopping and local distribution; (ix) the integration of digital technology into vehicles themselves, and the increasing importance of vehicle-generated data for existing aftermarket providers and for novel businesses; and (x) the increasing use of connectivity, first for emergency services, and more recently for monitoring the performance of vehicles and drivers. In the context of the evaluation, a contractor carried out a fact-finding study to analyse market developments with respect to: (i) the distribution of new motor vehicles: (ii) the provision of repair and maintenance services; and (iii) the distribution of spare parts. The study collected data on a representative sample of 12 EU Member States, and four vehicle categories (passenger cars, light commercial vehicles, trucks and buses) for the period 2007-2017 (“period in scope”). The main findings of the study are summarised below and complemented by other sources. 5.1.1.1Motor vehicle production and sales The motor vehicle industry is one of the most important sectors for the EU economy. Manufacturing of motor vehicles, bodies, trailers and semi-trailers employs around 2.5 million people in the EU and accounts for 8.5% of EU employment in manufacturing, while another 5.3 million jobs relate to both indirect manufacturing, sales and maintenance services. The EU produced almost 20 million motor vehicles in 2017 (ca. 20% of almost 99 million manufactured globally). Passenger cars accounted for 86.6% of all motor vehicle production. The rest was made up of light commercial vehicles (10.8%) and medium and heavy commercial vehicles (2.8%). Almost 260 million passenger cars were in use in the EU in 2016, and more than 15 million were registered in the EU in 2017, of which 49.4% were petrol-fueled, 44.8% diesel-fueled, and 1.5% electric. The EU is a major player in terms of motor vehicle trade: exports accounted for more than EUR 138 billion in 2017, with a trade balance of EUR 90.3 billion. According to the study, the sales of passenger cars, at aggregate level, dropped in 2008 during the financial crisis, and kept decreasing every year from 2009 to 2013. Sales in 2017 reached 13.3 million units for the countries in scope: 4% less than in 2007. A similar trend affected light commercial vehicles and trucks, with 2017 sales respectively 10.5% and 13% lower than in 2007. Despite some fluctuations, bus sales remained stable, with total sales in 2017 only 1% lower than in 2007 (24.8k vs. 25.1k). 5.1.1.2Product Innovation According to the study, the use of alternative powertrains has gradually increased from a low base, with the proportion of fossil fuel-powered vehicles sold declining slightly over the years. In 2017, around 2 million (0.8%) of the 262 million cars registered in the EU Member States were classified as either electric cars or hybrid electric cars using a combination of an electric motor and a petrol or diesel engine. The number of hybrid electric-petrol cars in 2017 (1.5 million) was almost seven times the number recorded in 2013 (0.2 million).

Based on vehicle manufacturers’ annual reports, the study indicates that, on average, research and development (R&D) expenditure increased over the period in scope for both manufacturers of passenger cars/ light commercial vehicles and for manufacturers making trucks and buses (respectively, from 4.3% in 2007 to 4.7% in 2017 and from 3.1% in 2007 to 4.1% in 2017). 5.1.1.3Distribution patterns and network density The study shows that quantitative selective distribution was the preferred model in the passenger cars category. The only Member States where vehicle manufacturers opted for exclusive distribution systems were France and Italy (12.5% and 14.3%, respectively in 2017). According to the study, no vehicle manufacturer used purely qualitative selective distribution for passenger cars in any of the countries in scope. Innovative channels (mobile pop-up stores, supermarkets, experience centers, third party platforms) were used extensively for sales across the countries in scope. The study showed that there were no significant changes in these proportions across the period in scope. In contrast to the position as regards passenger cars, many vehicle manufacturers present in the (more concentrated) light commercial vehicle category used qualitative selective distribution systems (50% in Austria and Italy, 40% in France). Quantitative selective distribution was prevalent in Cyprus and the UK (66.7%), while 20% and 25% of vehicle manufacturers opted for exclusive distribution systems in Spain and Germany. Quantitative selective distribution was the most prevalent distribution method used for truck distribution over the period covered by the study. However, some truck manufacturers opted for qualitative distribution systems in France (20%), Italy and Spain (16.7%), while a variable number of truck manufacturers opted for mixed systems (notably 67% in Greece, 50% in the Netherlands, 40% in Poland and Ireland). These proportions did not significantly change over the period in scope. As for buses, manufacturers opted mainly for exclusive distribution systems. Direct sales formats were common for the sales of both trucks and buses. The number of car dealer groups across all Member States increased from 2007 to 2011 then gradually declined during 2011 – 2017, leading to an overall decrease over the period in scope. According to the study, this result can be attributed to a consolidation trend between dealer groups. The network density for all car brands in analysis declined over the years. Aggregate network density fell from 0.17 car outlets per 1,000 inhabitants in 2007 to 0.14 in 2017, continuing the decline that was reported in the Commission’s evaluation report for Regulation 1400/2002. The number of dealer outlets fell to 57,304 outlets in 2017, 10,831 outlets fewer than in 2007. According to the study, vehicle manufacturers reduced the numbers of dealers in their networks to maintain dealer profitability and recover from the Eurozone crisis. Rising real estate prices in inner cities were also a factor affecting the number of dealer outlets. The fall in outlet numbers took place against the background of emerging retail trends such as online car sales, growing demand for used cars and fleet services and “immersive” virtual retail experiences. 5.1.1.4Provision of repair and maintenance services Repair and maintenance services are provided by both independent firms and members of authorised networks set up by a vehicle or parts manufacturers. The total turnover generated by the maintenance and repair of motor vehicles, for all categories in all countries in scope increased from EUR 106 billion in 2008 to EUR 145 billion in 2017. This figure should be appraised in the context of the increased size (from 197 to 225 million) and age of passenger cars parc. By 2017, the market for maintenance and repair had experienced significant growth compared to the position in 2008, particularly in the United Kingdom (+211% by 2017), Germany (+161%) and France (+148%). Out of all the countries in scope, 5 reported a decline in the total value of the market for repair and maintenance services, with the biggest such occurring in Greece (-69% in 2017 compared to 2008).

In terms of network density, the total number of repairers, both authorised and independent, increased in most countries between 2007 and 2017, with Cyprus, Greece, Ireland, Italy, Poland and Spain having a denser network compared to the other countries, and the Netherlands having the lowest network density. 5.1.1.5Distribution of spare parts According to the study, the market for spare parts supply (part manufacturers’ sales) for the 12 countries in scope increased by 29.8% in terms of sales value, from EUR 160.5 billion in 2008 to EUR 208.4 billion in 2017. This increase was not continuous over the years: in particular, market size decreased by 25.4% in 2009, as a result of the 2008 economic crisis. Over the 2007-2017 period, parts manufacturers registered a stable operating margin, averaging around 6-7% despite a decrease in 2009. For the top 10 firms, the average margin was higher at around 11-15%. As for motor vehicle spare parts distributors, their business grew by about 26% according to the study, with a volatile trend in all countries throughout the period 2007-2017. Based on survey responses, the study showed that passenger cars and light commercial vehicle parts were mainly distributed using qualitative selective distribution systems and, to a minor extent, through vehicle manufacturers’ own outlets. A number of survey respondents used innovative distribution channels for spare parts sales; in particular, parts manufacturers used their own websites for ecommerce, and by 2012, direct sales of spare parts had increased for all vehicle categories. 5.1.2Developments in the conditions of competition 5.1.2.1Market concentration The fact-finding study also analysed market concentration levels in the various segments by using metrics such as the Herfindahl-Hirshman Index (HHI), the CR4 index, as well as indexes of volatility (standard deviation and coefficient of variation). The passenger car category has medium concentration, with Volkswagen Group, PSA group and Renault-Nissan-Mitsubishi representing around 55% of the average aggregated market share in terms of volume. The average percentage difference in the market shares of the top four manufacturers decreased, at an aggregate level, from 5.91% in 2007 to 5.47% in 2017. Some shifts occurred in the market shares of the significant manufacturers throughout the period in scope: the distance between the third (Renault-Nissan-Mitsubishi) and second (PSA Group) vehicle manufacturers decreased, mainly due to the decrease in sales of the latter, while the share of the 4th to the 9th largest vehicle manufacturer (“VM”) remained relatively stable, and the difference in market share between the 4th and the 6th decreased over time. The light commercial vehicles category was assessed as more concentrated than that for passenger cars, with three vehicle manufacturers (PSA Group, Renault-Nissan-Mitsubishi and Ford Group) representing more than half of the market in terms of sales in the countries in scope. During the period 2007-2017, the sales of PSA Group and Renault-Nissan-Mitsubishi remained relatively stable, while some significant changes occurred for the other manufacturers (accounting for approximately 52.1% of the market). In particular, Ford Group shifted from 5th in 2011 to 3rd place in 2017. In terms of closeness of competition, the average difference among the top 4 manufacturers decreased over time from 6.19% to 4.97%.

The truck and bus categories were found to be highly concentrated. At aggregate level, five vehicle manufacturers represented more than 97% of the total volume in sales for trucks. Three main vehicle manufacturers represented more than 67% of total bus sales, while a significant portion (around 20%) of the market was covered by small local manufacturers. Although there was no major consolidation, mergers and acquisitions occurred in the motor vehicle sector during the period covered by the study, the largest in value being, for passenger cars, the acquisition of Porsche by Volkswagen Group (2009 and 2012) and the acquisition of Land Rover by Tata Motors in 2008. In the heavy-duty vehicles sector, the largest acquisition was that of MAN SE by Volkswagen in 2011. Finally, since the period covered by the study, PSA and FCA have merged to create Stellantis. 5.1.2.2Intensity of competition Respondents to the public consultation and NCAs shared their perceptions as to whether competition has intensified, weakened or stayed the same since 2010 in the three areas covered by the MVBER regime. A large majority of respondents to the public consultation reported changes in the intensity of competition in the distribution of new motor vehicles. Almost 40% of respondents suggested that competition had intensified. Some of these pointed, inter alia, to: (i) the increased number of brands of motor vehicles in the EU market; (ii) the increased use of direct sales by vehicle manufacturers; (iii) the increased diversity in terms of product variety (e.g., hybrid, plug-in hybrid, battery electric); (iv) the increased offer in some technologies (e.g., powertrain technology); (v) the multiple sales channels; (vi) the diversification in vehicle use (e.g., leasing, sharing or renting); and (vii) the increased leverage of fleet operators. Around 36% of respondents to the public consultation suggested that competition had decreased. Some of these supported their views by pointing to consolidation between OEMs, as well as mergers and takeovers of dealers. As for the NCAs, about 40% of them reported that the intensity of competition for the distribution of new vehicles had not changed significantly over the last 10 years. Those NCAs that reported an increase (31%) in competition intensity agreed with respondents to the public consultation that the wider range of vehicles available on the market and the increased use of multiple sales channels, such as internet platforms enabling price comparisons, have played a role in this intensification of competition. Some NCAs also pointed to other factors such as the increase in demand for new motor vehicles following the 2010 financial crisis and the decrease in the number of complaints received by NCAs. Only 13% of the NCAs reported a decrease in the intensity of competition. These NCAs point to the abolition of the previously-applicable motor vehicle block exemption rules (i.e., Regulation 1400/2002) as the alleged cause. The remaining 16% of the NCAs did not express a view. The fact-finding study mentioned above uncovered some elements pointing towards an increase in the intensity of competition in the distribution of new passenger cars. Despite the financial crisis, the demand for new vehicles has grown since 2013; new distribution channels, business models and players have started emerging, further stimulating demand and reaching new customer segments; several new models have been launched by car manufacturers that are new to the market (especially Asian) and alternative powertrains for passenger cars have been developed. The study highlights that passenger cars category is a sector of medium concentration, unlike the light commercial vehicles, trucks and buses categories, which are more concentrated. These three categories, however, witnessed considerable market share fluctuations, with the main vehicle manufacturers shifting positions over the period in scope, thus suggesting that competition intensity has not decreased over the years. The views of respondents to the public consultation are divided as to the evolution of the intensity of competition in repair and maintenance services, with 44.6% considering that competition had intensified and 44.6% considering the opposite. Some of the respondents claiming that competition has intensified referred to a number of factors to justify their views, such as (i) e-commerce; (ii) the VBER/MVBER rules; (iii) growth in the business of independent aftermarket operators; (iv) on-line reviews of repairers and more price transparency; (vi) authorised repairers’ provision of aftersales services for several brands; (vii) an increase in competition between authorised and non-authorised repairers; and (viii) pressure from leasing / rental companies, which are alleged to wish to build their own service networks. The group of respondents claiming that competition had weakened pointed, inter alia, at (i) the decreasing number of repairers in some European regions; (ii) issues faced in accessing technical information; (iii) restrictive warranty terms; (iv) captive spare parts and requirements to activate spare parts after installation; (iv) restrictions on access to tools, diagnostic systems, digital updates and software; and (vi) technological developments in new vehicles making it harder for small independent repairers to provide their services effectively and affordably. NCAs are also divided as to the evolution of the intensity of competition in the provision of repair and maintenance services. About 35% of the NCAs reported that the intensity of competition for the repair and maintenance services had not changed significantly over the last 10 years. The same percentage reported that competition had increased. NCAs claiming that competition had intensified referred to the following factors to justify their views: (i) the MVBER regime having reduced the “monopoly” of authorised repairers / distributors and consequent intensified competition between authorised and independent service providers; and (ii) the 2010 financial crisis having greatly increased the demand for repair and maintenance services, as consumers had a greater tendency to pay repair bills rather than purchasing a new vehicle. NCAs reporting a decrease (22%) in the intensity of competition in the provision of repair and maintenance services attributed the changes mainly to mergers between players, changes in consumer preferences and technological developments. These NCAs also reported that insurance companies tended to favour repairs in authorised repair garages, making it more difficult for independent service providers to compete. Finally, they indicated that, due to the increased complexity of modern vehicles independent repairers are forced to focus on the simple mechanical operations that are decreasing in frequency, while more complex and software related operations are becoming more common. The fact-finding study shows that the size of market for repair and maintenance services increased during the period in scope, which can be linked to the increased size and age of the passenger car parc. The study also shows a trend towards a decrease in network density, which can be due to several factors, including the continuing trend observed toward rationalisation and consolidation of vehicle manufacturers’ networks.

As for the intensity of competition in spare parts distribution, a large majority of respondents to the public consultation believe that this has changed, with 54% reporting an increase in competition. Some of the latter pointed, inter alia, at: (i) the positive impact of the MVBER; (ii) the growth of e-commerce, which boosts price competition; (iii) the increasing demand for remanufactured/recycled parts; and (iv) the fact that new players had entered the EU parts distribution market (e.g., LKQ). In contrast, about 44% of the NCAs reported that the area had not undergone major changes in the intensity of competition over the last ten years, while 22% believed that competition had generally intensified. The latter nonetheless cautioned that, as a result of the increased connectivity of modern vehicles, more spare parts need to be registered with the vehicle’s embarked software, which may constitute a risk to competition in the distribution of spare parts. Finally, only 4% of NCAs reported a decrease in the intensity of competition in spare parts distribution. The fact-finding study shows a growth in terms of sales value of the business of both parts manufacturers and distributors over the period 2007-2017, which can be linked to the increase in the average age of vehicles and their growing complexity. Vehicle parts supply appears in general to be a profitable business which, mainly towards the end of the period in scope, is also increasingly taking advantage of innovative distribution channels (in particular e-commerce through own websites or third-party platforms) for spare parts distribution. Taking into account the limitations of the study and the elements collected through other sources, the overall picture suggests that the intensity of competition in spare parts distribution did not decrease during the period in scope. Against this background, it can be concluded that the intensity of competition seems to have increased between 2007 and 2017 in the distribution of new passenger cars, but remained moderate for the distribution of light commercial vehicles, buses and trucks. The evidence collected for repair and maintenance services and spare parts distribution shows a mixed picture as data from the fact-finding study is not conclusive and views of stakeholders point in different directions. 5.1.3Enforcement of the Commission and NCAs regarding vertical restriction in the motor vehicle sector Section 5.1.3 presents an overview of the enforcement activities of the Commission and NCAs regarding vertical restrictions in the motor vehicle sector. 5.1.3.1The Commission’s enforcement and monitoring action regarding vertical restrictions in the motor vehicle sector Between 2010 and 2020, the Commission did not adopt any prohibition or commitments decisions concerning vertical restraints in the motor vehicle sector. This is not to say that the Commission did not encounter allegations; rather, these complaints indicated, at most, only a limited likelihood of the Commission finding a breach of Article 101 of the Treaty In particular, during this period, the Commission received 22 formal complaints concerning a variety of issues relating to vertical agreements in the sector, but considered that none of these complaints were suitable for pursuit. Two of the Commission’s rejection decisions regarding these complaints were subject to appeals before the General Court. One of the decisions was upheld on appeal. The other appeal is currently pending before the General Court. In addition to formal complaints, as part of its monitoring and enforcement activities in the sector, the Commission deals with informal correspondence/ submissions from stakeholders. Between 2010 and October 2020, it dealt with around 600 such informal submissions. In a relatively small number of these cases, the initial informal correspondence evolved into a formal complaint. For about 28% of correspondence, the Commission found no indications of potential infringement that would justify pursuing an investigation, while in 26%, it provided clarification or guidance. The largest proportion of these informal submissions concerned the distribution of new motor vehicles, followed by the provision of repair and maintenance, and then the distribution of spare parts. 5.1.3.2NCA enforcement and policy actions regarding vertical restrictions

Between 2010 and 2020, NCAs from the Member States, the UK and Norway received 142 complaints and started 25 ex officio procedures related to the motor vehicle sector. More than 90% of these cases were closed during the period under analysis, with only 11 cases still ongoing. A large majority of the cases (97) did not lead to a formal decision and were closed administratively, primarily due to absence of sufficient evidence or lack of priority. Three cases were administratively closed by providing guidance to the complainants. In 33 cases, the NCAs issued rejection decisions, primarily because they could not establish an infringement. In 19 cases, the NCAs issued commitment decisions, but none of these imposed financial or other types of penalties on their addressees. In six cases, the NCAs issued prohibition decisions; all of these decisions imposed either financial or other types of penalties on the addressees. In addition, the Belgian NCA was the only competition authority that reported having adopted a decision imposing interim measures in the motor vehicle sector in the period under analysis. Finally, during the period concerned, Austria, Ireland and Latvia and Norway issued national guidance papers concerning vertical restraints in the motor vehicle sector. For Austria and Ireland, these are part of their general guidelines on vertical restraints. 6The evaluation criteria Against the background of Section 5, Section 6 evaluates the MVBER in the light of the five evaluation criteria. 6.1Effectiveness 1.What is the level of legal certainty that the MVBER regime provides for undertakings assessing whether vertical agreements in the motor vehicle sector and/or specific clauses/restrictions are exempted from the application of Article 101 of the Treaty and thus compliant with this provision? What is the issue? As the function of the MVBER regime is to provide a safe harbour for certain categories of vertical agreements in the motor vehicle sector, by nature, one of its specific objectives is to give legal certainty to stakeholders, making it easier for them to perform the self-assessment required by the wider competition law framework. To provide legal certainty, the conditions for exemption must be set out in a clear and comprehensible manner, allowing stakeholders to understand them and how they apply to their agreements. Nonetheless, the analysis of whether this objective has been met is predicated on the understanding that the MVBER regime could never provide absolute legal certainty. Instead, the assessment of whether this objective has been achieved seeks to determine whether the MVBER regime rules provided increased legal certainty as compared to a situation without them, but also whether there is room for improvement in achieving the objective. The MVBER regime covers a sector within which business models, agreements and restrictions change over time. When setting the conditions for the exemption, it is thus not possible to predict exactly how markets will evolve and the types of restrictions that may appear. Therefore, to ensure that the exemption remained future-proof, the Commission had to set conditions that required some interpretation in their application to specific cases. Moreover, even though the SGL and VGL were intended to provide additional guidance on how to apply the MVBER, the VBER and Article 101 of the Treaty to the motor vehicle sector, for the same reasons, they could not have been made so exhaustive as to anticipate every possible market development, or every type of agreement or restriction that could conceivably have emerged. Finally, individual respondents’ assessment of the level of legal certainty provided by the rules may also depend on the specific difficulties they encounter when applying the rules to agreements in the particular field in which they are active within the overall motor vehicle sector. Therefore, the assessment pursuant to this objective takes into consideration the specific areas of the rules for which respondents and NCAs consider that there is uncertainty as well as the Commission’s enforcing and monitoring experience and the findings of the study. What are the findings?

A majority of respondents to the public consultation consider that the MVBER regime has achieved its aim of providing legal certainty. Similarly, NCAs are generally of the view that the MVBER has provided a helpful framework for companies (and advisors) to self-assess compliance with Article 101 of the Treaty while also reducing the risk for a divergent application of Article 101 of the Treaty, and adding legal certainty for companies operating in more than one Member State. Despite the general view that the MVBER regime has provided legal certainty, respondents to the public consultation, from different stakeholders’ groups, point to some areas of the rules which they consider not sufficiently clear. In this sense, definitions such as “vertical agreements”, “agency agreements”, “subcontracting” or “tool” are seen by a significant share of respondents as providing little legal certainty. Similarly, a considerable number of respondents perceive that certain hardcore restrictions such as: (i) the restriction on the ability of suppliers of parts/tools/equipment to sell to authorised and independent repairers, distributors or end users; (ii) the restriction of original equipment suppliers’(OES) ability to sell spare parts to end users or repairers; and (iii) the restriction of dealers ability to sell motor vehicles spare parts to other dealers within the same distribution system provide little legal certainty. Some replies to the public consultation also suggest that the provisions that deal with a number of specific vertical restraints may provide insufficient legal certainty. In particular, these submissions refer to: (i) the restriction on independent operators’ access to technical information; (ii) placing limits in the numbers of authorised repairers within a brand network; and (iii) the misuse of warranties have provided little or very little legal certainty. With regard to point (ii), it should be noted that the fact-finding study confirms that vehicle manufacturers use a combination of distribution systems that took into account the caveats set up in the MVBER. In particular, vehicle manufacturers preferred quantitative distribution systems in the medium concentrated passenger car category, whereas qualitative distribution systems were mostly used in the more concentrated light commercial vehicle category. A few NCAs are also of the view that further clarifications and guidance on some rules would be welcomed. They also pointed to the fact that recent market developments, new business models and new technologies should also be considered. A few NCAs felt the need for further clarifications as regards the definitions of “vertical agreements”, “agency agreements”, “selective distribution”, “non-compete obligation”, “intermediary”, “spare parts” and “connected undertaking”. A considerable number of NCAs perceived certain provisions on specific vertical restraints, such as those dealing with independent operators’ access to technical (repair and maintenance) information, and the misuse by suppliers of vehicle warranties as providing little legal certainty. Similarly, a few NCAs indicated that the hardcore restriction concerning resale price maintenance provide little legal certainty. In addition, few NCAs suggest integrating the recent case law in relation to vertical restraints into the respective provisions to increase legal certainty. Finally, the MVBER regime appears to have made it easier for NCAs and national courts to apply the rules consistently by providing a common framework for the application of Article 101 of the Treaty. Respondents and NCAs suggest that national guidance, enforcement practice of NCAs and relevant national case-law could not have been more than or as effective as the MVBER regime. Nevertheless, few NCAs note that the rules might be difficult to understand for those who are not legal experts, since five different documents have to be taken into account and the wording can be highly technical. In this regard, only one NCA notes that it should be discussed whether the VBER and the MVBER should be merged. However, if the motor vehicle rules were to be incorporated in the VBER regime, the NCA notes the following points: (i) including sector specific rules in the VBER and the VGL might increase the length and complexity of these documents; (ii) other sectors might also ask for sector-specific rules in the VBER regime; and (iii) the strong signaling effect of the MVBER regime on the sector might be reduced. Therefore, it appears that merging both instruments would not automatically increase legal certainty for NCAs. Based on the Commission’s monitoring and enforcing experience, the MVBER regime appears to have provided a high degree of legal certainty. In particular, the Commission has received – informally - relatively few questions as to how the rules should be interpreted, and none of the formal complaints that it has received and subsequently rejected concerning vertical agreements in this sector hinged on a misunderstanding of the substantive rules. Overall, respondents to the public consultation as well as NCAs consider the MVBER regime to have generally met the specific objective of increasing legal certainty for companies and NCAs and national courts as compared to a situation without the MVBER regime. In general, the MVBER regime is considered to be a useful instrument that has increased legal certainty as compared to a situation without it. The MVBER regime also appears to have made it easier for the relevant authorities to apply the rules consistently and, therefore, to have met the specific objective of facilitating the enforcement work of NCAs and courts, and the self-assessment of vertical agreements, by providing a common framework for the application of Article 101 of the Treaty. Nevertheless, it appears that certain provisions: (i) may benefit from further clarifications; (ii) may be difficult to apply or; (iii) may not take into account recent market developments. 2.To what extent do the conditions currently defined in the MVBER regime meet the objective of only exempting those agreements for which it can be assumed with sufficient degree of certainty that they generate efficiencies in line with Article 101(3) of the Treaty? What is the issue? The safe harbour provided by the MVBER regime is limited by the Empowerment Regulation of 1965, which only authorises the Commission to block exempt those agreements for which it can be assumed with sufficient certainty that they satisfy the conditions of Article 101(3) of the Treaty. In this regard, the Commission must pay particular attention to avoiding false positives, this is exempting agreements for which it cannot be assumed with sufficient certainty that they satisfy the conditions of Article 101(3) of the Treaty (over-exemption). At the same time, the Commission also seeks to avoid false negatives, which result in a situation where the respective vertical agreement or practice is not block exempted despite fulfilling the conditions of Article 101(3) of the Treaty (under-exemption). A false negative increases the burden for businesses when self-assessing the compliance of their agreements with Article 101 of the Treaty, as they have to perform an extended individual assessment, instead of being able to rely on a simpler set of rules (i.e., the MVBER regime). In light of the above, it has been assessed to what extent the MVBER regime has correctly drawn the line when setting out the conditions that vertical agreements need to meet in order to benefit from the block exemption.

The conditions to take into account when assessing this specific objective are those set out in Articles 3 to 5 VBER and Article 5 MVBER. These include firstly the conditions to be met by all agreements: namely, the market share threshold below which the exemption is granted and the hardcore restrictions that remove the benefit of the block exemption for the whole agreement. Secondly, the conditions include certain restrictions excluded under the VBER, to which the block exemption does not apply, although the remainder of the agreement in which they are contained may still be exempted. The VGL and the SGL are also relevant for this assessment insofar as they provide additional guidance on the interpretation of the respective provisions of the VBER and MVBER. What are the findings? Article 3 VBER provides that the exemption shall only apply on condition that the market share of the supplier and the buyer concerned do not exceed the threshold of 30%. A majority of respondents and NCAs believe this market share threshold to be appropriate for vertical agreements in the motor vehicle sector. Some respondents and a few NCAs however pointed to potential false positives and false negatives as regards the level of the market share threshold. Those views are outlined below: -As for potential false positives (over-exemption), some respondents argued that the current threshold may be too high, pointing out that very few players actually exceed 30% market shares. Some respondents drew a distinction between the distribution of new cars and the aftermarket sectors. This group mentioned that while the 30% threshold still seemed appropriate for the market of distribution of new cars, for the aftermarket the current approach of calculating market share for each brand separately means that, in practice, the threshold has little effect, since few agreements fall below it. A few NCAs noted that the current threshold is too high with regards to the market for new motor vehicles, as for certain countries and segments the market is very fragmented, meaning that all agreements fall below the market share threshold. -As for potential false negatives (under-exemption), a few respondents to the public consultation considered the threshold to be too low. In this regard, they pointed out, for example, that if (i) the market for repair and maintenance (insofar as it is separate from the market for the sale of new motor vehicles) were considered to be brand-specific; and (ii) the market shares of authorised repairers (even if legally they are separate companies) were attributed to vehicle manufacturers or if these were used as a proxy for the position of vehicle manufacturers on the upstream market, the majority of agreements for repair and maintenance and spare parts distribution would fall outside the exemption. Similarly, a few NCAs noted that the threshold may be too low, at least for the provision of repair and maintenance services and for the distribution of spare parts. In the Commission’s monitoring and enforcement experience, 30% has proven itself to be a market share threshold below which it can be presumed with sufficient certainty that agreements will satisfy the conditions of Article 101(3) of the Treaty. To date, the Commission has not identified any category of agreements that are unable to benefit from the exemption because of the parties’ market share, but which are relatively unproblematic in terms of competition; the identification of such a category would have been an indication that the threshold was set too low. Nor has it found any elements that have led it to consider withdrawing the exemption from any agreement or category of agreements in the motor vehicle sector, which is an indication that the exemption threshold is not set too high. Article 4 VBER and Article 5 MVBER provide for a list of hardcore restrictions. These are particularly severe restrictions which inclusion in an agreement implies that the latter cannot benefit from the block exemption under the MVBER regime. As regards these provisions, a majority of respondents to the public consultation and NCAs do not indicate having encountered other types of vertical restrictions beyond those currently included in the VBER and MVBER which should be considered severe restrictions of competition. At the same time, a significant share of respondents and a few NCAs reported that they had encountered restrictions that should be qualified as hardcore, thereby identifying a number of potential false positives. The following in particular were identified: (i) restrictions on access to technical information and in-vehicle data for aftermarket operators; (ii) direct or indirect quantitative criteria for access to authorised networks; (iii) requiring the use of vehicle manufacturer-branded spare parts in respect of replacements that are not covered by the terms of the warranty; (iv) bundling sales and aftersales markets; (v) refusing to license certain rights necessary to allow suppliers to offer spare parts to the independent channel; (vi) restrictions on the sale of brands from different suppliers; and (vii) restrictions that were included in Article 4.2 and Article 4.1.(k) of Regulation 1400/2002. Based on their enforcement experience, a few NCAs also pointed to refusals by OEMs to give independent repairers access to technical information as a potential additional hardcore clause. A few NCAs suggested that in practice the inclusion of such a clause might not have real effects, since for passenger cars at least, most repair agreements may not benefit from block exemption in any event, due to the high market shares of the members of the authorised networks. Nevertheless, a few NCAs considered that listing this provision as a hardcore restriction could have a signaling effect on the market for the provision of repair and maintenance services. In addition, a majority of NCAs and respondents to the public consultation did not consider that there were any restrictions currently listed in Article 4 VBER and Article 5 MVBER that should not be included in this list. In general therefore, the majority of NCAs and respondents to the public consultation did not consider that the current lists of hardcore restrictions created a risk of false negatives. Despite this general view, there were however a few respondents to the public consultation - mainly vehicle manufacturers - that considered that some of the restrictions that are currently listed as hardcore should not be considered as such. The main concern expressed in this regard related to resale price maintenance.

Finally, Article 5 VBER provides for a list of excluded restrictions. The presence of these restrictions in a vertical agreement does not imply the loss of the exemption for the entire agreement but only for the particular clauses that qualify as excluded restrictions. The majority of respondents to the public consultation and NCAs saw the current list of excluded restrictions contained in Article 5 VBER as appropriate. This means that overall, no risks of false positives or false negatives were identified in this regard. The Commission’s monitoring and enforcing experience in the motor vehicle sector has not led it to identify any need for additional hardcore or excluded restrictions. The evidence gathered in the evaluation suggests that the MVBER regime has generally met the specific objective of avoiding false positives and false negatives. This means that: (i) the MVBER regime generally does not exempt agreements for which it cannot be assumed with sufficient certainty that they satisfy the conditions of Article 101(3) of the Treaty; and (ii) the MVBER regime does not fail to exempt agreements that could be exempted, respectively. This being said, with regard to specific points, a few NCAs and some respondents to the public consultation mentioned additional practices that could be considered as hardcore restrictions. 3.To what extent has the MVBER regime contributed to protecting competition in certain dimensions of the motor vehicle sector? What is the issue? As explained in Section 2.3, in the 2009 Communication that preceded the entry into force of the current MVBER regime, the Commission identified certain problematic dimensions of competition in the motor vehicle sector which were considered to be of particular relevance for the future. These specific policy objectives are englobed by the fourth specific objective of the MVBER regime: protecting competition in certain dimensions of the motor vehicle sector (see Section 2.3). Against this background, the evaluation analyses whether the seven specific policy objectives identified in the 2009 Communication have been achieved. What are the findings? 1.Preventing foreclosure of competing vehicle manufacturers and safeguarding their access to the market In the 2009 Communication, the Commission found that in certain circumstances, restrictions in distribution agreements - especially the widespread use of single-branding clauses in motor vehicle distribution agreements entered into between suppliers and distributors - might make it unduly difficult for competing vehicle manufacturers to access the retail and/or repair market. To ensure that inter-brand competition was not undermined, the Commission stressed the need to preserve the ability of competing vehicle manufacturers to enter the market and/or expand their market presence. Overall, respondents to the public consultation and NCAs were of the view that full or partial progress had been made in terms of enabling competing vehicle manufacturers to enter the market and / or expand their market presence. Indeed, only a few respondents to the public consultation expressed the view that this objective had not been achieved. None of the respondents replying that this objective had not been achieved or had only partially been achieved provided specific explanations for their positions. Of the NCAs, only a few considered that the objective had been only partially achieved or not achieved at all. The latter pointed to the alleged lack of new players in certain national markets or to the lack of growth of existing markets to justify their reply. Similarly, at the NCA level, only 1% of all the complaints received by NCAs were filed by vehicle manufacturers.

The fact-finding study showed that inter-brand competition was fairly present at least in the passenger cars and light commercial vehicles segments in the period under review (2007-2017). In the same vein, the study also showed that no passenger car manufacturer appears to have had particularly strong market power in any of the countries in scope. The passenger cars segment can be classified as having medium levels of concentration. Over the period under review, the market shares of the players fluctuated considerably, which can be an indication of a competitive market. As with passenger cars, the light commercial vehicle category reported fluctuating market shares over the period in scope. Despite being a more concentrated segment than passenger cars, no manufacturers held particularly strong market power during the period covered by the study. It should however be noted that after the period covered by the study, two major manufacturers of light commercial vehicles - FCA and PSA – merged to create a new company named Stellantis, implying that at the date of the evaluation, concentration in this segment will have increased compared to the position at the time of the study. In the trucks category, in terms of sales, all main manufacturer groups registered a decrease during the period 2007-2017, although some shifts in market positions took place during the same period. Finally, the bus category appears to have suffered less from the crisis, with an overall minor sales decrease. As with trucks, the bus sector is also highly concentrated. When looking at innovation, the fact-finding study highlighted that, on average, R&D expenditure as a percentage of revenue remained rather stable for passenger cars and light commercial vehicles, while it increased throughout the years for buses and trucks, despite the serious economic crisis that affected the sector in 2008/2009. In line with the views of respondents and the fact-finding study, the Commission’s monitoring and enforcement experience indicates that this specific policy objective has been largely achieved. In particular, it points to inter-brand competition for new passenger cars in the EU being healthy. In contrast, the truck and bus sectors have traditionally been more concentrated. It should also be noted that the markets for light commercial vehicles (and the concentration levels thereon) have recently been particularly affected by the merger of FCA and PSA, which calls for monitoring this markets particularly carefully in the future. Over the period covered by this evaluation, based on the Commission’s experience, there are no indications that manufacturers have found it particularly difficult to access the EU motor vehicle markets, either by entering, or by expanding their presence. Only one of the 22 formal complaints received by the Commission between 2010 and 2020 was lodged by a vehicle manufacturer / national importer, and only 3% of the informal submissions to the Commission were filed by this type of stakeholder. Moreover, it does not appear that a vehicle manufacturers operating in other parts of the world would have attempted to enter / expand their presence in the EU markets, but being stymied by the existence of mono-brand sales networks. In light of the above, it appears that overall, the specific policy objective of preventing foreclosure of competing vehicle manufacturers and safeguarding their access to the market has been either fully or partially achieved. 2.Protecting competition between dealers of the same brand New motor vehicles are almost entirely distributed through the vehicle manufacturers' authorised networks. By exempting vertical agreements providing for quantitative selective distribution or exclusive distribution so long as the market share threshold of 30% is not exceeded and that no hardcore restrictions are included therein, the MVBER regime allows suppliers that do not have significant market power to limit the numbers of the firms authorised to distribute their products. In its 2009 Communication, the Commission considered that there was a danger that intra-brand competition could be undermined, particularly in a context where new vehicles were distributed through dealers with near-identical business models. It was therefore considered that there was a need to protect price competition between dealers of the same brand and to encourage diversity in distribution formats. NCAs and respondents to the public consultation were generally of the view of that full or partial progress had been made in terms of protecting competition between dealers of the same brand. Only some respondents and a small share of NCAs considered that this objective had not been achieved. These NCAs reported that the increasing consolidation between dealers combined with a growing presence of vehicle manufacturers-owned outlets (this trend being also echoed by some respondents to the public consultation), rigid remuneration systems and sales campaigns left little room for effective competition in the distribution of new vehicles. In the same vein, these NCAs also reported a trend towards direct distribution by OEMs when it comes to new motor vehicles, with dealers acting as delivery and configuration points. The increase in direct sales by vehicle manufacturers has also been indicated as a relevant factor by a number of respondents - mainly dealers - to the public consultation. Finally, some respondents, mainly dealers, argued that intra-brand competition has decreased due to, among other things, the removal of the sector-specific block exemption from agreements for new car sales which, in their view, has increased the dependence of dealers on vehicle manufacturers. The fact-finding study showed that intra-brand competition did not decrease significantly over the period in scope, at least as far as passenger cars are concerned. The study did not provide indications in this respect as regards light commercial vehicles, or trucks and buses. The fact-finding study has shown that the density of all passenger car manufacturers’ authorised networks decreased over the period 2007-2017, although in differing fashion, depending upon the brand. In general, the greatest reductions in density over the period affected brands like Renault, Dacia, Peugeot and Citroën, which had a relatively denser dealer network in 2007. Other brands, like Nissan and Toyota, whose network was already less dense than the average, reported a smaller decrease in density. The study provides limited input concerning market concentration of dealers. However, based on survey results, the average percentage difference in market shares of the top three passenger car dealers reported many fluctuations year over year, with an overall slight increase of this figure for seven out of 11 countries.

Based on survey results, the study showed a certain homogeneity of the models used by vehicle manufacturers for the distribution of passenger cars and trucks, in that vehicle manufacturers opted mainly for quantitative selective distribution systems. There was more diversity in the distribution of light commercial vehicles, where qualitative and quantitative distribution models were evenly spread across each of the countries in scope. Exclusive distribution systems seem to be the preferred system for bus distribution, although a certain diversity can also be observed in this category. In light of the study’s findings, the observed slight decline in aggregate network density for passenger cars and the increase in market concentration appear to have been moderate overall, considering the effects of the financial crisis and the observed trend of network rationalisation and consolidation of dealer groups. Moreover, a certain diversification of distribution systems was also observed, albeit without significant changes in the way that the different systems were used at country level. The Commission’s monitoring and enforcement experience indicates that the need to protect dealers of the same brand has largely been met, a finding which is in line with the views of respondents to the public consultation and the fact-finding study. Its experience is that the homogeneity in distribution formats observed prior to 2010 is still present in the markets in 2021, and in particular it notes that the vast majority of passenger cars continue to be distributed through quantitative selective distribution networks, as confirmed by the findings of the study. It has also observed the density of these networks declining over the period covered by this evaluation, which represents a continuation of the trend observed at the time of its last review of the MVBER regime and is confirmed by the findings of the fact-finding study. On the other hand, its experience is that consumers are increasingly using the Internet to shop around for vehicles, and that this is extending the geographic reach of individual authorised dealers. Finally, over the period since the MVBER regime was adopted, the Commission has not pursued any cases demonstrating that suppliers had put barriers in the way of intra-brand competition, for instance via resale price maintenance. Sixteen out of the 22 formal complaints received between 2010 and 2020 were submitted by authorised dealers (or repairers), but all of them were rejected. There were two informal submissions including allegations of restrictions to access authorised dealers’ networks that turned into formal complaints, however, one of them was rejected and the Commission’s decision was upheld by the EU General Court and the other was withdrawn. In light of the above, it appears that overall, the specific policy objective of protecting competition between dealers of the same brand has been partially or even fully achieved. 3.Preventing restrictions on parallel trade in motor vehicles In its 2009 Communication, the Commission found that the protection of cross-border trade had enabled consumers to shop within the Single Market and take advantage of price differentials between Member States. There was thus a need to ensure that this continued to be the case and that distribution agreements did not restrict parallel trade. Overall, both NCAs and respondents to the public consultation were of the view that full or partial progress had been made in terms of preventing restrictions of parallel trade in motor vehicles. Some NCAs even reported that cross-border competition had intensified slightly. This being said, some NCAs reported a tendency to prevent cross-border sales via indirect means (e.g., by shortening the warranty period in certain Member States or “accidentally” failing to provide the registration document for the end consumer). These NCAs reported that since car sales margins are low, and dealers make much of their profit from repair and maintenance on cars that they have sold locally, they have few incentives to sell to consumers resident in other Member States. It is also worth noting that, only one of the decisions issued by NCAs finding an infringement of competition involved parallel trade restrictions. This position seems to be supported by the fact that only 8% of the respondents to the public consultation declared to have encountered restrictions of authorised dealers’ ability to sell motor vehicles or spare parts in other Member States in their agreements. In contrast to the overall picture, a few respondents raised concerns that the EU Single Market had been segmented into national markets, thereby obstructing any real EU-wide competition; and that intra-brand competition between dealers only existed at national level. The Commission's monitoring and enforcement experience also points in the direction that the objective of preventing obstacles to parallel trade and largely enabling consumers to purchase vehicles in other Member States has, at least in part, been met. Although the Commission has had substantial volumes of correspondence on this issue since the current MVBER regime was adopted, and 9% of the formal complaints filed with the Commission contained allegations regarding restrictions on cross-border trade, this has not allowed it to detect any substantial obstructions on the part of suppliers. More concretely, the Commission has not had cause to adopt any decision similar to those pursued in the early 2000s. In light of the above, it appears that overall the specific policy objective of preventing restrictions on parallel trade in motor vehicles has been either fully or partially achieved.

4.Enabling independent repairers to compete with the manufacturers' networks of authorised repairers In its 2009 Communication, the Commission observed that independent repairers provided consumers with an alternative channel for the upkeep of their motor vehicles and were a source of vital competitive pressure, as their business models and their related operating costs were different from those in the authorised networks. Independent repairers’ ability to compete depended on unrestricted access to essential inputs such as spare parts and technical information. It was thus necessary to safeguard this access, as well as to prevent other indirect means from affecting independent repairers’ positions, such as the misuse of warranties by vehicle manufacturers and/or their authorised repairers. The evaluation shows that the majority of respondents to the public consultation and NCAs considered that this objective had been partially achieved and some respondents and NCAs considered it to have been even fully achieved. Despite the general views, based on their enforcement experience, some NCAs report difficulties for independent repairers to obtain timely access to spare parts and to information relevant for the provision of aftersales services - notably repair and maintenance - persisted and that this may become more important in the future as result of the increasing digitalisation of motor vehicles. This is also echoed by some respondents to the public consultation, which flagged (i) difficulties accessing OEM-branded (captive) parts, in particular from independent distributors; (ii) limitations on independent publishers’ acc