WRITTEN QUESTION E-0292/02

by Charles Tannock (PPE-DE)and Theresa Villiers (PPE-DE) to the Commission

(11 February 2002)

Subject: European block exemption on car retailing

Does the Commission believe that there is any reason to continue the block exemption for motor retailing once it expires in September of this year or that ending it would in any way prevent motor manufacturers from offering professional after-sales services?

Does the Commission accept that motor manufacturers have used the current system of selective and exclusive distribution to manipulate prices at the expense of consumers in individual Member States, and, if so, will the Commission address this problem by ensuring that consumers from one country are able to purchase cars in another country without undue delays or discrimination, and by making it easier for retailers to take on more franchises and to sell overseas, thus ensuring that consumers in all Member States are able to take advantage of real competition within the Single Market?

Answer given by Mr Monti on behalf of the Commission

(25 March 2002)

The Honourable Members will by now be aware that on 5 February 2002, the Commission adopted a draft sector-specific block exemption Regulation for the motor vehicle sector(1).

The new draft regulation was recently sent to the Parliament, and is intended to replace Commission Regulation (EC) No 1475/95 of 28 June 1995 on the application of Article 85(3) of the Treaty to certain categories of motor vehicle distribution and servicing agreements(2) once it expires in September 2002.

Distribution agreements such as those used in the car sector form part of a broader class of agreements known as vertical agreements. In most other economic sectors, where there is no sector-specific block exemption, these agreements are covered by a general block exemption, known as Commission Regulation (EC) No 2790/1999 of 22 December 1999 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices(3), so long as they respect certain conditions and do not contain any hard-core severely restrictive provisions.

One of the first questions which arose when the Commission began its analysis, was whether Regulation (EC) No 1475/95 ought to be left to lapse, leaving the general regulation to apply automatically to the motor vehicle sector. That option was rejected, since Regulation (EC) No 2790/1999 did not contain sufficient safeguards to remedy the competition problems identified in the Commission's 2000 evaluation report and would in particular have allowed carmakers to continue using broadly the same kind of

selective and exclusive distribution networks that have led to such problems in the past. Furthermore, unlike Regulation (EC) No 1475/95, the general block exemption contains no availability clause forcing carmakers to supply dealers on the Continent with right-hand-drive vehicles for sale to British and Irish customers; the Honourable Members will no doubt agree with the Commission's analysis that such a clause is a vital element of the Single Market.

Although Regulation (EC) No 2790/1999 would not have prevented manufacturers, or rather their dealers, from providing good quality after-sales servicing, the Commission concluded that, in the absence of stricter measures, competition between dealers and independent repairers would have been eroded, to the detriment of the consumer. In particular, the general Regulation has no provisions guaranteeing independent repairers' access to technical information, makes insufficient provision for competition in spare parts sales, and would allow manufacturers to prevent dealers from sub-contracting vehicle servicing to other authorised repairers.

The Commission's evaluation report on Regulation (EC) No 1475/95 concluded that the Single Market was not functioning as it should in the motor vehicle sector. To make the Single Market more effective, the new draft Regulation prohibits the combination of selective and exclusive distribution and contains a number of measures which will make it easier for consumers to purchase cars in other Member States. It will also make it easier for retailers to sell vehicles overseas, and even open outlets in other areas of the Union. The new draft also prohibits manufacturers from imposing many restrictions which have in the past been used to prevent dealers from selling vehicles of other makes. The Commission will consider, during the consultation procedure leading up to the definitive adoption of the new Regulation, whether it is appropriate to include some kind of measure to make it easier for a dealer to sell their dealership to another authorised dealer belonging to the same network. The Commission believes that taken together, the proposed measures will make it easier for dealers to bridge frontiers, thereby reinforcing the Single Market still further, to the benefit of all European consumers.

(1) A press release is available on the Commission's website at http://europa.eu.int/comm/competition/car_sector/distribution/

reform_proposal.

(2) OJ L 145, 29.6.1995.

(3) OJ L 336, 29.12.1999.