WRITTEN QUESTION E-2541/00

by Theresa Villiers (PPE-DE) to the Commission

(28 July 2000)

Subject: European car market

Could the Commission indicate when it intends to publish its review on the functioning of the European car market?

Could the Commission list any documents or communications issued so far on the review of the competition rules applicable to the European car market?

Does the Commission believe that the competition exemptions granted to the car industry, in particular those relating to dealerships, increase prices or contribute in any way to the difference in prices between:

- the UK and mainland Europe?

- the EU and the rest of the world?

Answer given by Mr Monti on behalf of the Commission

(22 September 2000)

The Commission is currently preparing an evaluation report of the 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(1), the current block exemption regulation concerning car distribution, with a particular regard to price differentials between the Member States and on the quality of service to final users. This evaluation report will be published by the end of this year.

The Commission has not issued any document or communication on the evaluation of the current block exemption and will not do so before the adoption and publication of its evaluation report.

Many factors contribute to price differentials between the United Kingdom and the other Member States, such as the strength of the British Pound, and the additional cost for the right hand drive specification of the cars sold in the United Kingdom. High taxation in some Member States (such as Denmark, the Netherlands and Finland) induces car manufacturers to decide to sell their cars at lower prices in these Member States, and this factor may also generate high price differentials between those Member States and the United Kingdom, where no specific tax is imposed on car purchase.

The evaluation report of the current block exemption concerning car distribution will assess, among other points, the issue of price differentials and the role of the current distribution system in this respect.

Price differentials do not as such constitute a violation of European competition rules. The Commission's task is to ensure that parallel trade, which is an important factor for reducing price differentials, is not hindered by restrictive practices from car manufacturers, practices incompatible with Community competition rules. The Court of first instance confirmed the Commission's decision establishing that such practices constitute very serious infringements and imposing a fine in its judgement of 6 July 2000 delivered in the Volkswagen case. Various ex-officio proceedings have been opened against other car manufacturers in this regard and some of them should be finalised before the end of the year.

The British competition commission recently carried out an extensive investigation with regard to the situation of the British market. The minister for trade and industry, published a report in April 2000 and also announced some remedies aiming at increasing competition in the supply and selling of cars. These remedies should enter into force in the near future.

As for price differentials between the Community and the rest of the world, in line with Commission Regulation (EC) No 1475/95 the Commission will draw up a report on the evaluation of the exemption granted concerning the distribution of cars within the Community. Price differentials between the rest of the world and the Community are therefore not part of the analysis carried out.

(1) OJ L 145, 29.6.1995.