WRITTEN QUESTION E-1538/01

by Daniel Hannan (PPE-DE) to the Commission

(22 May 2001)

Subject: Vehicle imports (UK)

Does the Commission have any statistical research into price fixing by car manufacturers, so that vehicles which are manufactured and purchased on the continent of Europe by car importers cannot be imported into the United Kingdom at prices lower than those of the official franchised dealer? The case particularly in point is the new model of the VW Passat.

Does the Commission have any information on the legal validity of a so-called right-hand drive surcharge reportedly being levied on customers to raise prices in the UK?

Does the Commission believe that, if proven, such practices would be in breach of the Single Market?

Answer given by Mr Monti on behalf of the Commission

(18 July 2001)

The Commission has no statistical data on price fixing by car manufacturers. Price fixing by car manufacturers is the subject of a black clause under Article 6(1) of sector-specific Block Exemption (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)) and if proven would constitute a breach of Article 81 (ex Article 85) of the EC Treaty. The Commission does, however, publish bi-annual surveys of prices for new cars across the Union(2). It does this to promote price transparency, which should in turn both encourage European citizens to purchase their vehicles where prices are lowest and enable national authorities to monitor prices.

The Commission has seen no evidence of any attempt by VW to fix prices with the intention of ensuring that VW cars purchased on the Continent cannot be imported into the United Kingdom at prices lower than those of the British franchised dealers. The Commission has recently imposed a 30,96 million fine on VW for anti-competitive price-fixing practices involving the VW Passat in Germany(3). However, the matters investigated only directly affected the United Kingdom to the extent that prices were fixed for all purchasers, irrespective of their Member State of residence. That case did not involve the type of practice that the Honourable Member describes.

The Honourable Member also asks about the legal validity of a right-hand drive surcharge. The Commission's Notice of 18 January 1985 concerning Commission Regulation (EEC) No 123/85 of 12 December 1984 on the application of Article 85(3) of the Treaty to certain categories of motor vehicle distribution and servicing agreements(4) provides that a manufacturer may charge an objectively justifiable supplement where a car supplied to a dealer has a different specification to the corresponding model commonly supplied within the dealer's contract programme. Where such a charge relates to differences between the United Kingdom right-hand drive specification and the local specification, it is commonly known as the right-hand drive surcharge.

The right-hand drive surcharge is generally applied to cover the greater cost of producing a right-hand drive vehicle. Left-hand drive cars generally have lower unit production costs than equivalent right-hand drive vehicles because they are produced in larger numbers, leading to economies of scale. It goes without saying, however, that the additional cost should be spread over the whole right-hand drive production of the model in question, and not just over those right-hand drive cars sold in a left-hand drive country.

The Commission notes that some car manufacturers have recently increased the amount of the right-hand drive surcharge and is investigating the matter with a view to finding out whether the new charge is objectively justifiable.

(1) OJ L 145, 29.6.1995.

(2) http://europa.eu.int/comm/competition/car_sector/price_diffs/.

(3) See IP/01/760, 30 May 2001.

(4) OJ L 15, 18.1.1985, as replaced by Commission Regulation (EC) No 1475/95.