WRITTEN QUESTION P-2696/99

by Neil MacCormick (Verts/ALE) to the Commission

(11 January 2000)

Subject: Internal market: Restrictive practices in car sales

Given that vehicles from Belgium, the Netherlands and Ireland can be sold in the UK at prices well below the manufacturers' UK list prices and that various other countries also provide substantial savings

(in Finland, for example, some vehicles cost up to 60 % less than in the UK, a specific example being the Saab 9-3 2-0 SE coupé, whose pre-tax price in Finland is £9 223 whereas in the UK it is £20 220).

Given that the Commission publishes six-monthly car-price tables (Ref. IV/F2/0599) which, however, list prices only for left-hand drive vehicles, thereby clouding clear price comparisons for consumers in the UK.

1. Will the Commission extend its present service and publish price tables for right-hand drive vehicles in each Member Sates in an effort to increase price transparency and allow everyone to take further advantage of the 'single market?

2. Is the Commission aware that manufacturers still employ a variety of strategies to discourage people in the UK from buying, or arranging for the purchase of, their preferred new car from sources outside the UK?

3. Does the Commission agree that such practices by automobile manufacturers deprive EU citizens of the real advantages of the single market in a domain which, for many people, involves their largest expenditure on any item of movable property?

4. If so, does the Commission agree that it ought to give very high priority to the taking of effective steps to end once and for all the uncompetitive practices of this kind that weaken consumer confidence in the credibility of the internal market?

5. What steps does the Commission therefore propose to take in the next six months on this matter?

Answer given by Mr Monti on behalf of the Commission

(26 January 2000)

The Commission is indeed aware of the price discrepancies for cars between the United Kingdom and other Member States. Contrary to what is stated in the Honourable Member's question, British prices and supplements for right-hand drive (RHD) specification in each Member State have always been published in the Commission's regular report on car prices(1). It has been found that the price differences observed since 1997 are partly due to the strength of the Pound Sterling and the additional cost of British specification, while a part must be attributed to low net prices in Member States with high car taxation (Denmark, the Netherlands and Finland in particular). The strong demand from British consumers to buy cars in mainland Europe is to an appreciable extent due to the increased price transparency created through this report.

High price differentials as such do not constitute a violation of European competition rules. The Commission's task is to ensure that parallel trade, which is an important market-related factor for reducing price differentials, is not affected by anti-competitive practices incompatible with 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) granting a block exemption to car distribution. In this respect, since 1995, the Commission has undertaken a number of major initiatives, including the opening of ex-officio proceedings against certain car manufacturers and their networks and requesting the establishment of telephone help lines by manufacturers, with the aim of ensuring that consumers from the United Kingdom also can buy a car in another Member State and benefit from the achievements of the internal market.

As an example to be mentioned, the Commission's decision adopted in 1998(3) against Volkswagen AG imposed a fine of 102 million on the undertaking for impeding citizens from other Member States from buying a new car in Italy.

The present high level of car prices in the United Kingdom and possible restrictive practices by car manufacturers is also a matter of concern for the British authorities responsible for competition. They have decided to carry out extensive investigations with regard to the situation of the British market and a report from the United Kingdom competition commission with some proposals for remedies is expected, in principle, for the end of January 2000.

The Commission is closely following this exercise in particular, since it will have to evaluate whether Regulation (EC) no 1475/95 functions in a satisfactory manner in the Member States. It will, to that effect, issue a report by 31 December 2000. The impact of this Regulation on consumers will be one of the key elements of the evaluation. This report will serve as a basis for determining the future legal framework for the car industry and for a possible revision of Regulation (EC) no 1475/95. In this respect, the Commission firmly intends to take all the necessary measures to arrive at the most satisfactory distribution system for cars in the interest of the European consumers.

(1) See for example Press Release IP/99/554 of 22 July 1999.

(2) OJ L 145, 29.6.1995.

(3) OJ L 124, 25.4.1998.