WRITTEN QUESTION P-0499/00

by Christopher Huhne (ELDR) to the Commission

(17 February 2000)

Subject: Car price differentials

Does the Commission consider that the substantially higher prices for cars in the UK are the result of concerted behaviour on behalf of car producers and/or distributers and thus should result in an early revision of the block exemption from competition rules under the existing regulation? If the Commission does not consider this to be the case, how does it explain the substantial and persistent difference in the price of new cars, well beyond the figure mentioned in the notice published by the Commission in connection with the regulation EEC 123/85(1)?

(1) OJ L 15, 18.1.1985, p. 16.

Answer given by Mr Monti on behalf of the Commission

(8 March 2000)

The block exemption regulation concerning car distribution Commission Regulation (EC) No 1475/95 of 28 June 1995 on the application of Article 85(3) of the EC Treaty to certain categories of motor vehicle distribution and servicing agreements(1), which will expire on 30 September 2002, provides in its Article 11 that the Commission evaluates on a regular basis the application of the Regulation, with a particular view on price differentials between the different Member States and on the quality of service to final users. To this end, the Commission has since 1993 monitored car price differences in the Community in its bi-annual report on car prices(2). Article 11 of the Regulation also requires the Commission to draw up a report on the evaluation of the Regulation before 31 December 2000.

It is true that, since 1997, the Commission has found high price discrepancies between the United Kingdom and other Member States. This situation has been partly caused by the strength of the British Pound, while a part may be attributed to the right-hand drive (RHD) specification of the cars sold in the United Kingdom. On the other hand, it has been observed that low prices before tax prevail in Member States with high taxation of car purchase. This circumstance may be apt to contribute to artificially high price differences between those countries and countries where no such taxes exist, such as for example the United Kingdom.

The Commission considers that growing price transparency, as promoted by its car price reports and the introduction of the euro, is increasingly inducing customers from the United Kingdom to acquire cars in other Member States. These developments are important market-related factors contributing to a better harmonisation of prices throughout the Community. The Commission has undertaken a number of initiatives (opening of ex-officio proceedings against certain car manufacturers, request accepted by the industry to establish telephone help-lines to assist consumers) to ensure this freedom for consumers. For instance, the Commission imposed, on 28 January 1998, a fine of 102 million to Volkswagen for restrictive practices aiming at establishing a prohibition on its dealers to sell cars for export to citizens of other Member States. Similar cases relating to other car manufacturers are being examined at present.

The Commission notice concerning Regulation (EEC) No 123/85 of 12 December 1984 on the application of Article 85(3) of the EC Treaty to certain categories of motor vehicle distribution and servicing agreements(3) mentioned by the Honourable Member specifies the circumstances under which the Commission may withdraw the benefit of the block exemption. It refers inter alia to the existence of substantial price differentials between Member States over a considerable period and requires in such cases the Commission to demonstrate that such price differentials are chiefly due to the car distribution block exemption. The simple existence of a high price differential superior to the figure quoted in the notice, is therefore, in itself, not sufficient evidence for a possible withdrawal.

The report on the evaluation of the Regulation is expected to provide more evidence on the causes for price differentials and on the impact of the exempted distribution system on car prices. The United Kingdom Competition Commission is also in the process of finalising a report which should contain detailed information on the particular issue of the price differentials for the British market. After having taken note of the findings of the United Kingdom Competition Commission, and having completed its own report, the Commission will then be able to determine which measures, if any, are to be taken. The report on the application of Regulation (EC) No 1475/95 will provide an essential basis for the forthcoming discussion about the future legal framework for car distribution, after expiry of the current Regulation.

(1) OJ L 145, 29.6.1995.

(2) See for most recent one IP/00/121 of 7 February 2000.

(3) OJ C 17, 18.1.1985.