Opinion of the Economic and Social Committee on the "Evaluation Report on motor-vehicle distribution and sales and after-sales service in accordance with Regulation (EC) No 1475/95 (Additional opinion to the opinion on the XXIXth Report on competition policy)"
Date: 2001-05-30
Institutions: European Economic and Social Committee
Subjects: after-sales service, competition policy, distributive trades, motor car, vertical agreement

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Opinion of the Economic and Social Committee on the ‘Evaluation Report on motor-vehicle
distribution and sales and after-sales service in accordance with Regulation (EC) No 1475/95
(Additional opinion to the opinion on the XXIXth Report on competition policy)’

(2001/C 221/23)

On 23 January 2001 the Economic and Social Committee, acting under the second paragraph of Rule 23
of its Rules of Procedure, decided to draw up an opinion on ‘the Evaluation Report on motor-vehicle
distribution and sales and after-sales service in accordance with Regulation (EC) No 1475/95 (Additional
opinion to the opinion on the XXIXth Report on competition policy)’.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 16 May 2001. The rapporteur was
Mr Regaldo.

At its 382nd plenary session (meeting of 30 May 2001), the Economic and Social Committee adopted
the following opinion by 83 votes to 22 with eight abstentions.

1.

Introduction

2.

Legal framework for motor vehicle distribution and
after-sales service

1.1.
In accordance with Article 11 of the Commission’s
Regulation (EC) No 1475/95 (1) of 28 June 1995 on the
application of Article 81(3) of the Treaty to certain categories
of motor vehicle distribution and servicing agreements, the
European Commission has drawn up a report (2) intended to
provide a full evaluation of the effects of implementing the
Regulation, with special reference to the impact of
the
exempted agreements on the price differentials of new motor
vehicles between different Member States and on the quality
of service offered to consumers. The report also takes account
of the two communications which supplement it and clarify
certain points of the regulation: Communication on Regulation
(EEC) No 123/85 (3) and Clarification of the activities of motor
vehicle intermediaries (4).

The report represents the initial stage of the process
1.2.
through which Community decisions will need to be taken on
the future legal regime applicable to motor vehicle distribution
agreements following the expiry of the current exemption
Regulation (CE) No 1475/95 on 30 September 2002.

The report is divided up essentially into three main

1.3.
chapters covering:

— current Community rules on motor vehicle distribution

agreements;

— the current structure and most recent developments in

the sector;

— analysis of the restraints allowed by Regulation (EC)
No 1475/95 in relation to the situation and competitive
forces operating in the sector.

2.1.
Agreements between enterprises which prejudice trade
between Member States and limit competition are forbidden
under Article 81(1) of the Treaty. However, under Article 81(3),
when the four conditions laid down are met, the Commission
can stipulate in individual cases or by regulation that the
prohibition in paragraph 1 is not applicable to any specific
agreement or category of agreements between enterprises.

2.2.
The first decision on exemption of agreements for
motor vehicle distribution and related after-sales service was
taken by the Commission in 1974 in the so-called BMW case.

This decision was a point of reference for subsequent legis-
lation on the subject, since the Commission, by authorising in
accordance with Article 81(3) the exclusive and selective form
of distribution practised by the manufacturer, was taking
into practical account the socio-economic aspects closely
connected with the nature of the motor vehicle product, and
not just purely legal aspects, thus acknowledging that this
form of distribution was sufficiently in the public interest to
be authorised.

2.3.
The main principles of the BMW decision, which are
still valid today, were taken up and incorporated in subsequent
sectoral block exemption regulations on the distribution of
motor vehicles and related services for assistance to customers:
Regulation (EEC) No 123/85, which came into force on 1 July
1985 and remained valid until 30 June 1995, and the current
Regulation (EC) No 1475/95, which came into force on 1 July
1995 and is valid for seven years — up to 30 September 2002.

(1) OJ L 145, 29.6.95, p. 25; ESC Additional Opinion OJ C 133,

31.5.1995, p. 27.

(2) COM(2000) 743 final of 8.11.2000.
(3) OJ C 17, 18.1.1985.
(4) OJ C 329, 18.12.1991.

2.4. With Regulation (EEC) No 123/85, covering distri-
bution and service agreements of a selective and exclusive
type, the Commission sought on the basis of the BMW decision
to find a necessary and reasonable compromise among the
plethora of interests involved:

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— those of consumers, interested in being able to obtain
new vehicles and after-sales services, as well as quality
products and related guarantees, throughout the territory
of the European Union at competitive prices;

— those of the European motor vehicle industry, interested
in preserving the brand image by externalising the
distribution function in a rational and efficient way, and
in increasing their own level of competitiveness on the
world market;

2.4.2.
of distributors, the following provisions were laid down:

To protect the interests and economic independence

— a ban on inhibiting the distributor’s freedom to determine
prices, discounts and reductions for the sale of products
covered by the contract;

— a requirement

for agreements to have a minimum
duration of four years or to be of indeterminate duration
with a notice of termination of at least one year.

— those of dealers, interested in meeting their obligations to
customers in the best possible way — supply of new
vehicles, spare parts and pre-sales and after-sales service
— and in having a favourable framework for a return on
the investments which they must make to carry on
their activity, as well as in preserving their economic
independence;

— those of spare-part manufacturers, interested in access to
dealers’ networks and in preserving their research and
development potential in the EU;

— those of independent repairers, interested in the avail-
ability of spare parts to be used only for the repair and
maintenance of vehicles.

The essential restrictions included in the agreements
2.4.1.
to achieve these objectives met
the four conditions laid
down in Treaty Article 81(3), and were designed to achieve
rationalisation and hence a better distribution of motor
vehicles and a better after-sales service. These restrictions
enabled the manufacturer to bind the distributor inter alia to
the following obligations:

— not to sell motor vehicles which compete with those

covered by the contract;

— to sell only to final consumers or other dealers in the

network;

— not to seek customers outside their contract territory;

— not to make active sales outside their contract territory;

— not to sell or use spare parts which compete with those
of the contract or which are not of matching quality;

2.4.3.
specific cases:

The benefit of exemption could be revoked in four

— lack of competition;

— barriers to parallel trade and hence to integration of the

markets;

— excessive differences of price attributable to the Regu-

lation;

— unjustifiable prices or discriminatory conditions.

2.5.
The Economic and Social Committee endorsed this
Regulation in an opinion adopted during the plenary session
of 28 and 29 September 1983 (1).

On that occasion, the Committee, while recognising the need
for a specific block exemption system for the motor vehicle
sector for both selective (qualitative and quantitative) distri-
bution and exclusive distribution, noted in particular positive
effects on the intensity of inter-brand competition at that time
in the EEC, and stressed how important it was to ensure a
good balance between the reciprocal rights and obligations of
the parties, in the interests of competition and consumers.

On the expiry of Regulation (EEC) No 123/85, the
2.6.
Commission adopted a new block exemption system, Regu-
lation (EC) No 1475/95, essentially based on the fundamental
principles of the previous regulation in terms of exclusive and
selective distribution, but including profound changes with
regard to: improving the internal market for motor vehicles
and intensifying competition at the distribution stage; achiev-
ing a better balance between the parties by allowing distribu-
tors greater independence of manufacturers and by giving
producers and independent distributors of spare parts easier
access to the markets;
increasing the consumer’s range of
choice.

— to provide contractual products exclusively for final users
or authorised resellers forming part of the manufacturer’s
distribution networks;

The main changes and essential objectives of Regu-

2.7.
lation (EC) No 1475/95 were aimed at:

— to provide services to assist the consumer.

(1) OJ C 341, 19.12.1983, p. 18.

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2.7.1.
Ensuring the efficiency of motor vehicle distribution
and related services to the advantage of the consumer, and the
existence of effective competition between manufacturers’
distribution networks (interbrand) and within them (intra-
brand).

2.7.2.
ance with the principle of the single market, through:

Further broadening the consumer’s choice in accord-

— arbitrage between markets through parallel imports;

— active promotion of the sale of new motor vehicles
outside the contract territory through advertising, pro-
vided that it is not personalised advertising;

— an obligation on dealers to provide assistance and repair
for any vehicle sold by another enterprise in the network;

— offering independent producers and distributors of spare

parts the possibility of easier access to markets.

Strengthening the independence of the dealer in
2.7.3.
relation to the manufacturer, and increasing competitiveness
through:

— giving independent spare part producers the opportunity
to supply such products to dealers of their choice;

— giving independent repair workshops the opportunity to
obtain from the manufacturer the necessary technical
information for the repair of motor vehicles (apart from
information covered by an intellectual property right or
which constitutes confidential know-how).

The Committee also endorsed (1) the new Regulation
2.8.
(EC) No 1475/95, stressing that it was convinced that the
effects would benefit manufacturers, spare part producers,
distributors and consumers.

In particular, the Committee stressed the positive role of
arbitration, welcomed the extensions of prohibited clauses,
emphasised the need to harmonise legislation on intellectual
property, and the need to update the Communication of
12 December 1984 on Regulation (EEC) No 123/85 and the
Communication on the Clarification of 18 December 1991 on
intermediaries,
to make them more compatible with the
regulation.

— allowing the dealer to sell other competing vehicles in

different premises (multi-marketing);

3. References to the new Community rules on vertical

restraints

— allowing the dealer to become involved in any form of
marketing except for sales to non-authorised resellers;

— prohibiting the manufacturer from unilaterally changing

the status of the dealer or the contract territory.

The European Commission has carried out a far-
3.1.
reaching review of competition policy with regard to vertical
restraints by adopting Regulation (EC) No 2790/1999 (2) of
general scope and the Communication on guidelines, which
constitute the instrument for interpreting the policy.

2.7.3.1. With a view to strengthening the economic inde-
pendence of the dealer, the Regulation lays down:

— an extension from four to five years of the duration of
the agreements, and an extension from one to two years
of the minimum period of notice for agreements of
indeterminate duration, in order to safeguard investments
more effectively;

— reference to a third independent expert or an arbitrator
in the absence of agreement between manufacturer and
dealer on the objectives of sales, the size of stocks and
the number of demonstration vehicles.

3.2.
The Regulation replaces the Commission’s existing
exemption regulations on exclusive distribution agreements
(Regulation (EEC) No 1983/83) (3); on exclusive purchases
(Regulation (EEC) No 1984/83) (4); on franchising (Regulation
(EEC) No 4087/88) (5); and also includes selective distribution,
previously excluded from the exemption regulations.

3.3.
Although the Commission has specified from the start
that these rules did not concern the motor vehicle sector — a
view strongly supported by the ESC in its relevant opinions —
it cannot be ignored that the review of the specific vertical
agreements regime envisaged by Regulation (EC) No 1475/95

2.7.4.
services through:

Increasing competition in the market for customer

(1) OJ C 133, 31.5.1995, p. 27.
(2) OJ L 336, 29.12.1999, p. 21; ESC opinion OJ C 116, 18.4.1999,

— giving authorised dealers the right to acquire from third
parties spare parts of equivalent quality to the original
parts;

p. 22.

(3) OJ L 173, 30.6.1983, p. 1.
(4) OJ L 173, 30.6.1983, p. 5.
(5) OJ L 359, 28.12.1988, p. 46.

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will have to be looked at in relation to the new legal context
brought about by the reform of the Community policy on
vertical agreements.

and repairs throughout the territory of the Union, in line with
a business-management approach based on quality standards,
the constant pursuit of customer satisfaction (CSI), long-term
continuous staff
training and the adoption of advanced
computerisation and communication techniques.

3.4.
The new Regulation (EC) No 2790/1999, in order to
guarantee sufficient arbitrage channels between non-integrated
markets, lays down that the block exemption is not applicable
to agreements which impose on the purchaser a ban on active
sales together with a ban on sales to intermediaries or
unauthorised resellers.

Moreover, the new regime reserves the right for the Com-
mission to declare (through a regulation) that the exemption
is inapplicable in situations where networks of parallel vertical
agreements cover more than 50 % of the market.

These provisions, together with the lack of any safeguards for
SMEs and the absence of minimum provisions for the ending
of contracts and for recourse to arbitration — as repeatedly
stressed by the ESC in its opinions on the new regime — give
rise among other things to serious problems involving the
compatibility of motor vehicle distribution agreements —
given their nature and widespread occurrence — with the
principles and obligations of the new Community rules on
vertical agreements.

4. What is at stake for the European motor vehicle

sector

4.1.
The specific Community rules for the motor vehicle
sector, based on the concept of exclusive and selective
distribution, have represented for more than 25 years the
basic prerequisite for the European motor vehicle system,
characterised by a closely integrated and highly competitive
chain of production and distribution by brand, which the
manufacturers establish with selected partners on a basis of
joint plans — component and spare part suppliers upstream,
and the distribution and service network downstream of the
production stage.

4.2.
As a whole, the European system is made up of more
than 120 000 firms (98 % of them SMEs in the distribution
system) which employ 3 900 000 people
(of whom
1 500 000 in the distribution networks), with an annual
turnover of approx. EUR 400 billion.

The European Union produces 16,5 million motor
4.3.
vehicles per year with guarantees ranging from one to three
years. A two-year guarantee will become mandatory from
1 January 2002 when Directive 1999/44/CE on the sale of
consumer goods and associated guarantees comes into force.
Moreover, the 200 million motorists in the European Union
are guaranteed the availability of spare-part supplies, servicing

4.4.
These significant socio-economic data are comp-
lemented by others which help to describe the sector further:
the vehicles have implications for individual safety and the
integrity of the environment, require both regular and irregular
repairs and servicing, and must meet strict technical and
environmental standards.

For many people buying a vehicle represents the second most
important investment in the course of their lives, and it is
estimated that EU citizens spend about 13-15 % of their family
budget on their vehicles. All these factors go to make up the
challenge which the European motor vehicle system must
continually face to meet the needs of all the interested parties
and especially those of consumers.

In this context,

4.5.
larger vehicles for the transport of
people and goods by road — industrial commercial vehicles
and buses — represent a strategic component both for society
the European Union; here the
and for the economy of
final customer is a professional operator with commercial
objectives.

4.6.
The Committee therefore calls upon the Commission
to consider the question thoroughly, taking all these aspects
adequately into account, before setting about the definitive
reform of the current Community rules on motor vehicle
distribution.

5. General comments

5.1.
The Commission’s evaluation report on the application
of Regulation (EC) No 1475/95 on agreements on motor
vehicle distribution rightly demonstrates — by its size and the
scale of the analyses carried out — the importance attributed
to this important, sensitive sector of the European economy.
The Committee congratulates the Commission on this useful
piece of work.

5.2.
Although it does not have the aim of sketching out
proposals on the situation which will follow the expiry of the
current regulation, the report still represents a starting and
reference point for the Commission’s subsequent work on the
subject.

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5.3.
In this connection, the Committee would point out the
lack of a summary table of final conclusions on the aspects of
the current Community rules on motor vehicles which the
Commission regards as most relevant in terms of safeguarding
competition and integrating markets.

5.4.
It would also have been desirable to draw a distinction
between the restraints expressly allowed by the Regulation
(such as territorial exclusivity and the ban on sales to
independent resellers) on the one hand, and those restraints
which result from the practices of operators which violate the
limits laid down in the regulation for the applicability of
exemption (such as barriers to passive sales to final consumers,
or transactions between authorised dealers, relating to the
location of those consumers or dealers within the Community
territory).

5.9.
In support of the link between exclusive and selective
distribution and the automobile sector, the Committee notes
that the report shows how the distribution system in the USA
is largely comparable to the European one in its practical
operation. The Committee would also point out that a feature
of the legislative framework in the USA, which is made up of
the separate laws of the individual states, is that it is mandatory
and not optional as in the EU, and that it views the economic
protection of dealers vis-à-vis manufacturers — in terms of
both termination of contracts and the requirement that sales
be made through the network — as a necessary means of
guaranteeing consumer protection.

5.10.
As regards the balance between the parties concerned
and the benefits for the consumer, the report brings out the
fact that, despite the improvements provided by Regulation
(EC) No 1475/95, the economic independence of the dealer is
still very limited in relation to the producer, and this has effects
on the extent to which the consumer’s needs can best be met.

5.5.
In general terms, the report shows that the set of rules
on selective distribution laid down in the Commission’s anti-
trust legislation has made it possible, over the past 25 years,
for the European motor vehicle industry to restructure itself
and become more competitive in relation to global challenges
by optimising the production system (lean production, robot-
ics, the ‘just in time’ approach) and the distribution system
through restructuring and ever closer integration with the sales
network (lean distribution).

5.11.
In this connection, the Committee reiterates what it
has repeatedly stressed in earlier opinions: the need for future
rules in this field to provide effective protection for dealers, by
seeking a better balance in the contractual and economic
position of the SMEs in the networks through extending as
widely as possible the scope of action of the expert or
arbitrator in all aspects of the contractual relationship, with
special reference to the ending of contracts.

5.6.
The preservation of a strong brand image — a basic
factor for confronting the global interbrand challenge — and
joint responsibility of producers and distributors for meeting
the growing quality and safety requirements imposed by the
EU directives and regulations in the field, have been made
possible precisely through the presence of an exclusive and
selective regime in motor vehicle distribution.

6.

Specific comments

6.1.

Introduction

5.7.
Thus the exclusive and selective distribution regime
seems to have enabled the European motor vehicle system to
meet the requirements of Treaty Article 81(3) which allows for
the authorisation of any agreement or category of agreements
between undertakings ‘which contributes to improving the
production or distribution of goods or to promoting technical
or economic progress, while allowing consumers a fair share
of the resulting benefit’.

5.8. Moreover,
the Commission, strongly supported in
this by the Committee, acknowledged in Regulation (EC)
No 2790/1999 on vertical restraints that exclusive and
selective vertical distribution systems are not only important
for the economy but ensure incremental benefits for the
consumer.

The Commission’s report (1) makes it clear that the
6.1.1.
main aims of Regulation (EC) No 1475/95 have been to ensure
that motor vehicle distribution takes place in an efficient way
to the benefit of the consumer and that effective competition
exists between manufacturing systems (interbrand) and within
each system (intrabrand). Related to this are the aims of
improving choice to the consumer on the internal market and
improving the possibilities of parallel trade. A further aim
has been to strengthen the dealer’s independence from the
manufacturer.

6.1.2.
The Report indicates that there is currently reason to
believe that interbrand competition in the field of motor car
sales is effective in the European Union (Report Con-
clusion 6.1.1.4). The Committee considers that this is also an
important background economic fact to the consideration of

(1) COM(2000) 743 final of 8.11.2000.

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the degree of intrabrand competition. Prices have been falling
consistently over the last five years, and this has been matched
by progressive improvements in vehicle technology in terms
of greater safety, and by a reduced environmental impact.
Distribution has also improved, with greater attention paid by
manufacturers and dealers to providing increasingly effective
and widespread services. Dealer networks have seen customer
satisfaction indices rising constantly.

— the prohibition of making dealer remuneration dependent
on the final destination of the vehicle [Article 6(1)(8)];

— at the same time, however, the Regulation continues to
allow manufacturers to prohibit dealers from selling to
non-authorised or ‘independent’ resellers [Article 3(10)
and (11)].

On the other hand, the Report suggests that there are
6.1.3.
important questions about the effectiveness of intrabrand
competition, as evidenced by the complaints to the Com-
mission and the Commission’s own investigations (see Report
p. 55 and Annexes III and IV). Here, the Committee believes
that the Report focuses too much on the situation in the
British market, where there is a risk that factors unrelated to
competition policy (tax, currency) might lead to over-hasty
conclusions about a system which has functioned well in the
rest of the Community market. In addition, the number of
complaints (a yearly 200/300 letters for the United Kingdom
and 50/60 from other European consumers) represent a
modest percentage of the 16 million cars sold every year in
Europe, and put the allegation that intrabrand competition is
not functioning into proper perspective.

6.2. The effectiveness of intrabrand competition

6.2.3.
Taken as a whole, these legal rules appear to offer a
promising basis of legal support for intrabrand competition
and parallel imports. The main vehicle for intrabrand compe-
tition under the present arrangement seems to be the inter-
mediaries who act on behalf of consumers.

6.2.4.
independence of dealers consist of:

The main legal provisions inserted to strengthen the

— a reduction in the scope of the non-compete clauses.
Dealers can now ‘multi-market’ under certain conditions
[Article 3(3)];

— dealers are allowed to use a common workshop for the

servicing of all makes they sell;

— manufacturers are unilaterally prohibited from modifying
the allotted territory

the dealer or

the status of
[Article 6(1)(5)];

6.2.1.
should be considered here: the legal
producers’ commercial controls over the dealers.

There are two important contributing factors that
framework and the

— distribution agreements with a fixed duration must have

a minimum duration of 5 years; and

— distribution agreements of indefinite duration must have

minimum notice period of 2 years;

6.2.2. T h e

l e g a l

f r a m e w o r k f o r

i n t r a b r a n d

c o m p e t i t i o n

— sales targets and inventory requirements have to be
agreed on and independent arbitration is provided for
disagreements.

The main legal provisions introduced into Regulation (EC)
No 1475/95 to improve intrabrand competition and the
possibilities for parallel imports consist of:

— the entitlement of dealers to actively promote the final
sale of new vehicles to final customers — either directly
or through an intermediary — outside their contract
territory by advertising, as long as they avoid personalised
advertising [Article 3(8)(b)];

6.2.5.
Taken as a whole, these legal rules seemed at the
time of the Regulation to be a promising legal basis for
improved dealer independence. However, they must be evalu-
ated in the light of the commercial relationship between the
car producers and the dealers.

— the entitlement of dealers to sell to other dealers belonging

to the same network;

6.2.6. T h e

c o m m e r c i a l m a n u f a c t u r e r - d e a l e r

r e l a t i o n s h i p

— the obligation that dealers must carry out maintenance
work on vehicles sold by another dealer within the
distribution network [Article 5(1)(1)(a)];

In practice, the Report suggests that there are certain features
of the commercial relationship between manufacturer and

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dealer which inhibit intrabrand competition and reflect con-
tinued dealer dependence.

6.2.6.1.
The manufacturers remunerate dealers using a
system of year-end bonuses which are not based on fully
predictable criteria and this discourages lateral sales as well as
reinforcing dealer dependence (Report paragraph 257). The
Committee would point out
that more predictable sales
policies on the part of manufacturers might allow dealers to
be more flexible in implementing a prices policy designed to
increase intrabrand competition.

6.2.6.2.
The lack of quantity or volume discounts and
narrow margins reduce the scope for dealers to set different
prices (Report paragraphs 182 and 265). This limits intrabrand
price competition to a certain extent (Report paragraph 182),
though it does not prevent other forms of intrabrand compe-
tition such as competition based on quality of service( Report
paragraph 181).

6.2.6.6.
The threat of termination appears to continue in
practice to give power to the manufacturer, particularly in a
situation of fewer dealerships where loss of a dealership with
a major car manufacturer could mean no prospect of another
dealership with another major car manufacturer (Report
paragraph 253). The longer periods of security given to the
dealer by Regulation (EC) No 1475/95 do not in practice seem
to have increased dealer independence.

6.2.6.7.
There is evidence of growing concentration, with
fewer dealers and larger contract territories (Report para-
graph 91). This could add to the risk of reduced intrabrand
competition unless it is compensated for by more extensive
publicity and Internet use. The Committee stresses that while
Internet use cannot be finally assessed, as it is only in its
infancy, it has shown its worth as a means of information, but
has also shown its limits as a means of direct sales. This is due
to the complex nature of motor vehicles and, among other
factors, to commercial practice which very often involves
disposal of an older vehicle at the same time as acquisition of
a new one.

6.2.6.3.
In practice the ‘agreement’ of sales targets by
manufacturers and dealers is based on national sales targets, in
practice fixed by manufacturers, which leave little scope for
sales to intermediaries, particularly if the targets are combined
with a limited product allocation.

The Committee would also emphasise that
this type of
Internet use is considered to constitute passive sales under the
guidelines on the vertical restraints regulation. If, as seems
probable, the same applies to the regulation on motor-vehicle
distribution, then intrabrand competition will be boosted.

6.2.6.4.
In practice, the arbitration option is little used. Yet
the Report concludes that the possibility of such recourse
generally contributes to more serious and balanced nego-
tiations between dealers and manufacturers. The Committee
would be in favour of a wider basis for arbitration as a way of
improving dealer independence.

6.2.6.8.
Price differentials remain across Europe for the
same makes and models. One of the main causes are tax
differences. Another is currency fluctuations. Other influential
factors are the manufacturer’s historical presence on a national
market, distribution and transport costs
(Report para-
graph 189). The Committee believes that a closer alignment of
the
taxes (tax and VAT levels) and the introduction of
euro should generate greater transparency and reduce price
disparities across the Community market.

6.2.6.5. Multi-marketing, though allowed under the Regu-
lation, is rare in practice except in Northern Europe (Report
paragraphs 208-210). This suggests that one theoretical avenue
to dealer independence is not being taken. The Committee
wonders whether the rarity of multi-marketing is not due in
practice to the high structural, management and training costs,
particularly in the case of general, broad-reach brands. Except
in the case of brands belonging to the same group, multi-
marketing is more common where it is to offer a full range of
vehicle types or involves complementary products not offering
direct competition.

6.2.6.9.
Delivery times particularly for intrabrand orders
between member states are frequently longer for foreign
buyers than for national buyers (Report paragraph 200). The
Committee would agree with the Commission that some
method should be found to end this practice of delayed
deliveries for inter-state orders, where no reasonable cause is
given for such delays.

The Commission report takes no account of the type of multi-
marketing practised by holding companies controlling a
number of dealers in different brands.

The Committee would like to recall the fact that a
6.2.7.
considerable degree of intrabrand competition exists, given the
fact that more than 30 % of the dealer’s sales (sometimes rising

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to 60 % in metropolitan areas) are to consumers outside the
contract territory assigned to him. Moreover, the level of
intrabrand competition could be significantly increased
through a reasonable balance in relations between producer
and dealer.

matching spare parts. Use of equivalent parts could be even
more widespread if their quality was certified, enabling dealers
to assume full liability towards vehicle users, including for
work concerning safety and environmental protection.

6.2.8.
The way forward is to attempt to modify the block
exemption and extend it, rather than putting an end to the
selective distribution system.

6.3. The protection of competition in the after-sales service market

The Committee would remind the Commission that in practice,
independent manufacturers can only supply dealers with
certain types of spare part rather than the full range, for
obvious management-efficiency reasons; 20 % market pen-
etration therefore represents a considerable level given that
these parts are used outside the usual guarantee period. In this
context, the Committee urges the Commission to tackle the
equivalent quality issue by means of instruments which can
effectively guarantee the equivalent quality of products placed
on the market.

spare parts of matching

A further aim of Regulation (EC) No 1475/95 has
6.3.1.
been to protect competition in the after-sales service market.
One feature of this aim has been to improve the access of
spare part producers to dealer networks. To this end, 1475/95
strengthens the right of dealers to use spare parts of matching
quality by introducing a right for spare parts manufacturers to
supply
to dealers
[Article 6(1)(9) and(10)]. It also preserves a right for spare
parts manufacturers to exhibit their own trade mark or logo
on the spare parts they supply [Article 6(1)(11)]. It also
prohibits manufacturers from using bonuses which aggregate
car sales with spare parts sales. Finally, it provides independent
repairers with a right to technical information and specifies
that requests for such information are not to be improperly
refused [Article 6(1)(12)].

quality

Again the Report indicates that in practice dealers
6.3.2.
have tended to continue to rely on manufacturers for supply.
Only 5 %-20 % of spare parts are outsourced (Report
paragraph 248). The Report suggests that, despite the legal
framework, dealers are reluctant to buy parts from other
sources because of their dependency on the vehicle manufac-
turers caused by end of year bonuses linked to turnover figures
for original spare parts combined with large discounts for
original spare parts, and recommended original spare part
inventory holdings for dealers (Report paragraph 249). The
Report concludes that the right of spare part producers to
supply their product
to dealers, as provided for in the
Regulation, has not materialised. (Report 6.2.2).

6.3.2.1.
It is true that a contributing factor is the belief of
many consumers that original spare parts are of better quality
and that this may be because of consumer confidence in
original products and of inadequate information, mainly on
the part of independent manufacturers.

6.3.2.2.
The Committee would support the Commission in
exploring measures to help encourage dealers to make use of

6.4. Has the position of independent repairers been adequately

protected?

6.4.1.
Regulation (EC) No 1475/95 made provision for
several means of protection for independent repairers. Dealers
were enabled to supply original spare parts to independent
repairers for the repair and maintenance of a motor vehicle
[Article 6(1)(12)], though there is no obligation to supply such
parts at wholesale prices. The Report concludes that in general
independent repairers have no major problems as regards
access to original parts but that the inability to purchase such
parts at wholesale prices makes it more difficult to compete.

6.4.2.
Secondly, manufacturers were given an obligation to
make any technical information necessary for the repair and
maintenance of its vehicles accessible to independent repairers.
There were limits to this obligation in the case of intellectual
property rights or qualifying know-how, but such information
must not be improperly withheld [Article 6(1)(12)]. It is clear
that technical developments will make such information even
more important in the future. However, even though non-
compliance constitutes a black practice [Article 6(12)], com-
pliance by car manufacturers is patchy and uneven. Some
publish lists. Some release information on a case by case basis.
Independent repairers often get information from official
dealers.

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independent

6.4.3. Most
repairers report problems of
access to technical information. The problems include lack of
access to new vehicle information, complex and expensive
technical publications,
lack of access to information on
electronic devices and information systems and diagnostic
equipment (Report paragraph 294). The Report comments
that the car manufacturers seem not to have created technical
and economic conditions that allow adequate access to
independent repairers, as is required by the Regulation, and
this in turn limits consumer choice.

6.4.4.
The Committee would urge the Commission to
explore ways of strengthening the obligations of producers to
supply technical information to independent repairers: this
should be done in a non-discriminatory way, enabling indepen-
dent repairers to develop and subsequently enhance the quality
of their services.

ommend to the Commission that it allow such a link as part
of an exempted motor vehicle distribution agreement, but at
the same time the conditions should be promoted for raising
the level of competition once the guarantee period (minimum
2 years) laid down by the manufacturer and practised by the
dealer network has expired.

6.4.7.
The Committee consequently regards as essential the
link between sales and after-sales service for new vehicles,
bearing in mind the nature of the product, since first and
foremost it serves the interests of consumers who thus enjoy a
service with quality and safety guarantees, and defective
vehicles can be returned to suppliers throughout the EU
territory regardless of where the vehicle in question was
purchased. Secondly, respect for environmental standards is
guaranteed and the brand image is maintained.

the latter,

is reasonable that

The Committee would, however, remind the Commission that
the high levels of investment required of dealers in order to
develop and acquire the technology, and provide the training
needed to improve their product and related services are far
greater than those normally borne by independent repairers.
their
It
competitiveness, should specialise in a number of specific
products and offer consumers a transparent service guarantee
similar to that provided by dealer networks. Lastly,
the
Committee emphasises that the one-stop-shop spare parts
service that the dealer networks offer consumers involves a
high level of investment in stock; in contrast, it is independent
repairers’ interests to make ad-hoc acquisitions of only a few
parts, usually those with the highest turnover.

in order to boost

7. Concluding comments

7.1.
The Report presents a case for amending the Regulation
to improve the possibilities for intrabrand competition, dealer
independence and the provision of technical information by
manufacturers to independent repairers.

6.4.5.
In this context the Committee recalls the need to
take account of the fact that at present the dealer, in order to
provide the consumer with guaranteed availability of spare
parts and full servicing of all models in the network brand’s
range, must constantly make considerable investments both in
structures and in staff training.

7.2.
The Committee has recommended a number of specific
changes in the Regulation, since it must be made to reflect
experience, new instruments and technological development
— provided this is achieved in full compliance with the
unchanged principles acknowledging that motor vehicles are
not only a means of mobility, and hence an economic asset,
but also a social asset which must be protected in the interests
of users themselves. This means safety, and helping to ensure
that safety is maintained over time.

6.4.6.
In Regulation (EC) No 1475/95 manufacturers are
required, if they are to benefit from the block exemption, to
impose on their dealers an obligation to provide after-sales
service as well as sales of new cars. The Report indicates that,
while there are technical and economic reasons for a link
between sales and after-sales service, there is evidence that
consumers divide between those who prefer the link and those
who prefer, particularly with older cars, to use independent
repairers. On balance, therefore, the Committee would rec-

7.3.
The Report itself suggests that the main inhibitions
to intrabrand competition are the limits on personalised
advertising and the ban on selling to undertakings not
belonging to the network, i.e. to the independent resellers.
Nevertheless, the Committee, on the basis of the points made
above, would suggest that the best way forward is to strengthen
the position of intermediaries in making the most of the
opportunities and choices offered by parallel trade rather than
to remove the ban on sales to independent resellers.

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7.4.
The Committee would also like to suggest that the
Commission update the Communication on intermediaries
and set up guidelines on the use to be made of the Internet by
dealers and producers. A further suggestion would be to assess
how the Internet — which did not exist when Regulation (EC)
No 1475/95 was prepared — may lead to a different view of a
number of elements in the regulation.

7.5.
On the basis of the general and specific comments set
out above, the Committee favours confirming the special

block exemption for motor-vehicle distribution, and urges the
Commission to explore methods of amending and extending
the current Regulation. The primary aim of the new Regulation
should be to raise the overall level of competition in order to
improve consumer well-being and safety, and the operation of
the single market. In order to achieve these objectives, the new
Regulation should have a practical impact in providing greater
protection for dealers and promoting the SMEs operating in
the European car sector. The Committee looks forward to the
opportunity to comment on any changes that are proposed by
the Commission.

Brussels, 30 May 2001.

The President

of the Economic and Social Committee

Göke FRERICHS

APPENDIX

to the opinion of the Economic and Social Committee

The following amendments, which received more than one quarter of the votes cast, were rejected during the course
of the deliberations:

Point 5.6

Delete.

Reason

Quite apart from the fact that there are also strong brand images in sectors not covered by Community Regulations,
the purpose of the EU legislation cannot be to increase the profile of brands of motor vehicles.

Result of the vote

For: 26, against: 60, abstentions: 6.

Point 5.7

First sentence to read as follows:

‘In this respect the Commission has hitherto assumed that the existing exclusive and selective distribution regime
makes it possible for the European motor-vehicle system to meet the requirements of Treaty Article 81(3).’

Delete second sentence.

Reason

Exclusive and selective distribution is not the only way in which the motor-vehicle sector can fulfil the EU Treaty.

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Result of the vote

For: 31, against: 59, abstentions: 7.

Point 6.1.3

Delete from the second sentence onwards (‘Here, the Committee believes ....’).

Reason

The implication is that the report places too much emphasis on the situation on the British market and that the
system elsewhere in the single market functions well. The fact is, however, that the Commission has uncovered
abusive sales’ practices in a wholes series of countries and has received appropriate complaints from consumers. The
Commission’s findings lead one to conclude that intrabrand competition is not functioning throughout the EU.

Result of the vote

For: 37, against: 58, abstentions: 6.

Point 7.2

Delete the reference to the motor vehicle as a social asset in the first sentence.

Reason

If we regard environmental protection as a main political objective, then the motor vehicle, which has been proven
to cause damage to the environment, should not be classified as a ‘social asset’.

Result of the vote

For: 34, against: 62, abstentions: 16.

Point 7.3

Delete the second sentence and replace with the following text:

‘The Committee calls for the lifting on the ban on selling to undertakings not belonging to the network and the
application in future of clear, transparent and exclusively qualitative criteria (expertise of the staff) for the selection
of dealers which are supplied by manufacturers.’

Reason

Quantitative restrictions which obstruct competition and establish region-wide brand monopolies for a small number
of official dealers are not within the meaning of the single market.

Result of the vote

For: 27, against: 70, abstentions: 9.

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Point 7.5

To read as follows:

‘On the basis of the general and specific comments set out above, the Committee considers the retention of the
special block exemption for motor-vehicle distribution to be still acceptable for the time being if it is ensured that
the conditions and measures laid down in Regulation (EC) No 1475/95 really are applied in full. In addition, the
Commission is asked to examine how the current Regulation can be amplified. The new Regulation’s most urgent
objective should be to increase competition, albeit without neglecting consumer safety. The Committee looks forward
to the opportunity to comment on any changes that are proposed by the Commission.’

Reason

In view of the lack of intrabrand competition referred to in the Commission report and highlighted by consumer
organisations — which is due in no small measure to the failure to observe the conditions laid down in Regulation
(EC) No 1475/95 — it is not enough to simply continue with the present situation, albeit with one or two minor
changes. In the long term the aim should be to abolish the block exemption in the motor-vehicle sector in keeping
with the need for a properly functioning single market.

Result of the vote

For: 33, against: 68, abstentions: 11.

Opinion of the Economic and Social Committee on the ‘Proposal for a Directive of the European
Parliament and of the Council on reporting formalities for ships arriving in and departing from
Community ports’

(2001/C 221/24)

On 26 February 2001 the Council decided to consult the Economic and Social Committee, under
Article 80(2) of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee’s work on the subject, adopted its opinion on 8 May 2001. The rapporteur was
Mr Kröger.

At its 382nd plenary session, held on 30 and 31 May 2001 (meeting of 30 May), the Economic and
Social Committee adopted the following opinion by 50 votes to four with three abstentions.

1.

Introduction

many ports, does, however, differ. In other ports the content
of the information required is also not the same.

A considerable amount of

1.1.
information has to be
provided by seagoing ships entering and departing from
Community ports. This information mainly concerns the
status of the ship, its crew, the nature and size of the cargo,
the passengers on board and the ship’s stores. Such information
is required in connection with: the payment of duties; decisions
taken by the port authorities on safety matters; monitoring
observance of immigration rules; the compiling of statistics
and, generally, the smooth clearance of ships.

1.2.
The content of much of the information is the same
for every port. The format of the information required by

1.3.
The fact that the information with the same content is
formatted differently is both time-consuming and highly
costly to the shipping industry. It complicates administrative
procedures not just for overseas shipping but also, and in
particular, for short sea shipping. The aim is to facilitate
clearance of seagoing ships and to make maritime transport
correspondingly more efficient, whilst at the same time not
reducing the content of the information required by the
authorities of the Member States.