WRITTEN QUESTION E-3180/02 by Charles Tannock (PPE-DE) to the Commission. The Extension of the Block Exemption from Competition Law.
Date: 2002-11-07
Institutions: European Parliament, Provisional data
Subjects: Netherlands, United Kingdom, competition law, distributive trades, exclusive distribution agreement, motor vehicle industry, production cost, selective distribution agreement, selling price, vertical agreement

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9.10.2003

clarify the role and responsibilities of different actors in order to increase transparency, quality and
timeliness of the budgetary data (both statistics and forecasts) used in the surveillance process.

The Commission published its 2002 autumn forecast on 13 November 2002. The 2002 deficit
in
Germany is now forecast to be 3,8 % of gross domestic product (GDP), in France 2,7 % of GDP, in Italy
2,4 % of GDP and in Portugal 3,4 % of GDP. In Italy, the 2001 deficit has been revised upward by 0,6 % of
GDP due to the Eurostat decision on the accounting of securitisation operations.

As regards the treatment of government investment expenditure in the calculation of net-lending, the ESA
and the EC Treaty are very clear: the recording in the accounts of investment expenditures are in no way
different to any other government expenditure. That is, recorded government investment expenditure has
an impact on net lending.

(1) Council Regulation (EC) 2223/96 of 25 June 1996 on the European system of national and regional accounts in the

Community (ESA 95) (cid:1) OJ L 310, 30.11.1996.

(2003/C 242 E/046)

WRITTEN QUESTION E-3180/02

by Charles Tannock (PPE-DE) to the Commission

(7 November 2002)

Subject: The Extension of the Block Exemption from Competition Law

Could the Commission indicate why it felt it necessary to extend the Block Exemption from Competition
Law for the motor trade for three years, even though there had been plenty of time for the industry to
prepare for its termination in September of this year?

The Commission retains wide-ranging residual powers in the area of Competition Law. Does it intend to
use them against motor manufacturers deemed to have violated EU Competition Law, and, if so, will it
respond only to complaints or will it initiate its own investigations?

One of my London constituents experienced problems which occur all too frequently to those who try to
purchase right-hand-drive vehicles on the continent.

He tried to purchase a Chrysler Grand Voyager in Holland given the very substantial price differential
(more than 30 %) but discovered that:

(a) Chrysler dealers in Holland require a full deposit for the vehicle as opposed to a small percentage

deposit if it is a left-hand-drive vehicle;

(b)

they cannot deliver in less than twelve months (although delivery time for a left-hand-drive vehicle in
Holland is three months and delivery time for a right-hand-drive vehicle in the UK is three months);

(c) a surcharge of EUR 2 000 is levied in Holland for right-hand-drive vehicles (surely not a reflection of

the true costs).

Are such practices legal, and,
investigators to investigate how widespread they are so long as the Block Exemption is maintained?

if not, has the Commission considered hiring teams of

independent

Answer given by Mr Monti on behalf of the Commission

(20 December 2002)

The first point raised by the Honourable Member, relating the reasons why the Commission felt it
necessary to adopt Regulation (EC) No 1400/2002 (1), has already been dealt with by the Commission in
detail in the reply to the Honourable Member’s Written Question E-0292/02 (2).

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The second point raised by the Honourable Member concerns the Commission’s willingness to enforce
Community competition law against motor manufacturers. The Commission’s powers in this area are not
residual, but are rather granted to the Commission by the Council pursuant to Article 83 of the EC Treaty.
The Honourable Member’s attention is drawn in particular to Article 83(2)(d) of the EC Treaty.

Council Regulation (EEC) No 17/62 (3) gives the Commission wide powers to investigate alleged breaches
of the competition rules, either on its own initiative or following complaints. The Commission does not
hesitate to use these powers where it deems it appropriate to do so. In recent years, the Commission has
carried out extensive investigations using the powers given to it by the Council. So far these investigations
have resulted in the Commission imposing a total of around EUR 250 million in fines in four separate
cases against three major vehicle manufacturers.

In other individual cases, where consumers complain about problems they have encountered while trying
to buy vehicles abroad, the Commission finds it appropriate and more effective from the consumer’s point
of view to take the matter up with the carmaker concerned.

The Honourable Member should also note that the powers of national competition authorities to enforce
Community competition rules will be substantially enhanced by the upcoming modernisation of the
procedural rules.

The third point raised by the Honourable Member relates to the level of deposit required by dealers in the
Netherlands before they will place an order for a right-hand-drive car. The Honourable Member will be
aware that deposits are often used in commercial transactions to cover one party’s losses in the event that
the other party pulls out of the transaction. Where a consumer no longer wishes to purchase the vehicle
that he has ordered, the dealer may be left with a car that he can not immediately re-sell. This risk is
higher for vehicles with specifications different to those normally sold by the dealer. It is therefore normal
commercial practice for dealers on the continent to ask for a higher deposit before accepting an order for
a right-hand-drive vehicle. Despite its monitoring of the market, the Commission is not aware of the
practice of full deposit mentioned by the Honourable Member. Should this practice be established and
result from an agreement, it would deserve further examination with regards to competition rules.

The Honourable Member’s fourth point relates to delivery times. Delays for right-hand-drive vehicles
supplied to a continental dealer should normally be comparable to those for left-hand-drive vehicles
supplied to the same dealership. The Commission regularly deals with consumer complaints relating to this
point. In many cases, contacts with relevant carmakers have led to satisfactory results for consumers in this
respect.

The fifth point raised by the Honourable Member relates to right-hand-drive surcharges. There is no rule of
Community competition law that obliges a manufacturer to make right-hand-drive vehicles available on
the continent at the same price as vehicles with local specifications. The amount that a given variant of a
vehicle costs to develop, produce and deliver will depend, amongst other things, on the number of units
involved. Since, for example, more left-hand-drive vehicles are generally produced than their right-hand-
drive equivalents, production costs for left-hand-drive vehicles are usually lower. To take account of this,
most manufacturers impose a surcharge on right-hand-drive vehicles delivered to dealerships in mainland
Europe. The level of this surcharge must, however, be objectively justifiable.

The Commission has never considered hiring teams of independent investigators to investigate the matters
raised by the Honourable Member. In the Commission’s view, the methods already employed to detect and
punish infringements of the competition rules have proved themselves adequate.

The new framework laid down by Regulation (EC) No 1400/2002 will reduce the scope for abuse and will
make it easier for consumers to buy vehicles in other Member States.

(1) Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the application of Article 81(3) of the Treaty to
categories of vertical agreements and concerted practices in the motor vehicle sector (cid:1) OJ L 203, 1.8.2002.

(2) OJ C 277 E, 14.11.2002, p. 30.
(3) EEC Council: Regulation No 17: First Regulation implementing Articles 85 and 86 of the Treaty, OJ P 13,

21.2.1962.