Communication from the Commission - The Future Competition Law Framework applicable to the motor vehicle sector (Text with EEA relevance) {SEC(2009) 1052} {SEC(2009) 1053}
Date: 2009-07-22
Institutions: European Commission
Subjects: EU industrial policy, competition law, competition policy, competitiveness, free competition, international competition, motor vehicle industry, restriction on competition

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.7.2009 
COM(2009) 388 final 

COMMUNICATION FROM THE COMMISSION 

The Future Competition Law Framework applicable to the motor vehicle sector 

(Text with EEA relevance) 

{SEC(2009) 1052} 
{SEC(2009) 1053}

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COMMUNICATION FROM THE COMMISSION 

The Future Competition Law Framework applicable to the motor vehicle sector 

(Text with EEA relevance) 

1. 

PURPOSE AND SCOPE OF THE COMMUNICATION 

1.1. 

Introduction 

1. 

2. 

Motor vehicle manufacturers distribute and ensure the repair and maintenance of their 
products  through  authorised  dealer  and  repairer  networks.  The  bundles  of  similar 
vertical agreements which make up these networks may require assessment pursuant to 
Article  81  of  the  Treaty.  Block  exemption  regulations  create  safe  harbours  for 
categories  of agreements  that are caught by the prohibition in Article 81(1),  relieving 
the contracting parties from the need to analyse whether those agreements can benefit 
from the exception provided for in Article 81(3). Block exemptions thus contribute to 
legal certainty and to the coherent application of EU competition rules across the EU. 
Agreements  not  covered  by  a  block  exemption  are  not  presumed  to  be  illegal,  but 
instead have to be assessed individually. 

The motor vehicle sector, which includes passenger cars and commercial vehicles, has 
been subject to specific block exemptions regulations since the mid-eighties, the most 
recent  being  Commission  Regulation  (EC)  No  1400/2002  ("the  Regulation”),  which 
was adopted in July 2002 and became applicable on 1 October 2003. This Regulation 
will  expire  on  31  May  2010.  Stakeholders  are  virtually  unanimous  that  the  sector 
should continue to benefit from a block exemption, whether general or sector-specific, 
after this date. The purpose of the present communication is to set out the basic policy 
orientations  for  the  future  legal  framework  that  should  apply  to  motor  vehicle 
distribution and after-sales services agreements after the expiry of the Regulation. All 
interested  parties  are  invited  to  submit  comments  on  this  Communication  before  25 
September  2009.  The  Commission  will  take  due  account  of  these  comments  in  the 
context of the follow-on legislative procedure. 

1.2. 

The review process leading to this Communication 

3. 

1 
2 

Pursuant to Article 11(2) of the Regulation, and following an in-depth market survey, 
the Commission evaluated the impact of the block exemption on industry practices and 
the effects of those practices on competition in the EU markets in its Evaluation Report 
of 31 May 20081. The publication of this Report prompted numerous comments from a 
wide  range  of  stakeholders,  including  vehicle  manufacturers,  dealers  and  authorised 
repairers,  the  independent  motor  trade,  consumers,  national  authorities  and  the  legal 
community2.  

http://ec.europa.eu/competition/sectors/motor_vehicles/documents/evaluation_report_en.pdf  
The  comments  received  have  been  published  on  DG  Competition's  website  at  the  following  address: 
http://ec.europa.eu/competition/consultations/2008_motor_vehicle/index.html 

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4. 

5. 

6. 

7. 

3 

4 

On  the  basis  of  the  Evaluation  Report  and  the  ensuing  consultations  and  discussions, 
the  Commission's  services  have  produced  an  Impact  Assessment  Report  ("IAR") 
appraising  the  potential  benefits  and  costs  of  various  policy  options  for  the  future 
regime applicable to the motor vehicle sector. This Communication is therefore to be 
read in conjunction with the IAR.  

The  IAR  assessed  four  options,  namely  (i)  prolonging  the  current  Regulation;  (ii) 
letting  it  lapse  and  allowing  the  general  block  exemption  regulation  on  vertical 
agreements ("the general block exemption")3 to apply to the motor vehicle trade; (iii) 
adopting  sector-specific  provisions4  in  the  form  of  guidelines  accompanying  the 
general block  exemption  and  (iv) adopting sector specific provisions in the form of a 
block exemption regulation focussing on restrictions of competition in the aftermarket 
and complementing the provisions of the general block exemption. 

Although the IAR conclusions expressed a slight preference for Option (iii), the overall 
assessment  of  this  option  did  not  differ  substantially  from  the  one  relating  to  Option 
(iv),  due  to  the  comparative  advantages  and  disadvantages  of  the  two  scenarios. 
Therefore the IAR did not exclude that the preferred option might be an amalgam of the 
best features of these two options. 

The present Communication takes also into account that the motor industry is currently 
facing difficult conditions stemming from a steep decline in demand due to the general 
economic crisis and a fall in sentiment that has deterred consumers from spending on 
costly  items  such  as  cars.  Commercial  vehicles  have  experienced  an  even  stronger 
decline in demand and production. Overall, the industry has been hit particularly hard, 
mainly because it was already suffering from structural overcapacities. In this context it 
is important for the Commission to set out a clear and predictable competition policy 
framework for the motor sector, so as to avoid uncertainty, particularly in the current 
crisis,  and  that  due  account  is  taken  of  the  challenges  faced  by  the  industry  and  its 
importance to the European economy.  This communication takes into  consideration a 
broader reflection on the future of the industry, its suppliers – a majority of which are 
SMEs – and its customers, and should be seen as part of the general policy framework 
for the sector. Given the importance of SMEs, notably in the aftermarket, the present 
Communication is in line with the principles agreed in the Small Business Act. 

Options (ii), (iii) and (iv) imply that the Commission will adopt a new general block exemption to replace 
the  current  Commission  Regulation  (EC)  No  2790/1999  of  22  December  1999  on  the  application  of 
Article 81(3) of the Treaty to categories of vertical agreements and concerted practices, after its expiry in 
May 2010. The preliminary draft approved by the Commission on 8 July 2009 envisages the introduction 
of a number of improvements which, if finally adopted, would not change substantially the analysis of the 
impacts  connected  with  the  above  mentioned  options.  Should  the  Commission  decide  to  modify  the 
current proposals in a manner that would appreciably affect the motor vehicle trade, it is understood that 
such  changes  would  not  be  automatically  transposed  to  the  motor  vehicle  sector  but  will  be  subject  to 
further  consultations  with  all  stakeholders  following  the  publication  of  the  present  Communication.  The 
expression  “the  general  block  exemption”  will  be  used  throughout  this  Communication  to  designate  the 
current proposals for a block exemption replacing Regulation (EC) No 2790/1999. 
Unless  otherwise  stated,  the  expression  "sector-specific  provisions"  will  be  used  throughout  the  present 
Communication to indicate either additional guidelines as foreseen under option (iii), or a supplementary 
sectoral block exemption regulation as foreseen under option (iv) or a combination of both. 

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1.3. 

8. 

9. 

10. 

11. 

12. 

13. 

14. 

Key  elements  of  the  future  legal  framework  for  motor  vehicle  distribution  and 
after sale service agreements  

The  general  objective  of  the  Commission's  competition  policy  towards  vertical 
agreements  is  to  allow  the  undertakings  concerned  to  benefit  from  a  safe  harbour 
through the adoption of block exemption regulations with a view to ensuring effective 
supervision  of  markets,  while  simplifying  administration  and  reducing  compliance 
costs for firms, in accordance with Article 83(2)(b) of the Treaty.  

As  regards  the  aim  of  ensuring  effective  supervision  of  the  markets,  the  Commission 
acknowledges  that  the  specific  policy  objectives  underlying  Regulation  (EC)  No 
1400/2002 remain valid. These are discussed in section 2 below. 

As to the measures designed to achieve such objectives, it should be recalled that the 
benefit of the block exemption only applies to those agreements for which it is possible 
to presume that the four conditions of Article 81(3) are fulfilled. At the same time, the 
scope  of  the  block  exemption  should  not  be  narrowed  down  to  such  an  extent  that 
administrative costs for enforcers and compliance costs for firms are unduly increased 
by  the  need  to  individually  assess  agreements  with  no  likely  net  anti-competitive 
effects.  

It also follows that the Commission should refrain from imposing regulatory constraints 
which  are  not  justified  by  the  objective  of  protecting  competition  on  the  market  and 
which  may  instead  hamper  industry  efforts  to  become  more  competitive  at  a  global 
level.  On  the  other  hand,  the  future  regime  should  enable  competition  authorities  to 
deploy  their  resources  for  the  prosecution  of  the  most  serious  breaches  of  the 
competition  rules,  with 
the  resulting  optimisation  of  enforcement  efforts,  a 
strengthening  of  the  deterrent  effect  of  Article  81  and  the  improvement  of  policy-
related outcomes. As a result, such an approach should lead to a positive overall impact 
on consumer welfare. 

In  the  light  of  the  foregoing,  in  order  to  define  the  appropriate  scope  of  a  block 
exemption  applicable  to  the  motor  vehicle  sector,  the  Commission  needs  to  take  into 
account the competitive conditions on the relevant markets and that a basic distinction 
should  be  drawn  between  the  markets  for  the  sales  of  new  motor  vehicles  and  the 
markets for repair and maintenance services and/or for spare parts distribution.  

As regards sales of new motor vehicles, the Commission has not found indications of 
significant  competition  shortcomings  in  the  EU.  Therefore,  it  considers  that,  motor 
vehicle  distribution  agreements  should  benefit  from  the  safe  harbour  granted  by  the 
general block exemption on vertical agreements. Sector-specific guidelines should also 
be  given  on  certain  specific  issues  to  clarify  how  the  general  principles  would  apply 
and in particular the conditions under which the benefit of the general block exemption 
may be withdrawn as indicated below at point 2.1.  

As  to  the  markets  for  repair  and  maintenance  services  and/or  for  spare  parts 
distribution,  the  Commission  concludes  that  competition  is  less  intense  due  to  their 
brand-specific nature , which means that manufacturers’ authorised networks generally 
enjoy high market shares. By limiting the scope of the safe harbour through a market 
share  threshold  of  30%  applicable  to  all  types  of  agreements,  the  general  block 
exemption would in itself enable a focused and effective enforcement of Article 81 to 

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such agreements. However, in order to enhance the efficiency and the predictability of 
its competition policy, the Commission will complement the general block exemption 
with  sector-specific  provisions  designed  to  address  a  number  of  problematic  issues 
which are particularly relevant for the motor vehicle sector.  

2. 

OBJECTIVES AND POLICY CHOICE  

2.1. 

15. 

16. 

17. 

Preventing the foreclosure of competing vehicle manufacturers and safeguarding 
their access to the vehicle retailing and repair markets  

The  Commission  aims  at  safeguarding  competition  by  minimising  the  risk  that 
incumbents  will  foreclose  competing  manufacturers  from  the  market  through  the 
widespread use of non-compete obligations which prevent or otherwise restrict dealers 
from selling competing brands. Foreclosure risks should however be balanced against 
the  possibility  that  multi-brand  sales  may  bring  about  free-riding  and  lead  to  sub-
optimal levels of investment.  

It  should  be  recalled  that,  in  accordance  with  the  case  law  of  the  Court  of  Justice5, 
single-branding obligations are not regarded as restrictions of competition by object. In 
particular, they may fall outside Article 81(1) when they comply with the conditions of 
the  de  minimis  Notice6.  This  means  that  the  exclusion  of  single-branding  from  the 
scope  of  the  block  exemption  granted  by  the  Regulation  cannot  be  construed  as 
automatically  granting  dealers  the  right  to  sell  brands  of  competing  manufacturers 
irrespective of the economic context in which such obligations are applied. The market 
power  of  the  parties  and  the  characteristics  of  the  relevant  market  are  key  factors  to 
determine whether single branding obligations are caught by Article 81(1) and require 
therefore an assessment pursuant to Article 81(3).  

In  order  to  reflect  the  need  to  appropriately  balance  potential  anticompetitive  effects 
against  efficiency  enhancing  benefits,  the  general  block  exemption  covers  single-
branding agreements where the supplier has a market share not exceeding 30% and on 
condition  that  the  duration  of  single  branding  obligations  does  not  exceed  five  years. 
This means that in order to benefit from the general block exemption, dealers must be 
able  to  effectively  end  the  single-branding  arrangement  after  the  initial  five-year 
period,  without  losing  their  distribution  contract  and  the  brand-specific  investments 
connected with it. However, it is common practice in the motor vehicle sector to enter 
into dealership agreements of either indefinite duration or, in rare cases, for renewable 
periods of at least five years. This would imply that the current agreements operated by 
vehicle  manufacturers  would  not  be  covered  by  the  general  block  exemption  if  they 
were to contain single-branding obligations applicable for longer than five years. 

18. 

The main difference between the specific provisions of the current Regulation (EC) No 
1400/2002  and  the  general  block  exemption  lies  in  the  definition  of  non-compete 
obligations.  Under  Regulation  (EC)  No  1400/2002,  this  concept  means  any  direct  or 

5  

6 

As the ECJ stated in its judgment of 28 February 1991 in case C-234/89, Stergios Delimitis v Henninger 
Bräu  AG,  agreements  containing  single-branding  obligations  do  not  have  the  object  of  restricting 
competition within the meaning of Article 85(1) (now Article 81(1)). 
Commission  Notice  on  agreements  of  minor  importance  (de  minimis  notice);  (OJ  C  368,  22.12.2001, 
p. 13).  

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indirect obligation causing the dealer to purchase from the supplier more than 30% of 
the buyer's total purchases of the relevant goods, thereby allowing the dealer to take on 
up to  two additional brands from  competing suppliers, which can be sold from either 
different premises or from a single showroom. Under the general block exemption, the 
definition  is  limited  to  those  obligations  (extending  beyond  five  years)  that  cause  the 
dealer  not  to  manufacture,  purchase,  sell  or  resell  goods  which  compete  with  the 
contract  goods,  or  to  purchase  from  the  supplier  more  than  80%  of  the  buyer's  total 
purchases of the relevant goods. In practice, this means that the dealer, after five years, 
should be free to take on one additional brand, but may have to sell it from a separate 
showroom. 

In this respect, it should be recalled that same-showroom multi-branding has been taken 
up  by  the  market  only  to  a  very  limited  extent  and  that  there  is  no  robust  empirical 
evidence indicating that such a distribution format has facilitated entry of  newcomers 
into  the  EU  markets  in  any  appreciable  manner.  Furthermore,  multi-branding  was 
practiced  even  before  the  entry  into  force  of  Regulation  (EC)  No  1400/2002  in 
geographic  areas  where  such  a  format  made  economic  sense  due  to  local  market 
conditions. It is therefore likely that this will continue irrespective of any change in the 
legal framework. It should also be stressed that search costs for motor vehicles are low 
as a percentage of product value, and that as a result consumers are generally willing to 
visit  different  showrooms  in  order  to  compare  competing  vehicles.  Indeed,  visiting 
different dealerships in order to compare and haggle over prices is a usual part of the 
purchasing  process.  In  addition,  consumers  can  readily  compare  products  on  the 
Internet.  Same-showroom  multi-branding  can  also  dilute  brand  image,  and  cause 
manufacturers to take steps to preserve their corporate identity by adjusting dealership 
standards to this end. In addition, they may refrain from investing in their dealerships, 
for  instance  through  training,  in  order  to  avoid  free-riding  risks.  In  practice,  these 
factors have led,  to a general increase in distribution costs borne by dealers.  

As  regards  repair  services,  single-branding  obligations  would  not  benefit  from  the 
general  block  exemption  applicable  to  vertical  agreements  in  any  event  because  the 
manufacturers' networks' market shares generally exceed the 30% threshold. Hence, as 
regards  after-sales  services  agreements,  no  difference  exists  between  the  various 
options considered.  

In  the  light  of  the  foregoing,  the  Commission  concludes  that  the  application  of  the 
general  block  exemption  to  single-branding  obligations  in  the  motor  vehicle  sector 
represents  a  balanced  solution  taking  into  account  the  high  level  of  inter-brand 
competition characterising the primary market, the risk of inhibiting efficiency gains in 
distribution  as  a  consequence  of  regulatory  constraints  which  would  not  be 
proportionate to the goal of protecting competition on the market, and having regard to 
the  safeguards  for  multi-branding  provided  by  the  general  rules.  Moreover,  the 
mechanism of withdrawal of the benefit of the block exemption will be maintained as 
an  additional  safeguard  in  case  the  existence  of  parallel  networks  of  agreements 
containing single branding obligations results in anticompetitive foreclosure effects.  

In  order  to  enhance  legal  certainty,  the  Commission  will  set  out  specific  guidelines 
explaining  that,  when  single-branding  obligations  foreclose  new  entrants  and  lead  to 
anti-competitive  effects,  the  benefit  of  the  block  exemption  can  be  withdrawn.  This 
guidance  will  also  explain  that,  under  certain  circumstances,  minimum  purchasing 
requirements  not  exceeding  80%  of  the  dealer's  total  annual  purchases  may 

19. 

20. 

21. 

22. 

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nevertheless  have  loyalty  enhancing  effects  and  can  therefore  be  treated  as  single-
branding obligations. 

2.2. 

Protecting intra-brand competition  

23. 

24. 

25. 

26. 

27. 

Intra-brand competition is of importance in markets where inter-brand competition, at 
the  level  of  the  manufacturers  and/or  the  distributors,  is  weak.  However,  in  markets 
where inter-brand competition is strong, competitive interaction between suppliers and 
buyers naturally drives contracting parties towards the implementation of the most cost-
effective and efficient transactions and ensures that the resulting benefits are passed on 
to  consumers.  In  these  circumstances,  regulatory  intervention  risks  imposing  an 
unnecessary  burden  on  companies,  which  may  ultimately  translate  into  losses  of 
efficiency.  As  far  as  the  protection  of  parallel  trade  is  concerned,  the  Commission 
acknowledges  however  that  this  is  a  core  objective  of  the  Common  Market  and  has 
been the subject of long-standing case-law from the European Court of Justice7. 

The current Regulation block-exempts quantitative selective distribution for new motor 
vehicles  up  to  a  40%  market  share  threshold  and  combines  such  a  wide  safe  harbour 
with  stricter  hardcore  provisions  and  specific  conditions  concerning,  in  particular, 
restrictions  preventing  dealers  from  subcontracting  repair  and  maintenance  activities 
and the opening by dealers of additional sales outlets (the so-called "location clause"). 
These stricter conditions were designed to stimulate diversity in car distribution models 
as a means to sustain intra-brand competition.  

Few  observable  benefits  resulted  from  these  stricter  rules.  The  market  survey 
conducted by the Commission showed that the opportunity for dealers to specialise in 
sales-only  activities  and  to  subcontract  the  profitable  repair  and  maintenance  services 
has  not  been  taken  up  by  the  market.  Moreover,  the  dealers  opened  additional  sales 
outlets only in a marginal number of cases. 

On the other hand, in a context of fierce inter-brand competition on the markets for the 
sale  of  new  motor  vehicles,  the  current  rules  implied  significant  drawbacks.  In 
particular, the potential for uncontrolled proliferation of additional outlets can lead to 
some dealers free-riding on the investments made by others, and has in practice caused 
vehicle  manufacturers  to  take  steps  to  preserve  the  integrity  of  their  networks  by 
adjusting  qualitative  standards  to  this  end  This  has  led,  in  turn,  to  higher  investment 
costs and lower margins for dealers. 

The  Commission  therefore  concludes  that,  by  removing  regulatory  constraints  which 
distort  the  investment  incentives  of  the  parties,  the  application  of  the  general  block 
exemption  will  bring  about  benefits  to  businesses  and  consumers.  This  implies  that 
selective distribution will become subject to the general market share threshold of 30%, 
and “location clauses” as well as restrictions of "sales-only" dealers will be exempted 
up  to  this  reduced  threshold.  However,  in  order  to  increase  legal  certainty  and  to 
contain  compliance  costs  for  companies,  the  Commission  proposes  to  set  out  sector 

7 

See  judgments  in  cases  C-551/03  P,  General  Motors,  [2006]  ECR  1-3173,  paragraphs  67-68;  Case 
C-338/00  P,  Volkswagen/Commission,  [2003]  ECR  I-9189,  paras  44  and  49,  and  Case    T-450/05, 
Peugeot/Commission, judgment of 9.07.2009, not yet published, paras 46-49.  

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specific  guidelines  for  assessing  those  cases  where  the  relevant  market  share  exceeds 
30%. 

28. 

Furthermore,  given  the  potential  benefits  that  consumers  may  draw  from  unrestricted 
parallel  trade  of  motor  vehicles,  the  Commission  will  explain  in  sector-specific  
guidelines the circumstances in which agreements restricting dealers’ ability to obtain 
and resell vehicles with foreign specifications (“availability clause") would amount to 
an indirect restriction on active and/or passive sales and, therefore, infringe Article 818. 

2.3. 

Protecting competition between independent and authorised repairers 

29. 

30. 

31. 

32. 

Competition from independent repairers imposes a powerful competitive constraint on 
the  authorised  networks  as  the  independent  sector  offers  consumers  a  comparable 
service,  often  at  lower  prices.  However,  independent  repairers  can  only  compete 
effectively if they have access to both technical information and spare parts, which are 
key  inputs  for  performing  repair  and  maintenance  work.  The  current  Regulation  has 
sought to ensure access to those inputs by setting out specific hard core restrictions.  

The issues connected with possible restrictions affecting access to spare parts are dealt 
with below under point 2.5. 

As regards access to technical repair information, it should be recalled that Regulation 
(EC)  No  715/20079,  which  regulates  the  type  approval  of  light  passenger  and 
commercial  vehicles  provides  for  a  detailed  set  of  rules  ensuring  full  and  non-
discriminatory access to such information for all independent operators. This regulation 
is  already  applicable  on  a  voluntary  basis  and  will  become  mandatory  for  new  type 
approvals  from  September  2009  onwards.10  However,  for  several  years,  the  car  park 
will  still  contain  large  numbers  of  vehicles  not  covered  by  Regulation  (EC)  No 
715/2007,  which  will  constitute  a  significant  market  for  independent  repairers.  The 
Commission therefore concludes that it is important to continue to enforce competition 
rules  in  order  to  prevent  foreclosure  of  independent  operators  by  ensuring  equivalent 
access conditions for technical repair information pertaining to the existing car park.  

It  should  also  be  observed  however,  that  anticompetitive  foreclosure  effects  may 
equally  stem  from  other  practices  aimed  at  sheltering  authorised  repairers  from 
competition by independent repairers. A typical example is the possible misuse of legal 
and  extended  warranties  granted  by  the  vehicle  manufacturer  which  are  sometimes 
honoured only on condition that all repair and maintenance works, including those not 
covered by the warranty terms, are carried out by a member of the authorised network. 
A  drawback  of  the  current  Regulation  is  that,  by  exempting  qualitative  selective 
distribution agreements without any market share threshold, it has prevented effective 
remedial action against such potentially harmful practices. 

8 

9 

10 

Judgment  of  28  February  1984,  joined  cases  228  and  229/82  Ford  of  Europe  Inc.  and  Ford-Werke 
Aktiengesellschaft v Commission ECR (1984) 1129. 
Regulation  (EC)  No  715/2007  of  the  European  Parliament  and  of  the  Council  of  20  June  2007  on  type 
approval of motor vehicles with respect to emissions from light passenger and commercial vehicles (Euro 
5 and Euro 6) and on access to vehicle repair and maintenance information (OJ L 171, 29.6.2007, p. 1). 
Cf. Article 10 of Regulation (EC) No 715/2007 for details. 

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33. 

2.4. 

34. 

35. 

36. 

Therefore,  the  Commission  concludes  that,  by  limiting  the  exemption  of  selective 
distribution up to a market share threshold of 30%, the general block exemption would 
allow  a  more  focused  enforcement  in  respect  of  a  wider  range  of  potentially  harmful 
practices, thus improving competition between independent and authorised repairers. In 
order to enhance effective enforcement, the Commission proposes to explain in future 
sector-specific  provisions  the  circumstances  in  which  a  refusal  to  grant  full  and  non-
discriminatory access to technical information to independent operators, or a misuse of 
warranties would bring qualitative selective agreements within the scope of Article 81 
and trigger enforcement action.  

Ensuring effective competition within the manufacturers' networks of authorised 
repairers 

Competition between authorised repairers of a given brand is particularly important for 
motorists  owning  a  younger  vehicle  (i.e.  up  to  four  years  old).  The  percentage  of 
repairs  on  such  vehicles  carried  out  within  the  authorised  networks  is  high  due  to 
consumer  preferences  and,  in  particular,  to  the  higher  residual  value  that  is  normally 
attributed to a car which has been regularly maintained by authorised repairers. 

Repair  and  maintenance  services  are  considered  to  be  brand-specific  markets.  The 
intensity of competition between authorised repairers of a given brand depends on the 
conditions of access to the network established under the standard authorised repairer 
agreements. As the network of the authorised repairers and parts distributors of a given 
brand normally holds market shares well in excess of 30%, vehicle manufacturers that 
wish  to  benefit  from  Regulation  (EC)  No  1400/2002  can  only  apply  qualitative 
selective  distribution.  This  means  that  access  to  their  network  of  authorised  repairers 
must be based on selection criteria which are objectively justified by bringing benefits 
to the final consumers. The application of the general block exemption will lead to the 
same result. 

In  order  to  ensure  legal  certainty  and  effective  enforcement,  the  Commission  will 
clarify through future sector specific provisions the circumstances in which qualitative 
selective distribution would fall outside the scope of the prohibition in Article 81(1) as 
well  as  the  framework  of  analysis  for  assessing  agreements  falling  outside  the  safe 
harbour  of  the  block  exemption.  In  particular,  sector-specific  provisions  will  be 
provided to clarify the circumstances in which agreements linking sales and after-sales 
services would not fall foul of Article 81, as for instance in case of newcomers trying to 
enter a market. 

2.5. 

Preventing foreclosure of spare parts producers in the automotive aftermarkets  

37. 

Other than parts bearing the trademark of the vehicle manufacturer (OEM parts) there 
are  parts  made  on  the  same  production  line  as  the  original  component  of  the  vehicle 
(OES  parts),  while  others  are  made  by  "matching  quality"  parts  manufacturers.  Parts 
falling into these categories are often cheaper than identical parts bearing the brand of 
the vehicle manufacturer. It is therefore important to protect alternative supply channels 
for  spare  parts,  both  to  authorised  and  independent  repairers  by  limiting  car 
manufacturers' ability to prevent suppliers to sell to the aftermarkets. 

38. 

Under  the  current  Regulation,  restrictions  to  the  OES'  ability  to  sell  spare  parts  to 
authorised  repairers,  restrictions  to  the  authorised  repairers'  ability  to  sell  parts  to 

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39. 

40. 

independent  repairers,  restrictions  to  the  authorised  repairers  ability  to  purchase 
competing  parts  from  sources  other  than  the  vehicle  manufacturer,  as  well  as 
restrictions  limiting  OES’  ability  to  affix  their  logo  on  parts  supplied  to  vehicle 
manufacturers for the purposes of first assembly are listed as hardcore restrictions and 
are, therefore, treated as restrictions by object.  

Under  the  general  block  exemption,  the  restrictions  at  issue  would  not  be  treated  as 
restrictions by object but instead would be subject to individual scrutiny. By applying a 
30% market share threshold, parts distribution agreements would generally fall outside 
the safe harbour granted by the general block exemption, since vehicle manufacturers’ 
share  on  the  relevant  spare  parts  markets  are  likely  to  be  well  above  30%.  It  follows 
that the above mentioned practices would not be block exempted and, absent evidence 
of  off-setting  efficiencies,  Article  81  could  be  enforced  directly  against  agreements 
which have the effect of restricting competition. 

For  the  above  reasons,  the  Commission  concludes  that  enforcement  would  be  as 
effective as today should the general rules be applied with respect to such restrictions. 
However,  given  the  uncertainty  that  this  approach  may  entail,  the  Commission  will 
clarify in sector-specific provisions the circumstances in which the restrictions at issue 
would  bring  the  underlying  agreements  within  the  scope  of  Article  81  and  trigger 
enforcement action11. 

2.6. 

Preserving the deterrent effect of Article 81 

41. 

42. 

43. 

The last objective is to preserve the deterrent effect of Article 81 so as to avoid that the 
block  exemption  is  used  by  manufacturers  to  inhibit  independent  pro-competitive 
behaviour  by  authorised  dealers  and  repairers.  In  order  to  achieve  this  objective,  the 
Regulation  contains  a  number  of  measures  intended  to  safeguard  dealers'  sunk  costs 
(e.g.  contract  duration,  periods  of  notice,  motivation  of  contract  terminations,  and 
transfer  of  dealerships  contracts  between  the  members  of  the  same  networks,  as 
provided by Article 3) which are normally covered by national contract laws. 

There  are  a  number  of  arguments  for  concluding  that  protecting  dealer  independence 
through provisions aimed at regulating particular contractual clauses in the context of a 
block exemption is no longer an effective or valid means to achieve this objective. 

First, as pointed out in the Commission's Evaluation Report, there is no evidence that 
these provisions have had the intended deterrent effect. On the contrary, the Regulation 
may have had negative effects, by making it more difficult for vehicle manufacturers to 
adjust  their  networks  to  changing  economic  conditions  in  which  the  ability  to  swiftly 
reorganise  the  network  is  vital  for  the  European  automotive  industry  to  maintain  and 
improve its competitiveness in the longer term. 

44. 

Second, dealers would have no effective remedy if their contractual partner refused to 
issue a contract containing the supposedly protective provisions. This is because these 

11 

In  addition,  in  accordance with  the Volvo Veng  case  law  (case 238/87 Volvo  (AB) v Erik Veng  [1988] 
ECR 6211), agreements preventing independent repairers from getting access to original spare parts may 
breach  Article  82,  when  the  vehicle  manufacturer  enjoys  a  dominant  position  in  respect  of  a  certain 
category of parts (e.g. captive parts) and if it can be shown that excluding independent repairers will likely 
eliminate effective competition on the market.  

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45. 

46. 

47. 

provisions create neither rights for dealers nor obligations on vehicle manufacturers but 
merely remove the benefit of the block exemption without implying that the contracts 
at issue would automatically infringe Article 81(1).  

Third,  it  would  seem  difficult  for  the  Commission  to  include  contractual  protection 
measures  in  any  future  competition  law  framework,  now  that  the  boundary  between 
national contract and commercial laws on the one hand and EU competition law on the 
other  has  been  clarified  in  the  context  of  Regulation  (EC)  No  1/2003.  During 
negotiations on that Regulation, the Commission stated that it wished "to align itself to 
the  Council's  view  that  "Articles  81  and  82  of  the  Treaty  have  as  their  objective  the 
protection  of  competition  on  the  market"12.  Provisions  that  predominantly  pursue 
another objective are normally found in national contracts laws. 

The Commission therefore envisages applying the general rules. This would lead to a 
more  economically  sound  approach  that  would  significantly  improve  the  overall 
consistency of competition policy in the area of vertical restraints and enable the use of 
efficient contractual arrangements.  

Moreover,  sector-specific  guidelines  will  be  provided  in  order  to  explain  that 
transparent  relationships  between  the  parties  would  normally  reduce  the  risk  for 
manufacturers  to  be  held  responsible  of  using  indirect  forms  of  pressure  aimed  at 
achieving anticompetitive outcomes13.  

3. 

CONCLUSION  

48. 

In the light of the above, the Commission proposes: 

•  As regards agreements for the sale of new motor vehicles, to apply the general rules 
as currently reflected by the proposed new block exemption for vertical agreements. 
Given that stakeholders in the motor vehicle sector have been accustomed to sector-
specific  regulations  since  1985  and  that  market  players  have  expressed  a  wish  for 
legal  certainty,  the  Commission  will  adopt  sector-specific  guidelines  on  the  points 
set out in Section 2.1, 2.2 and 2.6 above.  

In order to allow all operators time to adapt to the general regime, the Commission 
proposes  that  the  provisions  of  the  Regulation  that  apply  to  agreements  for  motor 
vehicle distribution will remain in force until 31 May 2013. 

•  As regards agreements for repair and maintenance services and/or for the supply and 
distribution  of  spare  parts,  to  apply  the  general  rules  as  currently  reflected  by  the 
proposed  new  block  exemption  for  vertical  agreements  complemented  by  either 
sector-specific  guidelines,  or  a  focused  block  exemption  regulation,  or  a 

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13 

See recital 9 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the 
rules on competition laid down in Articles 81 and 82 of the Treaty 
(OJ L 1, 4.1.2003, p. 1-25, first sentence). 
In  this  context  it  should  also  be  mentioned  that  the  main  associations  of  motor  vehicle  manufacturers 
(ACEA,  JAMA)  have  recently  agreed  to  propose  a  Code  of  Conduct  which  contains  certain  basic 
provisions derived from the current Regulation (EC) No 1400/2002. 

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combination of the two instruments with a view to reinforce competition authorities' 
ability  to  respond  to  competition  concerns  in  a  wider  and  more  comprehensive 
manner.  In  particular,  as  regards  the  following  concerns:  (i)  access  to  technical 
information; (ii) access to spare-parts; (iii) misuse of warranties; and (iv) access to 
networks of authorised repairers (Section 2.3, 2.4 and 2.5).  

Because the application of the new regime to the aftermarket may bring immediate 
benefits to businesses and consumers, the Commission proposes that it will apply to 
vertical agreements for the provisions of repair and maintenance services as well as 
for the supply and distribution of spare parts as from 31st May 2010. 

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49. 

All interested parties are invited to submit comments on this Communication before 25 
September 2009. Observations should be sent 

By electronic mail, to the following address: 

comp-car-sector@ec.europa.eu 

By post, to the following address:   

European Commission 
Directorate-General for Competition 
Antitrust Greffe 
B-1049 Brussels 
Belgium 

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