Association, Inc.

Issue No. 3, 2008

JAMA responds to the Commission's Evaluation Report on motor vehicle distribution and servicing

On 28 May 2008, the European Commission released a report on Regulation 1400/2002 addressing motor vehicle block exemption (the 'MVBER').  The report asserts that "conditions for competition have improved in recent years on the markets for both new cars and repair and maintenance".  It represents the first step in a procedure that will decide on the regime applicable to the car sector after the present Regulation expires on 31 May 2010.

Commenting on the report, Competition Commissioner Neelie Kroes stated that 'buying and running a car are big expenses for consumers, so we need to make sure that the right rules are in place to help competition to work properly.' The Commissioner went on to invite industry stakeholders to comment on the report with a view to 'help us understand how best to design the competition rules for the sector in the future.'

In its recent submission to the Commission on this issue, JAMA welcomed the Commission’s Evaluation Report as a 'sound analysis of the significant and positive evolution of the EU motor vehicle market during the term of Regulation 1400/2002.'

JAMA noted that this evolution has been characterised above all by 'the strengthening of competition with consequent benefits for EU consumers and the internal market.'  However, JAMA concurred that these positive developments have been driven largely by external market developments rather than the provisions of the MVBER.

JAMA further concurred that the very prescriptive and complex nature of the Regulation has to some extent constrained manufacturers'’ ability to respond to the market, enhance competition and provide greater benefits to consumers.  Other elements of the MVBER appear to relate very poorly to market realities and are simply unnecessary.

JAMA would therefore welcome the possibility to transition in 2010 to 'a simpler, clearer and more flexible exemption regime, as represented by the current vertical agreements Regulation 2790/1999'.  JAMA believes that a future exemption regime based on the policy set out in Regulation 2790/1999 and backed by the general principles of EU competition law in the motor vehicle sector would be the best way to ensure continuing growth of competition and related benefits in this market after May 2010.

JAMA believes that such a regime should also seek to achieve the following fundamental objectives:

  1. Facilitate competitive, viable dealer networks;
  2. Maintain quantitative selective distribution for optimum competition in new vehicle sales;
  3. Permit brand dedication under appropriate market conditions; and
  4. Focus on competition law, for the benefit of consumers.

JAMA appreciated the opportunity to comment on the Evaluation Report and looks forward to further exchanges with the European Commission on this matter.

Block exemptions create 'safe harbours' for categories of agreements, relieving the contracting parties from the need to individually analyse those agreements to see whether they fall foul of EU rules on restrictive business practices (Article 81).