European Law Report - The MVBER: Whither?
In view of the current economic crisis, any concerns about the application of competition rules to the motor-vehicle industry may indeed rank low in the list of priorities for motor vehicle manufacturers and distributors. This notwithstanding, in view...
In view of the current economic crisis, any concerns about the application of competition rules to the motor-vehicle industry may indeed rank low in the list of priorities for motor vehicle manufacturers and distributors. This notwithstanding, in view of the expiration of the current Motor Vehicle Block Exemption Regulation in almost a year's time, the European Commissioner for Competition Policy has forged ahead with the necessary discussions with stakeholders in order to pave the way forward.
The importance of the motor-vehicle industry to Europe's economy cannot be negated. It comes as, therefore, no surprise that the Commission has to date always deemed it essential to enact sector-specific rules which regulate the distribution and servicing of what nowadays can be said to be a sine qua non for European citizens. Distribution agreements entered into between car manufacturers and distributors in the various member states often give rise to restrictions of competition by endowing particular distributors with exclusivity to sell certain brands in a particular territory. Motor vehicle manufacturers also operate networks of authorised repairers. All such agreements are often caught by the antitrust rules found in the EC Treaty.
To this end, the Commission has over the years sought to exempt such agreements from the EU's competition rules by enacting a specific block exemption for this sector. In so doing, it always kept in mind the need to facilitate the ultimate right of every European citizen to be able to purchase a motor vehicle from wherever he desires and irrespective of his country of residence.
All motor-vehicle distribution agreements can benefit from this block exemption so long as they do not contain any serious restrictions of competition and meet the other conditions laid down in this law. The current block exemption which thus like its predecessors creates a safe harbour for a whole category of motor vehicle distribution and repair agreements, is now bound to expire in May 2010.
The Commission has already adopted an evaluation report which seeks to assess the impact of the current block exemption on industry practices and the effects of those practices on competition.
The Commissioner for Competition has recently also deemed it important to host a round table discussion with stakeholders in order to pave the way forward. In particular, the Commission wants to ascertain how any changes or maintenance of the current block exemption would affect the different categories of operators in the car sector, ranging from car manufacturers to distributors and repairers as well as consumers in general.
The discussion focused on a number of factors which the current block exemption has sought to safeguard and to assess whether these factors are to date still important. These include issues such as the possibility of distributors to sell competing brands from the same showroom also known as multi-branding, and whether such a right should, in view of increased globalisation and vigorous competition between brands, still be made available.
Another objective of the current block exemption is to facilitate cross-border trade in motor vehicles by ensuring that dealers operating within a selective distribution network have the possibility to open additional sales outlets anywhere in the EU.
The Commission is now assessing the extent to which such a rule has in actual fact contributed to market integration and to the possibility of consumers to purchase a motor-vehicle from wherever they desire.
Taking into account the stakeholders' contributions, the Commission is now gearing up to publish a communication on the subject which will set out a competition law framework for the industry. One thing is for sure. It will surely not be easy for the Commission to strike a balance between protecting consumer welfare and avoiding the imposition of additional burdens on industry in order to ensure the viability of this all-important sector.
mariosa@vellacardona.com
• Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a visiting lecturer at the University of Malta.
The importance of the motor-vehicle industry to Europe's economy cannot be negated. It comes as, therefore, no surprise that the Commission has to date always deemed it essential to enact sector-specific rules which regulate the distribution and servicing of what nowadays can be said to be a sine qua non for European citizens. Distribution agreements entered into between car manufacturers and distributors in the various member states often give rise to restrictions of competition by endowing particular distributors with exclusivity to sell certain brands in a particular territory. Motor vehicle manufacturers also operate networks of authorised repairers. All such agreements are often caught by the antitrust rules found in the EC Treaty.
To this end, the Commission has over the years sought to exempt such agreements from the EU's competition rules by enacting a specific block exemption for this sector. In so doing, it always kept in mind the need to facilitate the ultimate right of every European citizen to be able to purchase a motor vehicle from wherever he desires and irrespective of his country of residence.
All motor-vehicle distribution agreements can benefit from this block exemption so long as they do not contain any serious restrictions of competition and meet the other conditions laid down in this law. The current block exemption which thus like its predecessors creates a safe harbour for a whole category of motor vehicle distribution and repair agreements, is now bound to expire in May 2010.
The Commission has already adopted an evaluation report which seeks to assess the impact of the current block exemption on industry practices and the effects of those practices on competition.
The Commissioner for Competition has recently also deemed it important to host a round table discussion with stakeholders in order to pave the way forward. In particular, the Commission wants to ascertain how any changes or maintenance of the current block exemption would affect the different categories of operators in the car sector, ranging from car manufacturers to distributors and repairers as well as consumers in general.
The discussion focused on a number of factors which the current block exemption has sought to safeguard and to assess whether these factors are to date still important. These include issues such as the possibility of distributors to sell competing brands from the same showroom also known as multi-branding, and whether such a right should, in view of increased globalisation and vigorous competition between brands, still be made available.
Another objective of the current block exemption is to facilitate cross-border trade in motor vehicles by ensuring that dealers operating within a selective distribution network have the possibility to open additional sales outlets anywhere in the EU.
The Commission is now assessing the extent to which such a rule has in actual fact contributed to market integration and to the possibility of consumers to purchase a motor-vehicle from wherever they desire.
Taking into account the stakeholders' contributions, the Commission is now gearing up to publish a communication on the subject which will set out a competition law framework for the industry. One thing is for sure. It will surely not be easy for the Commission to strike a balance between protecting consumer welfare and avoiding the imposition of additional burdens on industry in order to ensure the viability of this all-important sector.
mariosa@vellacardona.com
• Dr Vella Cardona is a practising lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a visiting lecturer at the University of Malta.