Motor vehicle block exemption regulations and guidelines

Background

The Motor Vehicle Block Exemption Regulations introduced in 2002 exempt the motor trade from normal EU competition rules. These rules expired on 31 May 2010. The European Commission has now published the new regulations and guidelines.

What has changed?

The European Commission has confirmed that it will extend the exemption from normal EU competition rules relating to the sale and distribution of new vehicles until 1 June 2013. After this date the sale and distribution of new vehicles will fall within the general competition rules. Guidelines have been published which deal with specific issues for motor vehicle sales from 1 June 2013.

For matters relating to after-sales, new regulations became effective on 1 June 2010. The Commission justified these changes on the grounds that it believed competition in the after-sales market was less intense. New guidelines for the aftermarket accompany the regulation and also came into effect on 1 June 2010.

What is the impact of the changes?

Crucially, the guidelines provide unequivocal confirmation that leasing companies should be treated as the economic owners and end users of vehicles in the eyes of motor manufacturers and their distribution chains.

This end user status protects leasing companies’ freedom of choice when sourcing vehicles and mean that they do not have to provide a customer mandate when ordering them. As a result, leasing firms will also be able to keep customer details confidential.

The repair and maintenance services elements of the guidance help preserve owners’ freedom of choice in getting their vehicles repaired, whether it is with a franchised dealer, brand specialist or independent garage.

Guidelines on after-sales

The guidelines provide the following examples, of what could constitute a breach of the regulations:

• restrictions agreed by motor vehicle manufacturers who operate a selective distribution system (where dealers are chosen on quality criteria laid down by manufacturer) to independent repairers who do not supply captive parts (parts that may only be obtained from the vehicle manufacturer or members of its authorised network) to independent repairers
• restrictions agreed between a supplier of spare parts, repair tools or diagnostic or other equipment and a manufacturer of motor vehicles, which limits the supplier’s ability to sell to authorised and/or independent distributors and repairers. So called ‘tooling arrangements’
• restrictions which prevent suppliers of components from placing their trade mark or logo clearly
• refusing to provide technical information on vehicles to independent operators and thereby causing an independent operator’s market position to decline, leading to consumer harm.
  

Guidelines on new vehicle sales and distribution

The guidelines for new vehicles sales and distribution which will be applicable from 1 June 2013 state:

• dealers in selective distribution systems may not be prevented from selling new motor vehicles to leasing companies of their choice
• there is no requirement for a leasing company/dealer to identify its customer to the motor manufacturer prior to sale of a vehicle 
• dealers must be free to terminate a contract with a motor manufacturers after five years 
• single-branding obligations designed to exclude newcomers or smaller brands that are currently sold in existing multi-brand outlets will not be allowed
  

Overall summary

With the cost of after-sales bills accounting for 40% of the total cost of owning a vehicle, the BVRLA supports any changes that help to enhance competition and choice.

If members would like to discuss any aspect of these changes, contact the legal and policy department.

Contact

Amanda Brandon, amanda@bvrla.co.uk  
01494 545701

Useful links

European Commission – To view the full legislation and guidance
Previous BVRLA responses
BVRLA response February 2010 to the European Commmission on the draft regulations
BVRLA response July 2008 to the European Commission on the evaluation report of the regulations

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