Block exemption and new Commission guidance

Updated February 2011

Following the European Commission's publication of new competition rules applying to motor vehicle distribution and after-sales last summer, it will shortly be publishing a supplementary 'Q&A' document to help clarify certain elements of the new rules.

The Q&A should be available by the end of July 2011; however, the Commission has not committed to this date formally. Naturally, the longer the Commission delays the publication of its Q&As, the less likely it is that any issues dealt with in the Q&As will be addressed in any new network agreements that certain vehicle manufacturers are already beginning to roll-out.

(Vehicle manufacturers are beginning to communicate new dealer and repairer contracts to their networks in anticipation of the expiry of the motor vehicle block exemption (1400/2002) on 31 May 2013. The application of this regulation to new vehicle sales was previously extended by three years following the lobbying efforts of the RMI National Franchised Dealers Association and similar bodies. It is expected the vehicle manufacturers will try to persuade their networks to sign up to these new agreements in the near future, although the application of certain clauses may be suspended until June 2013 to ensure compliance with the current rules.)

Last autumn, the Commission invited contributions to the Q&A. On 3 November, the RMI National Franchised Dealers Association submitted a number of items for inclusion in the Q&A., For example, to clarify the scope of an industry code of conduct and to address the risk posed by the new rules to multi-branding. Disappointingly, this contribution was one of only six contributions to the Q&A received by the Commission across the entire EU.

In the next few weeks, the Commission will be contacting the governments of each EU member state to ascertain how the new rules have been received by affected groups locally. The RMI National Franchised Dealers Association has already contacted officials within BIS and the Office of Fair Trading (OFT) to assist with the UK's response.

For further information or if you would to discuss any new dealer or repairer agreement proposals, please contact Miles Trower, a partner and competition specialist at TLT. Miles regularly advises companies in the automotive sector on block exemption and competition matters as well as on dealer, repairer, parts distribution and stocking finance agreements.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2011. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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