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New block exemption for car sales and servicing comes into force

Today, a major part of the new EU rules on motor vehicle distribution that entered into force on 1 October 2002 will become effective, announces the European Commission. The transitional period for all contracts that expired after 1 October 2002 ends today. After a further transitional period, on 1 October 2005, the so-called location clause will be abolished, finally making the new rules fully effective.

The Commission says the new rules that will become effective as of today “open the way to new distribution techniques, such as Internet sales and multi-branding introducing more competition between different retail channels. The new rules also tear down residual barriers to cross-border purchases and allow dealers to place advertisements or mail shots throughout the single market. Car owners will have a wider choice of after sales service providers be it through authorised repair shops or fully independent repair shops. No repair shop may be prevented from servicing several brands and repair shops will no longer be obliged to operate a dealership as well.”

On the eve of the expiration of the transitory period for the new rules applicable to motor vehicle distribution Competition Commissioner Mario Monti stated: "More competition in car distribution leads to lower prices. By finally tearing down remaining obstacles to cross-border vehicle purchases, consumers will make use of the full potential of the single market for car purchases. From today onwards, there will also be new possibilities for operating stand-alone after-sales services and I expect these new service providers to exercise a downward pressure on the high after sales service prices.”

The new rules cover the sale and after-sales services of all motor vehicles (passenger cars, light commercial vehicles, trucks and buses).

The new rules allow car manufacturers to choose between exclusive distribution - each authorised dealer gets a sales territory - or selective distribution - dealers are selected according to a set of objective criteria but are not allocated a sales territory. Almost all manufacturers have chosen selective distribution throughout the single market.

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