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EC blocks carmakers’ ‘Euro defence’ policy

The terms of the new block exemption make it easier for retailers to claim damages from their manufacturer if a national court judge decides a dealer has been unfairly treated, says Paolo Cesarini, the head of motor transport within the EC Competition Directorate.

Previously, manufacturers could block a court action by claiming the judge had no power to decide on the legitimacy or otherwise of a particular practice – the so-called ‘Euro defence’. It meant that if the judge established the existence of an infringement, the manufacturer simply had to notify the Commission and, until such time as the Commission made a decision on whether or not the practice actually hindered competition, the judge could not grant damages.

Now, judges (in the UK, the Office of Fair Trading) may decide without reference to the EC, if the manufacturer’s argument is valid. And on that basis they can decide what, if any, damages should be paid to the dealer – for example, in cases where a dealer’s contract has been terminated without the proper notice period being served.

Speaking at the AM Dealer Conference, Cesarini highlighted some of the key issues under review within the EC. The Competition Directorate wants to look more closely at the development of multi-brand dealerships and repair services – in particular at rising franchise standards and the operation of different renumeration structures that act as a loyalty mechanism. Also under review are selection criteria for authorised repairer networks under qualitative selection distribution systems. To be genuinely qualitative, says Cesarini, a requirement must be strictly necessary to optimise the service. If there are less restrictive or costly obligations, which would achieve the same objective, the manufacturer must opt for the less restrictive option.

Access to technical information is also under review. The EC is conducting a survey of manufacturers, asking them about the type of data they are providing and the cost to interested parties. It should be complete by the end of July. A public version will be made available this year.

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