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OFT calls for feedback to enforce block exemption

The Office of Fair Trading has outlined its determination to enforce “rigorously” the revised block exemption regulations in the UK. But it stresses the need for feedback from the market.

Alan Williams, director of the OFT’s competition enforcement branch, told the AM Dealer Conference: “Please tell us if the terms are not being met. And please be specific. We need to know who, what, where, when and how.”

There are limitations to the actions the OFT could take. “Our aim is to make the market work well for consumers and to protect the competitive process,” says Williams. “We are not able to protect particular businesses. If you have a complaint that you think is hurting your business, we can only take it up if we believe it is affecting consumers negatively.”

Block exemption is not about regulating vehicle markets, Williams adds. “It is not about controlling prices – the market determines those. It is not about restricting freedom of contract in the absence of anti-competitive agreements. We cannot get involved in contractual disputes unless competition is being impaired,” he says.

Agreements of minor importance are also out of its remit. Vertical agreements between parties which each have a market share of less than 15% are deemed not to have an appreciable effect on competition, and are, therefore, not prohibited unless they involve ‘hardcore restrictions’ or are part of a network of parallel agreements, where suppliers each have less than 15% but cumulatively have a larger share.

Williams says some of the sales-related issues looked at by the OFT so far include new supply agreements which involve a tie-in to the manufacturer’s finance company; restrictions in property leases, where the manufacturer owns the land the showroom is built on and uses that to impose restrictions; and changes in standards for dealers – for example, more demanding requirements for showrooms, or the payment of bonuses for using dedicated sales staff, which could be construed as deliberate obstacles to multi-franchising.

The OFT is looking at a number of cases, and “hopes to resolve at least one of them informally”. Looking ahead, Williams says secondary sales outlets arising from the scrapping of the location clause in October 2005, is potentially the most radical change on the sales side, and one which the OFT “will monitor carefully”.

On servicing and repair, he says the OFT is concerned that some carmaker standards for authorised repairers are “disproportionate, and not related to the quality of service/repair work”. Other problems include access for independents to technical data, charges for training and restrictions imposed by carmakers on the sale of parts.

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