AM Online

BER impact is probed by EC

A study ordered by the European Commission into the effectiveness of Block Exemption is the first step in preparations for the 2010 revisions.

The report, compiled by London Economics, looks into new car distribution, aftersales and parts supply in Europe from 1997 to 2004.

Given that BER only came into effect in 2003, it finds little evidence of an effect on competition following the ban on exclusive market territories. It questions whether the growth of large dealer groups means more or less competition, but notes growth in multi-franchising and car supermarkets, plus easier inter-brand comparisons thanks to the internet.

A slight downward trend in prices “is clearly to the benefit of consumers”.

On aftersales, the report fails to find evidence of higher profits for franchised repairers compared to independents. It says profits are low, and adds: “These facts support the explanation that rising repair prices are driven by rising costs.”

John Whiteman, managing director of ICDP, describes the report as “pretty benign for vehicle manufacturers”. He foresees the next BER revision in 2010 as being another step towards inclusion of motor retail into general Block Exemption.

“The climate is looking more favourable for manufacturers at the moment than it was in 1999-2000 when we had ‘Rip-off Britain’. Manufacturers only have to keep their heads down for them to get a benign regulation in 2010,” Whiteman says.

Repairers face a challenge dealing with the technology in cars. “Independents have always managed to overcome the various technical barriers, to service cars as they come out of warranty,” says Whiteman. “But the size of the challenge is mounting dramatically – the OFT study painted rather a rosy picture of the underlying situation.”

Sam Gegg, of competition lawyers Osborne Clarke, says the EC will be concerned that the cost of marque-specific equipment and data remains a barrier to independents.

“It’s likely the Commission will look to further open up competition,” she says.

The AM view

We’ve been waiting for this report since spring and, as these often are, it’s a bit of a damp squib. That said, it heralds the start of the BER campaigning for 2010. What price a united industry front?

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