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Euro dealer body to fight dropping of auto BER

CECRA, the European retail motor industry trade organisation, is to fight the EC’s likely attempt to scrap the automotive industry’s exclusive Block Exemption Regulation (BER) from 2010.

In a leaked consultation document, head of EC competition unit Paolo Cesarini says there is “no valid reason” to keep a separate regulation for the appointment of franchised motor retailers.

The end of the existing eight-year automotive BER will coincide with a review of a general exemption rule covering retailing.

The issue is whether its replacement can satisfy the various demands of companies in the motor industry.

Jacopo Moccia, the CECRA director, believes it would not.

“Without the protection, dealers would always be fearing that bullying manufacturers would take away their contracts,” he said.

“This could be catastrophic. It would remove from dealer groups their right to open outlets with a franchise they hold. We don’t understand why the EC wants to go back a decade, and we see no benefit to consumers from it doing so.”

John Wormald, of the global consultancy Autopolis, shares CECRA’s concerns. “Without a specific BER, the power of vehicle manufacturers would be greatly strengthened,” he said.

“They might be completely unrestrained in the way they give contracts to franchised dealers. There would be no protection either for large groups because separate agreements relate to each of their dealerships. Car manufacturers tend to see dealers as no more than a conduit for what’s coming off their assembly lines.”

Wormald believes the EC has wanted for some time to “get shot” of a specific automotive BER because it sees no real competition problem relating to the sector.

“I believe Cesarini feels there are other industries where the EC needs to pay more attention to competition,” he said. “His view is that any issues can be settled nationally, and do not need pan-EU legislation.”

#AM_ART_SPLIT#Wormald’s concern is that the EC has been influenced by economists with no detailed understanding of the way the motor industry works.

ACEA, the European carmakers trade organisation, is cautious about the proposals.

Sigrid de Vries, communications director, said: “We don’t know yet what will be in the EC document, and it could turn out to be industry neutral.

“When the umbrella exemption changes from 2010 it could contain additional clauses relating to the automotive industry. Dealer organisations are expressing concerns but vehicle manufacturers are keen to maintain their relationship with them.”

Some industry commentators are also urging caution.

They believe the reality of a new general BER can eventually be acceptable to both dealers and manufacturers, whatever the official wording.

“Block Exemption is far too complex to condense into a single phrase like ‘a free-for-all in car selling’,” said one. “Never forget that Paolo Cesarini is a shrewd Italian lawyer. The absence of a Block Exemption solely for the automotive industry would not necessarily mean there was no exemption for the industry. It is the way these exemptions are interpreted that counts.”

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