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Robust opposition from retailers

This month the EC circulated a discussion document to the Office of Fair Trading in the UK and its equivalent competition bodies in other EU countries.

Some in the industry believe the EC was hoping for leaks to start a debate on Block Exemption. It will expect robust opposition from retailers.

At the end of May, the EU will publish a draft proposal, and that will be the starting point for CECRA and others to table their formal objections and proposals.

Scrapping a ‘sector-specific’ Block Exemption would be a far-reaching step.

It would put the relationship between carmakers and franchised dealers on the same footing as burger producers and their retail outlets.

So far, the EU has accepted that the motor industry is different.

Reasons include the volume and price of its products, the high level of technology in cars and heavy investment required.

In 2002, the EU accepted that motor retailers were entitled to the financial safety net of contracts that safeguarded their ability to make a return on their investment.

The driving force behind the EC’s stance in framing BER legislation is competition.

Its objective is putting consumers first – protecting their interests on health and safety and other issues, while keeping costs to a minimum.

CECRA’s Moccia said: “The EC is proposing removing stability from car dealers at a time when food and other producers are exerting increasing control over retailers in other sectors.”

According to one industry consultant, the NFDA and CECRA still have plenty of room for negotiation.

“This is not a foregone conclusion in the eyes of the EC,” he said.

“CECRA keeps believing its own propaganda and its opposition is easier to grasp than Cesarini’s stance.

“The important thing to remember is that the key to this is how Block Exemption of any kind will feel in the end, not how it’s described in a legal document.”

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