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Block Exemption evaluation - competition has improved, but rules need changing, says Commission

The European Commission last night announced proposals to simplify the motor industry Block Exemption 1400/2002 from 2010.

A meeting of the Commission last night approved publication of its evaluation report into the motor industry Block Exemption 1400/2002.

It has found that competition has improved in the new car sales and service and repair markets.

But the publication, which will be discussed in detail at the AM/NFDA Autoretailing conference (click here to book) on June 5 in Birmingham, hints that some of the current provisions may be dropped from 2010.

In its summary, the report says: "The provisions of the BER may be regarded as overly strict, too complex and/or redundant, particularly in view of the introduction of new EU legislation for motor vehicles.

"It would seem that a more effects-based and flexible approach would deliver better results for consumers."

The report states that the increase in inter-brand competition is mainly due to factors other than Block Exemption, such as manufacturing over-capacity, technological innovation and closer integration of markets.

It also highlights that while Block Exemption has given repairers access to manufacturers' technical information and has increased the number of authorised repairers, some sector-specific provisions have been unnecessary, such as allowing dealers to operate showrooms without a workshop - few have done so.

And it criticises the introduction of more onerous dealership standards by manufacturers for possibly making distribution more expensive, to the detriment of consumers.

Competition Commissioner Neelie Kroes said: "Buying and running a car are big expenses for consumers, so we need to make sure that the right rules are in place to help competition to work properly.

"That’s why I am eager to receive comments on this report that will help us understand how best to design the competition rules for the sector in the future".

A spokesman added: "The report therefore suggests that car owners might benefit from improvements in competition if less complex rules were to apply to the sector.

"The form and content of the future regime will be decided in the next stage of the review process."

  • Check AM-online later today for more analysis of the report.

  • Comment on the commission's findings on our forum.

  • Click here to download the full report from the European Commission.
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