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Draft rules revealed for aftermarket Block Exemption

The European Commission is proposing to adopt a new Block Exemption for vehicle repair and maintenance services.

It has launched a public consultation on its draft Block Exemption, and has invited comments on the proposal to be submitted by February 10.

Competition commissioner Neelie Kroes said: "Cars are a big chunk of the average household budget. Competition is therefore vital both as regards vehicle sales and repair.

“Our analysis has shown that competition is fierce as regards car sales, so we have no reason to treat this sector differently from any other. In contrast, we found the repair and maintenance market more prone to competition problems. This is why we propose to keep specific rules in this area."

The Commission proposes limiting the benefit of the Block Exemption for service and repair agreements to operators with a market share of up to 30%. This would make it easier for the Commission or for national competition authorities to prevent carmakers from sheltering their repair networks against competition from independent repairers, for instance by withholding technical information.

In addition, the Commission intends to include rules on the supply of spare parts, to to ensure that independent repairers can obtain carmaker-branded parts, and to ensure that component suppliers can put their brand on component or spare parts and can continue to supply spare parts to the aftermarket.

And it wants the sector-specific guidelines to clarify various aspects affecting competition in the aftermarket, for instance the consequences if a vehicle manufacturer refuses to honour warranties where vehicles have been repaired in independent repair shops.

The commission also proposes to adopt guidelines dealing with specific issues for both motor vehicle sales and repair.

The current motor vehicle Block Exemption Regulation (1400/2002) is due to expire in May 2010.

The Commission found no evidence that agreements between vehicle manufacturers and dealers would continue to require different treatment as compared to agreements in any other sector.

It therefore plans to apply the general competition rules from 31 May 2013, after a three-year adaptation period, granted to take account of brand-specific long-term investments made by dealers.

Key issues such as multi-branding, imposition of resale prices and parallel trade in the EU will be addressed in the proposed sector-specific guidelines, aimed at assisting companies in assessing the compatibility of their agreements with the competition rules.

The draft revised Block Exemption Regulation and Guidelines are available on the Europa website at http://ec.europa.eu/competition/consultations/open.html

Sue Robinson, director of the National Franchised Dealers Association, said: "Following the European Commission’s publication of the draft BER, I will be working closely with both the dealers and our retained solicitors, Osborne Clarke, over the coming weeks to formulate our response to their paper outlining our position and also our proposals regarding the guidelines."

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