The European Commission’s evaluation report on the Block
Exemption Regulation 2002 (BER) observes that customers are
enjoying much higher levels of competition within the new car
sector than they were when the last BER was drafted, but that this
is result more of market forces than the Commission’s
intervention.
In fact, the report goes on to point out several instances
where the Commission’s objectives in drafting the 2002 BER – such
as encouraging higher levels of autonomy from franchised dealers –
just haven’t happened.
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Overall, the report suggests that customers would be adequately
served if the sector were left to operate under the much improved
competitive conditions of the marketplace and existing EU
regulations.
The relevant EU regulation referred to in the report is
Regulation 2790/1999 which deals with the application of the EC
Treaty on vertical agreements (Article 81(3)). This says that as
long as a supplier does not control more than 30 per cent of the
marketplace (Ford currently controls around 15 per cent in the UK)
and that vertical agreements do not contain ‘certain types of
severely anti-competitive restraints’, competition is not
considered to be threatened.
Most of disputes and complaints the Commission has been asked to
deal with since 2002 have been to do with contractual agreements
and could be covered quite adequately by EU case law.
In brief, the Commission recommends that a very much simplified
BER should be applied next time round, and hints that it may be
redundant altogether, in the current market conditions. This would
leave the Commission to focus on the ‘most harmful anti-competitive
practices’.
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By GlobalDataPower shift to OEMs
As some of the dealer associations had feared, it looks as if
the Commission may be delivering up the franchised dealership into
the hands of the manufacturer, with a subsequent loss of
independent action. The Commission certainly does not seem to be
concerned about extending or even defending levels of dealer
autonomy – in fact, it goes so far as to argue in favour of some
instances of increased manufacturer control.
The Commission’s report restricts itself to a review of how well
the 2002 measures have performed so far. It does not suggest or
speculate on moving the focus of the BER controls to include more
than just sales and servicing, such as point-of-sale finance,
insurance and warranty deals.
Bearing in mind how important non-car sales income is to both
dealer and manufacturer, there is a potential for ‘anti-competitive
practice’ in the selling of finance and insurance products at the
point of sale.
Even if this is so, we are unlikely to see much action on this
front until the Commission has sorted out its de-escalation of the
current BER.
Logically speaking therefore, we should expect to see
manufacturer and other captive finance providers working hard to
establish an unassailable position at the dealership point of sale
before the Commission notices what is happening. The current credit
squeeze – which many commentators say will be around for a while –
will probably work in favour of the larger, most profitable
players, and that will include the big manufacturer finance
companies.
Motor Finance Issue: 44 – June 08
by
Steve Raybould , Analyst
Published for the web: June 25 08 15:13
Last Updated: June 25 08 15:25
