IAAF - The Independent Automotive Aftermarket Federation

IAAF NEWS - New Block Exemption rules for independent aftermarket - 04/06/2010

New Block Exemption rules for independent aftermarket

New Block Exemption rules for independent aftermarket

At the wire, the European Commission last week (Thursday 27th May) announced its final decision on the competition rules for the automotive sector. Even in the last few days, with the 31st May expiry date looming, negotiations were still ongoing in Brussels over the content of the new rules to replace the old 'Block Exemption' for the motor industry.

To the satisfaction of the IAAF's Brian Spratt, it was clear that the independent aftermarket's safeguards on matters such as servicing and repair during the vehicle's warranty period, access to technical information, parts, equipment and training, have been confirmed.

Mr. Spratt commented, 'Having gone from a situation where the Commission were determined to do away with a block exemption for our sector, the strength of our arguments on consumer benefits, and SME-friendly regulation have been successful, and we will have our own specific rules.' (For dealers the existing 2002 Regulation is extended until 2013).

"We now have documents marked 'Preliminary Regulation' together with 'guidelines' and the IAAF intends to produce a sales aid for parts distributors and garages to help them and their customers make the most of the opportunities," Brian Spratt said. "We intend to take every opportunity to help our members, especially if heavy-handed dealers start misinforming the public."

EU Competition Commissioner Joaquin Almunia said, at the press conference, announcing the new competition rules, "I strongly believe the new framework will bring tangible benefits for consumers by bringing down the cost of repairs and maintenance and will also reduce the cost of distribution by doing away with overly restrictive rules."

The Commission's new rules will increase competition in the market for repair and maintenance by improving access to technical information needed for the repairs and by making it easier to use alternative spare parts. They will allow the Commission to tackle manufacturers' abuse of warranties when they request that cars are serviced only in authorised garages. The new rules will also reduce distribution costs for new cars by eliminating overly restrictive rules.

They introduce a 30% market share threshold above which agreements between car manufacturers and authorised repairers will no longer be block exempted, aligning the rules with the general framework of the Vertical restraints block exemption Regulation 330/2010 adopted in April this year.

This will make it easier for the Commission to tackle possible abuses to the detriment of consumers, such as the refusal to grant independent repairers access to technical information. It will increase competition between authorised and independent repairers.

The new rules will strengthen repairers' access to alternative spare parts which can represent a big share of the repair bills. Car manufacturers will no longer be able to make the warranty conditional on having the oil changed or other car services only in authorised garages. Of course, manufacturers may request repairs covered by the warranty - and paid for by the manufacturer - be carried out within the authorised network.

All this is important for consumers because repair bills account for an estimated 40% of the total cost of owning a car and costs have been rising in recent years.

The new rules will come into force on 1 June 2010 as concerns the repair and maintenance markets, and on 1 June 2013 with regard to the vehicle sales markets and will be valid until 31 May 2023.

The Commission has promised to monitor developments and take appropriate remedial action if it detects problematic behaviour or changed competitive conditions, as it has done in the past.

Answering questions after the press conference Mr Almunia promised to tackle any anti competitive behaviour in the automotive sector particularly in the aftermarket for service and parts.

The new Block Exemption Regulation can be found at:
http://ec.europa.eu/competition/sectors/motor_vehicles/legislation/legislation.html

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