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New block exemption targets carmaker “abuses” with more power to independents

Photo of generic workshop largeIndependent repairers will have greater access to technical information for repair and maintenance work under the latest revision to the European Commission’s block exemption regulations (BER) which come into force next month.

New rules
The EC said the new rules, between carmakers and authorised dealers, repairers and spare parts distributors, are intended to increase competition in the market for repair and maintenance by improving access to the technical information needed for repairs and by making it easier to use alternative spare parts.

“(The rules) 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,” said Vice-President of the Commission and Competition Commissioner Joaquin Almunia.

The new rules introduce a 30 per cent market share threshold above which agreements between car manufacturers and authorised repairers will no longer be block exempted. The EC said this will make it easier for it to tackle possible abuses such as the refusal to grant independent repairers access to technical information. It will increase competition between authorised and independent repairers.

“I strongly believe the new framework will bring tangible benefits for consumers by bringing down the cost of repairs and maintenance that represent an excessive share of the total cost of a car over its lifetime. It will also reduce the cost of distribution by doing away with overly restrictive rules,” said Almunia.

The EC said the new rules will strengthen repairers’ access to alternative spare parts which can represent a big share of the repair bills.

Warranty issues
Car manufacturers will no longer be able to make the warranty conditional on having the oil changed, or other car services carried out, only in authorised garages. However, carmakers may request repairs covered by the warranty, and paid for by the manufacturer, be carried out within its authorised network.

The EC said this was an important issue as it estimated repair bills account for an around 40 per cent of the total cost of owning a car.

Distribution rules
The EC also said it has simplified the rules regarding the distribution of cars and treat it like any other market.
“The current distribution model will continue to be exempted in most cases, but certain sector-specific clauses which have proven ineffective or counter-productive will not be carried forward,” it said.

“The new regime will give carmakers more flexibility to organise diverse networks in which multi-brand dealers co-exist alongside dealers fully committed to promoting the brands of a single manufacturer.”

The new rules on the repair and maintenance markets will come into force on 1 June 2010. Rules on distribution will be valid from 1 June 2013 until 31 May 2023.

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

Further details
Click here for more details on the the new block exemption regulation. 

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