Neelie Kroes, the EU’s competition commissioner, has left the door open for automakers to retain one of the most cherished pillars of the traditional franchise system – control of where their dealers locate their premises, Automotive News Europe reported.
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Kroes has indicated to dealers and members of the European Parliament that carmakers can individually retain the so-called “location clause,” which permits them to divide their networks into territories.
Under the block exemption rules, the clause is still due to expire on October 1. But Kroes’ statement gives them a choice: They can retain control as in the past, but they must be able to prove to the European Commission they are working to open their dealer networks to more competition.
The controversial clause was the last component of the new block exemption regulations to take effect. The clause was a cornerstone of the new car distribution rules, authored by Kroes’ predecessor Mario Monti, meant to reshape the European auto retailing landscape and give consumers more choice. Removal of the clause was designed to allow dealers to locate a franchise outlet anywhere, including in a territory controlled by another dealer, without having to seek approval from the manufacturer. The commission believed removal of the clause would open the way for more cross border shopping and would help harmonise car prices across Europe.
CECRA, the European dealer trade association, had publicly opposed removal of the location clause, warning that it would allow big dealer groups to monopolise the retail landscape, putting small dealers out of business.
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By GlobalDataManufacturers, stung by their failure to influence the commission on block exemption three years ago, were more private in their objections.
“The ball is now up in the manufacturers’ court,” said Paulo Cesarini, head of the automotive sector of the competition commission, told Automotive News Europe.
“Now each brand can find a solution which is appropriate to its individual situation,” said JŸrgen Creutzig, executive director of CECRA. Creutzig claimed Kroes’ ruling is a victory for CECRA’s lobbying efforts. Her statement came in a letter to CECRA and also in response to a question from Othmar Karas, an Austrian member of the European Parliament.
CECRA had lobbied for a delay in the October 1 expiration of the clause, but the commission declined, Creutzig said. Creutzig had argued that the commission should wait for the results of a study it commissioned to determine what effect expiration of the clause would have. The results of that study are not due until December. London Economics, a UK-based consultancy, is doing the study.
