The European Commission has unveiled new binding rules on the block exemption of the European Union (EU) auto sector from standard EU competition rules.

The latest revision restricts exclusive agreements between automakers and authorized repair shops. The rules also make it easier for garages to use spare parts from independent manufacturers.

“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,” the commission’s top antitrust official, Joaquin Almunia, said in a statement.

The changes will come into force in two stages. Beginning June 1, agreements between vehicle manufacturers and aftermarket players such as repair garages and parts distributors will be governed by a fresh set of rules – which underline a ban on manufacturers from withholding technical information from the independent aftermarket sector, and allowing consumers to have their vehicles repaired with alternative parts.

This new policy includes increased power for the Commission to tackle any abuse, if the manufacturer tries to void the warranty when a consumer chooses to use an independent garage.

Carmakers will also be able to set standards for licensed repairers, although they will not be able to arbitrarily set limits on the number of licensed repair shops that can exist in an EU member state. Critically, in cases where networks of vehicle manufacturers, authorised repairers and spare part distributors have a national market share exceeding 30%, standard EU competition rules will apply to their agreements. This will give the Commission more authority to take action against “refusals to release technical information or the misuse of warranty terms aimed at excluding independent repairers or with new types of restrictions that may arise,” said a Commission note.

This represents good news for the consumer, according to EU competition Commissioner Joaquin Almunia: “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,” he said in a communiqué. He added this rule will also reduce distribution costs considerably by “doing away with overly restrictive rules.”
Costs may also fall because of the second tranche of the review, coming into force in May 2013. This includes a new stipulation allowing manufacturers to insist on single-brand showrooms at dealerships, rather than the multi-brand dealerships that are currently allowed. This follows a Commission admission that its attempt in the 2002 reform of block exemption to encourage the use of multi-brand dealerships has effectively failed. “Carmakers reacted to the threat that generalised multi-branding might pose for brand identity and corporate image by increasing the level of investments required from the dealers in terms of separating the brands, presentation, etc.

Manufacturers also started to contribute less to dealers’ investment costs,” said the Commission note. It said distribution costs rose 20% as a result.

Emma Jackson