French lawyers have claimed that existing car retailers are being favoured despite new block exemption rules, Automotive News Europe reported.
The one-year transition period vehicle manufacturers have to reorganise their dealer networks under new EU distribution rules is too short, the lawyers said.
Under the block exemption rules in force since last October, vehicle manufacturers have until September 30 to negotiate new contracts with their dealers.
The new rules aim to increase competition between retailers of the same brand by letting new entrants in provided they meet manufacturers’ standards.
However, many would-be dealers have found themselves unable to apply, lawyer Renaud Bertin said, because manufacturers won’t tell them what the conditions are to qualify.
In effect, Bertin argued, vehicle manufacturers are maintaining the network they had under the previous regime, based on exclusive distribution, in violation of the new rules.
“Even though it’s natural to show a preference for existing dealers, there is going to be a clash between vehicle manufacturers and the EU Commission by September,” Bertin warned at a Paris conference organised by Comité de Réflexion pour l’Indépendance des Concessionnaires or CRIC, a French car dealers’ trade association.
Lawyers representing vehicle manufacturers said their clients were justified in holding talks about new contracts with their existing dealers first.
“Establishing a dealer network is a long-term endeavour, and requires huge investments,” lawyer Jean-Paul Cocchiello said. “One could not put one’s dealer business on public tender and start from scratch. It would have destroyed everything. The Commission wants evolution, not revolution.”
Some vehicle manufacturers have argued they cannot as yet make public their selection criteria as they are still being discussed with their dealer network. Others, including Citroen managing director Claude Satinet, said that the selection criteria is available on demand, but that the EU Commission does not require that the data be publicised to all.
Even for existing dealers it will be tough to meet the EU deadline on October 1, lawyers at the CRIC conference said. Contracts may not be signed before August, which won’t leave them much time to upgrade their showrooms to the new, exacting standards that many vehicle manufacturers are setting, they said, according to Automotive News Europe.