Introduction
On 12 October 2020, the European Commission announced a public consultation in relation to the review of competition legislation which governs the distribution of the sale and repair of motor vehicles and the distribution of spare parts in the European Union.
The review will look into whether the terms of Commission Regulation 461/2010 (“the Motor Vehicle Block Exemption” or” MVBE”) and accompanying Guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts (“the Guidelines”) still remain appropriate and effective or whether these specialist rules can be submerged into the general vertical agreements block exemption ,Regulation 330/2010 (“VABE”). The terms of the VABE is also up for review
Regulation 461/2010 expires on 31 May 2023 and requires the Commission to draw up an evaluation report on its operation by 31 May 2021.
Background
Under the EU competition rules (Art. 101(1) of the Treaty on the Functioning of the European Union (“the Treaty”) there is a general prohibition of anticompetitive agreements between undertakings which appreciably affect trade and competition in the Community. However, under the conditions contained in Art. 101(3) of the Treaty they may be granted an individual exemption if they meet the requirements of the legislation and in particular promote efficiencies and allow consumers a fair share of the resulting benefits.
In addition to individual exemptions the Commission is empowered by Council Regulation (EEC) 19/65 to apply Art. 101(3) of the Treaty by regulation to certain categories of vertical agreements and corresponding concerted practices falling within Art. 101(1) of the Treaty provided they satisfy the conditions of Art. 101(3) of the Treaty.
The Commission has made use of this power to exempt certain types of motor vehicle distribution and after-sales agreements by virtue of the MVBE. The Commission has also adopted a Notice providing guidance on the interpretation of this Regulation entitled “Supplementary guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles” referred to above as “the Guidelines.”
The Commission has to draw up an evaluation report on its operation by 31 May 2021. The purpose of the Commission’s evaluation of the MVBE and the Guidelines was to gather facts and evidence on how well the legislation was working. Also, as part their review is a consideration of the application of another block exemption, Commission Regulation 330/2010 (“VABE”), which applies generally to vertical agreements but can also apply to the motor vehicle sector.
So, one central question for the review is whether there is a need for a specific MVBE and/or Guidelines or whether it would be sufficient to cover the distribution of motor vehicles under the VABE. There is a number of precedents for the Commission withdrawing specialist problem exemptions. The latest example was the removal of the specialist Insurance Block Exemption several years ago when it came up for review.
The Consultation
The consultation is designed to gather facts and evidence relating to industry practices, perceptions of stakeholders and possible cost savings from various types of stakeholders in order to assess whether and to what extent the objectives of the MVBE are fulfilled. This would allow the Commission to form a comprehensive picture of the Regulation’s effectiveness and efficiency.
By allowing interested parties to provide feedback and contribute their suggestions the Commission believes it will contribute to transparency and the accountability of the evaluation process.
According to the Commission the main stakeholder groups to which the consultation is relevant are as follows:
(i) undertakings with business operations in the EU motor vehicle sector, notably vehicle manufacturers and dealers, spare parts manufacturers and distributors (authorised and independent), and repairers (authorised and independent).
(ii) trade associations representing the interests of the above;
(iii) consumer organisations; and
(iv) academics with a focus on EU competition law and notably on the motor vehicle sector.
However, notwithstanding the above list, the consultation is open to any other stakeholder with a possible interest in the legislation.
According to the Commission’s questionnaire which form the basis for the Consultation they are seeking answers to a number of questions on the review criteria especially effectiveness, efficiency, relevance, coherence and whether it contributes added value to the relevant markets in the EU.
The consultation asks:
- Whether competition in new motor vehicle distribution, repair and maintenance services, and distribution of spare parts has intensified, weakened, or stayed the same since 2010.
- Whether the scope of the block exemption (particularly 30% market share threshold and list of hardcore restrictions) is still appropriate and effective.
- Whether the objectives of the block exemption (in terms of promotion of competition and removal of restrictions) and the prevalence in practice of the different types of restrictions referred to in the motor vehicle block exemption rules (including whether any indirect means of achieving anti-competitive results have been encountered).
- Whether the block exemption (including definitions and particular provisions) has provided clarity and increased legal certainty as to the applicable rules.
- What costs have been incurred in complying with the block exemption and whether these have been proportionate to any resultant benefits.
- Whether the objectives of the rules remain relevant, with regard to any changes in the market.
- Whether the motor vehicle block is consistent with the verticals block exemption and other EU rules.
- Whether the motor vehicle block exemption rules have made it easier for national authorities and courts to apply the rules or whether national rules could have been equally effective.
A copy of the Commission’s consultation and associated questionnaire can be accessed at:
https://ec.europa.eu/competition/sectors/motor_vehicles/legislation/mvber_review.html
