Antitrust: Commission publishes findings of evaluation on the Motor Vehicle Block Exemption Regulation

(Source: European Commission)

The European Commission has published today the Evaluation Report and Staff Working Document summarising the findings of its evaluation of the Motor Vehicle Block Exemption Regulation.

The aim of the evaluation was to gather evidence on the functioning of the rules applicable to vertical agreements in the automotive sector, in order to decide whether they should lapse, be renewed in its current form or be revised.

The evaluation has covered the whole regime applicable to the automotive sector, including the Motor Vehicle Block Exemption Regulation and the Supplementary Guidelines as well as the Vertical Block Exemption Regulation and the Guidelines on vertical restraints, as far as they apply to the automotive sector.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Our evaluation has shown that the Motor Vehicle Block Exemption Regulation has made it easier for businesses in the automotive sector to assess whether their agreements are in line with the EU rules on competition. At the same time, it showed that we need to take into account the emergence of new technologies and the increasing role of data in competitive dynamics in this industry. The Commission will therefore reflect on how to address these issues to ensure that the rules remain fit for a rapidly changing automotive industry.”

In December 2018, the Commission launched the review of the Motor Vehicle Block Exemption Regulation, which will expire on 31 May 2023. During the evaluation phase of the review, the Commission conducted an in-depth fact finding exercise and collected evidence to understand how the rules have functioned since their adoption in 2010. This evidence includes, notably, contributions by stakeholders, such as vehicle manufacturers, repairers, dealers, consumers and others, gathered in the context of a public consultation that took place between October 2020 and January 2021.

The findings of the evaluation

The evaluation has shown that, overall, the competitive environment in the motor vehicle markets has not significantly changed since the Commission last evaluated these markets in 2010, but that the sector is now under intense pressure to adapt in line with the green and digital transformation.

The Commission analysed the competitive landscape in three markets: (i) vehicle distribution, (ii) vehicle repair and maintenance and (iii) sale of spare parts.

  • (i) Motor vehicle distribution markets: the Commission found that competition in passenger cars remains vigorous, but is less intense for light commercial vehicles, trucks and buses. Overall, the evaluation concludes that the decision taken in 2010 to apply the Commission general vertical framework to these markets was appropriate.
  • (ii) Motor vehicle repair markets: the evaluation has shown that many authorised repairers enjoy considerable local market power and that intra-brand competition within the authorised networks appears to be limited by strict and detailed quality criteria. However, the evaluation has shown that independent repairers will only be able to continue to exert vital competitive pressure if they have access to key inputs such as spare parts, tools, training, technical information and vehicle-generated data. The evaluation has shown that the current regime is suitable for these markets, but may require certain updating to take account of the increasing importance of data.
  • (iii) Motor vehicle spare parts markets: the evaluation has shown that these markets are less flexible due to certain contractual arrangements between original equipment suppliers and vehicle manufacturers, which ultimately reduce the choice available to end-consumers. At this stage, the evaluation finds that the decision in 2010 to give special treatment to these markets was appropriate.

The Evaluation Report concludes that the current regime has shown itself to be suitable and adapted to diverse situations. Nevertheless, some provisions and policy objectives may need updating in the light of the report. The Commission will reflect on the various findings in the coming year, while also taking account of the findings of the ongoing review of the Vertical Block Exemption Regulation. During this forward-looking phase, all interested stakeholders will have the opportunity to provide their views on issues relevant to the future regime.

Next steps

The Commission will now start the policy-making stage of the review, in order to decide by 31 May 2023 whether to renew the current Motor Vehicle Block Exemption regime, revise it or let it lapse.

Background

Vertical agreements are agreements entered into between two or more undertakings operating at different levels of the production or distribution chain, and relating to the conditions under which the parties may purchase, sell or resell certain goods or services.

Article 101(1) of the Treaty prohibits agreements between undertakings that restrict competition. However, under Article 101(3) of the Treaty, such agreements can be declared compatible with the Single Market, provided they contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits without eliminating competition.

The Motor Vehicle Block Exemption states that the Commission’s general regime (i.e. the Vertical Block Exemption Regulation) applies to agreements for the distribution of new vehicles. The Vertical Block Exemption Regulation exempts vertical agreements that meet certain conditions from the prohibition in Article 101(1) of the Treaty, thus creating a safe harbour for those agreements. The Guidelines on Vertical Restraints provide guidance on how to interpret and apply the VBER and how to assess vertical agreements falling outside the safe harbour of the VBER.

As to agreements relating to the sale or resale of spare parts for motor vehicles or the provision of repair and maintenance services for motor vehicles, the Motor Vehicle Block Exemption Regulation provides that Article 101(1) of the Treaty does not apply, so long as these agreements fulfil the requirements for an exemption under the general regime and do not contain any of the hardcore clauses listed in the Motor Vehicle Block Exemption Regulation.

For More Information

See the dedicated webpage of DG Competition, which contains all stakeholder contributions submitted in the context of the evaluation and summaries of the different consultation activities.

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