On 28 May 2021, the European Commission has published 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.”
Competitive conditions in the motor vehicle sector also have a direct bearing on public safety, as the vehicles may be driven in an unsafe manner if they have been repaired incorrectly. Moreover, these vehicles may have negative impact on the environment, as emissions of carbon dioxide and other air pollutants may be higher from vehicles which have not undergone regular maintenance work. ECOPNET (European Cooperation and Partnership Network) informs its followers and partners from related sectors on the findings of the Evaluation Report that address particular competition issues arising in the motor vehicle sector. ECOPNET also wishes to influence and contribute to the formulation or implementation of policy and the decision-making processes of the EU institutions on selected subject matters.
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.
Source: European Commission Press Corner