Autoparts (S.Wales) Ltd.

At the end of May the European Commission published its long awaited Evaluation Report on Block Exemption.

The report concludes that Block Exemption regulation should NOT be replaced in 2010, but instead the industry should rely on a basket of existing 'general' competition legislation and some new industry specific legislation 'Euro 5' which comes into force for all new models of vehicle launched in 2009 and onwards.

In 2002 it was felt necessary to have an industry specific Block Exemption Regulation which set ou tto protext the independent aftermarket, the vehicle manufacturers main dealers and the consumer from the vehicle manufacturers using technology to create monopolies for the repair and service of their brand vehicles. Since 2002 there has been a huge increase in the technology so the need is greater now than ever before!

Use of the legislation as it is proposed will not work.

It is general and not specific; it is open to interpretation and will be difficult for competition authorities to police. Furthermore, to challenge a vehicle manufacturer's activity will involve expensive legal action in Europe with no certainty of a positive outcome. So even in the unlikely event that this were to happen, the business takeing the action will have been put out of business before a conclusion is reached.

The legislation needs to be specific and spell out in simple terms the obligation of the vehicle manufacturers and what is and what isn't allowed.

Euro 5 legislation goes some way to addressing this. It si very prescriptive and dictates to VM's the information that are leglaly obliged to provide to the independent aftermarket and the format in which it must be provided. Whilst on the surface this is fantastic there is an issue: the legislation only applies to new models launched after that date and is not being applied retrospectively. In practice, as new vehicles tend to hit the indepedent sector when they are three/four years old this will not even start to have an impact on the automotive sector until 2012 and even then in a very small way.

If Block Exemption is not renewed with the exploitable loop holes closed or a single piece of legislation introduced which is very specific, the results will not be positive for the independent aftermarket.