Introduction

In March 2015 the Competition Protection Agency initiated proceedings against Hyundai Avto Trade doo – the authorised importer and distributor for Hyundai in Slovenia – and its authorised mechanics. The companies were suspected of engaging in a selective distribution system which restricted competition, in breach of Article 6 of the Prevention of Restriction of Competition Act (for further details please see "Competition Protection Agency investigates automotive industry"). In January 2016 the agency published Hyundai Avto Trade's proposed remedies to eliminate the alleged anti-competitive effects online and invited third-party comments and suggestions (for further details please see "Open floor after Hyundai Auto Trade proposes commitments to Competition Protection Agency").

On May 5 2016 the agency issued a decision closing the proceedings and accepting the commitments.(1)

Commitments

In line with the commitments, Hyundai Avto Trade has agreed to amend the text of its warranty certificates and service books to remove any doubt about consumers' rights when claiming warranty. Further, Hyundai Avto Trade has agreed to remove all potentially misleading content about consumers' rights from its website.

Hyundai Avto Trade must amend the content of its warranty certificates in order to provide that the warranty is not conditional on where the vehicle has been repaired and maintained, but only on the fact that it was maintained according to the manufacturer's instructions. The company has also agreed to publish this information on its website and explicitly inform all Hyundai consumers who own vehicles with valid Hyundai warranties (or Hyundai anti-corrosion warranties).

Hyundai Avto Trade must also provide an explanation and guidance on claiming warranties in accordance with Article 6 of the Prevention of Restriction of Competition Act and Article 101 of the Treaty on the Functioning of the European Union to all of its authorised mechanics, which in turn must agree to follow the updated policy. Both Hyundai Avto Trade and its authorised mechanics must not mislead owners or potential owners on the issue of warranty claims or discriminate against them with regard to any history using independent mechanics.

Further, Hyundai Avto Trade must inform Hyundai vehicle owners and valid warranty holders of the measures that independent mechanics must follow when undertaking regular maintenance, and of campaigns and manufacturer recalls. In addition, the company must provide independent mechanics with access to original spare parts and tools, technical information, professional training and equipment under the same conditions as authorised mechanics.

Comment

In the agency's view, the commitments will enhance competition between authorised and independent mechanics during the warranty's validity period, in line with the objectives of the Motor Vehicle Block Exemption Regulation. They will help the agency to monitor the behaviour of the addressees by obliging them to report on compliance annually and by giving the agency access to relevant Hyundai Avto Trade databases without previous notice or special permission.

The addressees must comply with the decision and implement the commitments within three months of its adoption. The commitments will remain in force for three years from the date on which the decision was served on each of the addressees, respectively.

While the commitments does not constitute a finding of infringement, if the parties do not comply, the infringement proceedings may be reopened and the companies may be fined up to 10% of their annual worldwide turnover for non-compliance.

In addition, the agency made a statement that it will continue to check that authorised distributors of other brands are complying with competition law. For this purpose, the agency has called on the general public and consumers to report any similar abusive behaviour in relation to warranties and maintenance in the automotive industry. While it remains to be seen whether this will result in broader investigations of the Slovenian automotive sector, all players on the market are advised to apply additional scrutiny and caution.

For further information on this topic please contact Eva Škufca at Schoenherr by telephone (+386 1 200 09 80) or email (e.skufca@schoenherr.eu). The Schoenherr website can be accessed at www.schoenherr.eu.

Endnotes

(1) The text of the operative part of the decision (in Slovenian) is available at www.varstvo-konkurence.si/si/ostali_dokumenti/arhiv_odlocb/odlocba347/.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.