In August, the European Commission published a set of frequently asked questions (FAQs) on the application of the EU competition law rules to the motor vehicle sector.
The FAQs aim to address a number of queries that the European Commission has received from stakeholders and EU national competition authorities regarding the practical application of the new EU competition law rules relating to the motor vehicle sector which came into force on 1 June 2010 (Commission Regulation No 461/2010 and 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).
Whilst the FAQs do not contain any particularly more extensive guidance than is already available in the European Commission’s 2010 supplementary guidelines or from a basic application of the general EU competition law rules, they do provide some helpful additional guidelines in certain limited areas to assist companies in the motor vehicle sector to assess whether their agreements comply with EU competition law.
Car manufacturers, dealers, repairers, and spare part suppliers active in the European Union should take careful note of the FAQs. They should also bear in mind that the document will not just have an impact on cases which the European Commission chooses to pursue, but also on those pursued by national EU competition authorities, which since the new EU rules have come into place have received a number of complaints by aggrieved companies alleging breach of the EU competition law rules and which often choose to pursue cases, rather than the European Commission, because of the national nature of the markets involved.
The FAQs deal with six topics: (i) warranties; (ii) servicing in the context of leasing contracts; (iii) the supply of spare parts; (iv) the use and purchase of electronic diagnostic and repair tools; (v) access to technical information; and (vi) access to authorised repair networks.
The following aspects of the FAQs are particularly interesting.
The FAQs make clear that if a vehicle is leased from a company connected to the vehicle supplier, that firm can stipulate that servicing must be carried out within the vehicle supplier’s authorised network and/or using exclusively branded parts from the vehicle suppliers. This will be the case unless it is certain that a transfer of ownership over the vehicle to the lessee will take place at the expiry of the contract or at the end of the leasing term. The European Commission considers that a leasing company may have a legitimate interest in maintaining the vehicle’s residual value and may therefore be entitled to place more value in the vehicle if it has been serviced in the authorised repair network using exclusively vehicle-supplier branded parts.
A vehicle supplier may oblige its authorised repairers to store alternative brands of spare parts separately from parts of its own brand. The European Commission considers that there is a legitimate interest in this obligation since “if the correct parts are readily at hand, this may have an impact on consumer perception of the brand”, and the obligation can ensure that alternative brands are not mistakenly used for warranty repairs or servicing packages in respect of which suppliers bear the costs. However, requirements “should not unduly complicate stock control, increase required storage, or impede access to such an extent that repairers are discouraged from using alternative brands of parts”.
Specifying that an authorised repairer must have access to a particular electronic diagnostic or repair tool (even when equivalent tools are available from other sources) is unlikely to be a breach of EU competition rules and is likely to be an acceptable qualitative criterion. The FAQs state that such a requirement can lead to economies of scale, quicker solution to technical problems, and the better training of technicians.
Access to technical information
The FAQs note that vehicle manufacturers are required to release technical information, for which they are the only source, to independent operators, and that a failure to provide such information can only exceptionally be justified for safety or security reasons. When considering safety or security issues, the FAQs note that the availability of less restrictive forms of protection should be considered. This might include requiring independent repairers to attend training on a particular system or technique, although the European Commission notes that the “independent repairer should not be required to follow more training than it needs to work on the system or master the technique”. A criminal records check on the independent repairer might also be appropriate.