European Commission announces new competition rules for the car sector
Under the new repair guidelines, carmakers with a market share of over 30% in the repair and maintenance markets won't be able to force drivers to use authorised garages for repairs from 1 June 2010.
In addition, the new rules will improve garages' access to vehicle parts from independent manufacturers..
Joaquín Almunia, vice-president of the European Commission responsible for competition policy, said: 'Independent garages constitute an important source of competition for brand networks. Unfortunately, they are also vulnerable to behaviour by car manufacturers that shuts them out of the market, such as failure to grant access to technical information or refusal to honour warranties if consumers use their services.
'Behaviour of this type really harms consumers by pushing up the cost of repair. Consumers particularly feel the effect of rising repair costs during the present crisis, as they are more price-sensitive and their cars are getting older, and require more frequent maintenance. There's therefore a danger that if prices are too high, drivers will go to the garage less often and their cars may become dangerous or pollute the environment.'
He added that repair bills account for an estimated 40% of the total cost of owning a car.
The Commission is also adopting new Block Exemption rules on the sale and distribution of motor vehicles to give carmakers the ability to set up single-brand car showrooms. Previously, the Commission has tried to enforce carmakers to conduct sales with dealers that sell multiple brands.
Mr Almunia said: 'Prices have been falling steadily, and the consumer is benefiting from an increasing choice of models. Against this competitive background, the old sector-specific rules created an unnecessary straitjacket that limited the room for manoeuvre for car manufacturers to organise their distribution systems as best suited by the changing market conditions. They also discouraged car manufacturers from investing in their dealership networks.'
He added: 'This increased flexibility should also allow European carmakers to respond to new competition coming from the emerging markets of East and South Asia.'
The new rules on the sale and distribution of motor vehicles will be effective from June 2013, with a three-year transition period to help dealers to adapt.
However, Mr Almunia added that the Commission will continue to monitor the automotive sector and would 'take necessary steps if any serious shortcomings are identified'.For more of the latest industry news, click here.