Euro MPs want change in dealership competition

  • 2002-06-06
BRUSSELS

The European Parliament said May 30 that a proposed reform in European Union car distribution rules should be changed to give car makers an extra two years before their retail dealers are allowed freedom to locate where they want.

The proposals are likely to cause major upheaval in the ways cars are sold and serviced in the European Union.

The point made by the Parliament - which would push the effective date back from October 1, 2003 to October 1, 2005 - was the part of the European Commission's proposal most hotly contested by the manufacturers.

Parliament, which has only a consultative role in the matter, called for a new study to determine the feasibility of the change.

In a non-binding vote, Euro MPs voted 287 to 128 with 43 abstentions for a resolution to delay.

Car dealers' freedom to set up sales points virtually anywhere they want - even in supermarkets - has been fiercely contested by the manufacturers since it was presented by the commission in Strasbourg on Feb. 5.

The manufacturers, which enjoy dispensation from EU competition rules - known as the car-bloc exemption and which ends in September - want to guard their vise-like control over how and where their cars, parts and after-sale service are marketed.

Other than that one point, Parliament essentially agreed to the reform crafted by Competition Commissioner Mario Monti, which also provides for the sale of more than one brand of car in the same location, and restriction-free sales of parts and service.

On May 21, Monti acknowledged that the two-year delay before the changes would go into effect was feasible, telling a parliamentary committee: "I am prepared to consider a transition period a little longer than we envisaged."

However, in parliamentary debate on the question on May 29 ahead of the May 30 vote, he took a much tougher line, saying, in essence, that the resolution was unacceptable.

"This is an area where the commission has exclusive competence," he told the lawmakers.

The commission proposal represents sweeping changes in the way new cars are sold in Europe, a move aimed at giving buyers more price-shopping leeway and breaking the car makers' decades-old grip on marketing.

In the works for two-and-a-half years, the proposed regulations, which require consultations with the 15-nation members of the European Union before going back to the commission for final approval, would end the tradition of auto makers selling their products and parts exclusively through approved dealerships.

"The commission is putting car buyers first," Commission President Romano Prodi said in Strasbourg at the plan's introduction.

"People want a choice," he said. "They want to buy cars and obtain services wherever it is most advantageous, to have a choice of brands and models and to have high quality after-sales serving at a reasonable price."

Monti, speaking to Parliament in February, called the move "a bold initiative" that "encourages diversity and choice in motor vehicle retailing and puts the European consumer firmly in the driver's seat.

"It should help to remedy the competition problems that we have observed in the sector over the past few years and allow the car buyer to purchase his vehicle wherever it is cheapest," he said.