Branson attacks call for seven-year wait to end block exemption

Date: 13/09/01

By Laurence Frost

ONLINE car sellers, supermarkets and consumers' groups have stepped up their attack on the special distribution arrangements granted to carmakers under Union law.

British entrepreneur Richard Branson was in Brussels on Tuesday (11 September) to speak for a new generation of car retailers - including his own online firm, Virgin Cars - who believe the regime should be scrapped after it expires next year. "Our only concern is talk of a seven-year transition," Branson told European Voice as he prepared to speak at a special hearing in the European Parliament on the industry's 'block exemption' from competition rules. "It's a smokescreen to say that they need time - in our opinion six months would be quite long enough," he said.

The seven-year transition period for maintaining some of the current restrictions on distribution has been put forward by economic and monetary affairs committee rapporteur Christoph Konrad, as the European Commission prepares to unveil its own blueprint for the future of the business.

Branson dismissed warnings from Peugeot Citröen CEO Jean-Martin Folz, who also addressed the committee on Tuesday, that the shock of an immediate free-for-all would lead to job losses among the EU's 120,000 authorised dealers. "There's no reason why they should lose jobs if they're good retailers," argued the Virgin boss. "Instead of just selling Honda cars, for example, they'll also be able to sell 25, 30, or 50 other manufacturers' cars. If you've already got a retailer set up when the exemption is abolished then you've got a head start."

Competition authorities should learn from the earlier abolition of national airlines' monopolies on routes, Branson believes. "The flag carriers put up lots of arguments why competition shouldn't be brought in," he said. "Competition was brought in, we've now got hundreds of thousands of people travelling by air who weren't then - the consumer is benefiting."

The Commission is still digesting the results of a study prepared by consultants Arthur Andersen into the economic effects of abolishing or modifying the block exemption. Mario Monti, the EU competition commissioner, is expected to unveil firm proposals in coming months.

Online car sellers, supermarkets and consumers' groups have stepped up their attack on the special distribution arrangements granted to carmakers under Union law.