Car companies reject scathing Monti report

Date: 16/11/00

By Peter Chapman

EUROPE'S car industry has vowed to continue the fight to keep its special 'block exemption' from EU anti-trust rules, despite this week's hard-hitting report on its controversial distribution system by Competition Commissioner Mario Monti.

The block exemption allows manufacturers to run exclusive car dealerships, which means they can pick and choose who gets a franchise to sell their vehicles in a particular region. The sector argues this is necessary to ensure that firms offer a wide range of cars to consumers and provide a reliable after-sales service.

But Monti's report - a key stage in the Commission's review of the block exemption, which expires in 2002 - argues that in many cases, car firms have held dealers and consumers to ransom by stifling competition in national markets for new cars, after-sales service and spare parts. It argues that big differences in new car prices in member states, even allowing for variations in tax rates, shows that competition is not effective.

But a spokesman for European car industry lobby group ACEA rejected this, claiming the Commission report came to conclusions which were "not supported by hard evidence". "For example, the assertion that independent repairers can give a complete and comprehensive service is not borne out by the facts. Comprehensive EU-wide service can only be guaranteed by specially selected, fully equipped and properly trained authorised dealers," said Thierry Proteau.

He also argues that only specially approved dealers can ensure that increasingly complex new models are roadworthy, safe and environmentally friendly.

ACEA published its own report last month claiming that a 'free-for-all' distribution system would deny customers outside profitable urban areas access to the after-sales service they currently take for granted at local rural garages.

Europe's car industry has vowed to continue its fight to keep its special 'block exemption' from EU anti-trust rules, despite the hard-hitting report on its controversial distribution system issued by Competition Commissioner Mario Monti in mid-November 2000.