Car firms fear the worst in Monti report

Date: 05/10/00

By Peter Chapman

EUROPEAN car firms are braced for a highly critical report from Competition Commissioner Mario Monti on the industry's exclusive dealership system.

Car companies currently enjoy a special 'block exemption' from EU competition rules which allows them to operate exclusive dealerships. They won the exemption in 1995 after arguing that the system offered consumers a better choice of products and quality of service.

But the industry's EU lobby group ACEA says it expects Monti to heap fresh criticism on its members' distribution methods in a report currently being finalised by his staff. Its conclusions will be crucial to the sector's future as they will form the basis for the Commission's decision on whether or not the exemption will be renewed when it expires in 2002.

Monti served notice on the special treatment enjoyed by the industry earlier this year when he sided with critics who claim the system stops franchised dealers from competing with each other, closes the door to independent suppliers and allows the manufacturers to crank up prices.

"The tone of the report should be about the same as what Monti said in May," said an ACEA spokesman, who added that the industry was finalising its own submissions to competition officials on the issue.

He also confirmed that Fiat chief executive Paulo Cantarella, the current president of ACEA, was holding regular talks with Monti and Commission President Romano Prodi to urge his fellow Italians to soften their stance. "It is obvious that he is having talks with Monti and Prodi - they are all Italians and they know each other well," he said.

EU sources said Monti's report, expected in November, would not set out firm proposals for the future of the block exemption but would instead outline what the Commission believes is wrong with the present system.

European car firms are braced for a highly critical report from Competition Commissioner Mario Monti on the industry's exclusive dealership system.