The Warsaw Business Journal tells us that "Independent car service providers in the EU are under threat", reporting the Right to Repair Campaign who could be expected to make such claims.
The gist of the story is that the Commission has not yet decided to renew the "directive", as the report calls the Regulation. Not that this appears to be news: it sounds as if R2RC, or perhaps just their Polish operation, have decided to gee the Commission up a little. It was only the end of July when comments on the Evaluation Report were requested, so it might be a little premature to chase the Commission just yet. But we are entering a phase in the renewal process when we can expect the lobbying to become more and more frenetic.
Wednesday 29 October 2008
Saturday 25 October 2008
An endangered species
According to a PriceWaterhouse Coopers report described in an article in the on-line edition of Motor Trader: "Car dealers are an endangered species and their number in the UK will be significantly reduced in the future". I think I have read similar predictions of the demise of the franchised dealer in the past ... each new iteration of the Block Exemption seems to bring with it similar comments.
Suppliers are taking every opportunity to exercise more and more control over dealers, but this is nothing new. It was going on before we ever had a block exemption, and is an unavoidable consequence of the fact that the public face of the supplier is the dealer. All the valuable goodwill - the attractive force that brings customers back for more, or gets them interested in the cars in the first place - is in the hands of the independent dealer. Is it any surprise that car makers will cast around for anything that enables them to protect that reputation?
The important point is that surely that the process is reaching a new level. Every few years, the car makers' scope for exercising control over dealers has been diluted by the latest iteration of the block exemption regulation. It is due to happen for the fourth time in 2010, although the dilution of the car makers' powers has never been as great as dealers would have liked. In between new regulations, the car makers have striven to get back the control they lost, and more.
This time, when the Regulation is replaced, the chances are that dealers will find the outcome uncomfortable. The Commission, which in 1995 was moved to replace block exemption v1 following an extraordinary demonstration of how suppliers could exercise arbitrary power over their dealers (from memory, it was the president of CECRA whose franchise was terminated for no apparent reason, though I am sure that this is a gross oversimplification), is now set to remove all the dealer protection stuff that has been lobbied for and written into the regulation over the decades. They consider it out of place in a competition law instrument, and point out that the general competition rules can be used to control arbitrary abuses on the part of the supplier. So they can, but the process of invoking them (and moving national competition authorities to enforce the rules) will be long, complicated and expensive.
If the Commission is determined to lift the burden of regulation on the manufacturers, it should be putting in place protection for dealers similar to that given to commercial agents in the European Community and to auto dealers in most if not all states in the USA. If manufacturers could recognise that they are in it together with their dealers, and treat them as the independent experts they are supposed to be rather than micro-managing every aspect of the dealer's business, we might achieve a satisfactory outcome without legal intervention: but the history of the block exemption tends to show that more not less regulation of the manufacturer-dealer relationship is needed to preserve an appropriate balance in the market.
Suppliers are taking every opportunity to exercise more and more control over dealers, but this is nothing new. It was going on before we ever had a block exemption, and is an unavoidable consequence of the fact that the public face of the supplier is the dealer. All the valuable goodwill - the attractive force that brings customers back for more, or gets them interested in the cars in the first place - is in the hands of the independent dealer. Is it any surprise that car makers will cast around for anything that enables them to protect that reputation?
The important point is that surely that the process is reaching a new level. Every few years, the car makers' scope for exercising control over dealers has been diluted by the latest iteration of the block exemption regulation. It is due to happen for the fourth time in 2010, although the dilution of the car makers' powers has never been as great as dealers would have liked. In between new regulations, the car makers have striven to get back the control they lost, and more.
This time, when the Regulation is replaced, the chances are that dealers will find the outcome uncomfortable. The Commission, which in 1995 was moved to replace block exemption v1 following an extraordinary demonstration of how suppliers could exercise arbitrary power over their dealers (from memory, it was the president of CECRA whose franchise was terminated for no apparent reason, though I am sure that this is a gross oversimplification), is now set to remove all the dealer protection stuff that has been lobbied for and written into the regulation over the decades. They consider it out of place in a competition law instrument, and point out that the general competition rules can be used to control arbitrary abuses on the part of the supplier. So they can, but the process of invoking them (and moving national competition authorities to enforce the rules) will be long, complicated and expensive.
If the Commission is determined to lift the burden of regulation on the manufacturers, it should be putting in place protection for dealers similar to that given to commercial agents in the European Community and to auto dealers in most if not all states in the USA. If manufacturers could recognise that they are in it together with their dealers, and treat them as the independent experts they are supposed to be rather than micro-managing every aspect of the dealer's business, we might achieve a satisfactory outcome without legal intervention: but the history of the block exemption tends to show that more not less regulation of the manufacturer-dealer relationship is needed to preserve an appropriate balance in the market.
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