German Court dismisses repair shop action over right to be admitted to a passenger car manufacturer’s authorised repair network

Consumer Welfare in EU Competition Law: What is It (Not) About? by Victoria Daskalova :: SSRN

Consumer Welfare in EU Competition Law: What is It (Not) About? by Victoria Daskalova will be of interest to anyone concerned about the working of the block exemption - like me. The abstract reads:

"More than a decade after the proclamation of consumer welfare as a goal of EU competition law, a fundamental question remains unanswered: namely, what is the content of the EU consumer welfare standard? What types of benefits and harms count respectively as welfare and as harm? Whose harm and whose benefit is included in the definition? Few answers have been available to these crucial, from a legal perspective, questions.

The goal of this article is to explore the meaning of consumer welfare in terms of these questions. In particular, considering the assumption that the notion of consumer welfare in EU competition law is borrowed from economics, the article will attempt to verify to what extent consumer welfare coincides with the notion of consumer surplus in economics. The focus is therefore on 1) whether consumer can be taken to mean the final consumer or the intermediary purchaser and 2) whether the notion of harm refers primarily to price effects. Part I of the paper focuses on the definition of consumer welfare in antitrust law and in economics. Part II considers the definitions of consumer welfare in the Commission’s soft law and argues that a finding of an end user surplus cannot be supported. Part III turns to the jurisprudence of the European Courts and argues that support for end-user surplus cannot be found in the Court’s case law. The paper concludes that although we do not find support for an end-user surplus standard in the Court’s jurisprudence, the change in language in the 2012 Post Danmark ruling leaves us wondering as to whether and in what direction the Court’s approach might change."

If you feel an urge to read the 26-page article in full, you can download it from the link above.

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Another trip down memory lane: Richard Cound v BMW, Clover Leaf Cars v BMW

While I am on the topic of old law which we should not forget (a couple of weeks ago it was the Supply of New Cars Order), I thought it worth mentioning these two important Court of Appeal cases on the block exemption. The first one, that is, but potentially still relevant. The trouble is I don't have complete reports, but on the basis that something is better than nothing and I want to have a readily-accessible note of the cases I thought it worth writing as much as I could here.

Richard Cound Ltd v BMW (GB) Ltd [1997] Eu. L.R. 301 was decided on 10 May 1995. The judges in the Court of Appeal were Balcombe LJ, Pill LJ, and Sir Roger Parker. Clover Leaf Cars Ltd v BMW (GB) Ltd [1997] Eu LR 53 was decided in the Court of Appeal (Staughton LJ and Thorpe J) on 28 December 1995 (and at first instance in the Chancery Division, apparently on 20 December that year, by Rattee J). Given that the termination of the dealer agreement in the second case was to take effect on 31 December, one can see perhaps why the courts dealt with it so urgently. (I don't at present have information about the situation in the Cound case, but as I recall the same facts applied - BMW terminated the agreement from 31 December 1995 - but the case was brought a bit more promptly.) In the Clover Leaf case, and (subject to confirmation) in Cound too I think, the key fact was that the dealer had been taken over by a PLC and BMW did not want too many of them in its network, so it gave (as it was entitled to do) 12 months' notice.

In each case, the important matter was not really whether the restrictions in the agreement on ownership were prohibited by Article 85(1) (as was, and in my mind often still is) and, if so, exempted by Regulation 123/85: the manufacturer's freedom to terminate without having to state a cause (to terminate for convenience) on 12 months' notice was enough to make the termination lawful. What was really interesting was the contention by the plaintiffs that the allegedly prohibited and therefore void provisions of the contract could be severed and the rest of the contract enforced without them. The court held that the issue of severance was governed by English law, following Chemidus Wavin Ltd v Societe pour la Transformation et l'Exploitation des Resines Industrielles SA [1978] 3 C.M.L.R. 514. The judge in Cound had been right to conclude that the effect of severance would have been to alter the character of the agreement and that the agreement did not permit the excision of void terms such as to alter its scope and intention entirely: Hinton & Higgs (UK) Ltd v Murphy 1988 S.C. 353. In Clover Leaf, the court was able to follow the judgment in the earlier Cound case.

Also noteworthy, I think, is the court's holding (in both cases) that the termination was to be viewed as unilateral conduct by the manufacturer, not as something that constituted an agreement.

Brand-retailer relationships strained | Auto Retail Network

Brand-retailer relationships strained | Auto Retail Network:

"Relationships between franchised dealers and car manufacturers have fallen even further since summer 2014, according to the latest NFDA Dealer Attitude Survey. Asked how they rated their manufacturer overall, the average score was 6.5 out of 10, down 0.1 points since the summer 2014 survey and down 0.7 points since last winter."'via Blog this'

Skoda Auto fined CZK 49 million for margin fixing

Reuters reports that Škoda Auto has been fined CZK 49 million (which converts to a much less-impressive-souding £1.3 million) for margin-fixing. The penalty was imposed last December, but only now published after documents had been suitably redacted to remove confidential information. The manufacturer's offence was to fix margins with its Czech dealers in 2011 and 2012.



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AW: Direct sales approach gaining momentum in US

Automotive World (subscription required) reports that direct sales, cutting out the franchised dealers, are becoming more popular. Perhaps some would argue that the level of legal protection enjoyed by dealers in the US is encouraging manufacturers to find other ways to engage with customers?

Be careful with free offers

The BBC News website reported last week (before I became diverted by the election) that a dealer had found itself being taken advantage of: 'Free meal' garage customer's £700 bill at top London restaurant. A customer offered a meal out for two in apology for damage caused to her car on the premises managed to run up a bill of £714, including a surprising amount of alcohol ("four glasses of champagne, two bottles of wine costing £69 each, six cocktails totalling £86 and a sloe gin": is that humanly possible?). The dealer is offering to split it with the customer, which (knowing only what is in the BBC report) seems to me to be highly optimistic: even if there is no legal obligation (and this could be no more than a gift, with no consideration to make it a binding contract, as the actual damage was fixed and a courtesy car provided) it plays very badly in the media.

Of course, the solution is quite simple, and the dealer is no doubt kicking its corporate self for missing the obvious: put a cap on the amount you'll spend. And there is nothing to stop someone in the same position designating the restaurant too, providing an opportunity to give a customer a little business at the same time as making a disgruntled customer a little more gruntled.

On another point, as I have frequently observed the motor trade is in the odd position of manufacturers' goodwill being in the hands of its dealers, a matter which the manufacturers have in fact exacerbated over the past decade by increasing the prominence of their own identity over that of the actual dealer. The result is that the wronged party in this story, which now might be seen to be squirming to try to claw back a sum of money that the public will probably consider paltry by its standards, is not the dealer but Audi. (That makes it even more paltry, of course.) It is sad to see anyone trying to do the right thing being so badly taken advantage of, but it's worse perhaps when that person is wrongly identified.

Tesla, Dealer Franchise Laws, and the Politics of Crony Capitalism by Daniel A. Crane

Cross-posted from the Motor Law blog:

Thanks to Public Lawyer's Consumer Law & Policy Blog  I can bring to your attention an interesting article entitled Tesla, Dealer Franchise Laws, and the Politics of Crony Capitalism by law professor Daniel Crane. Here's the abstract, to save you following the link back to CL&P:

Tesla Motors is fighting the car dealers' lobby, aided and abetted by the legacy Detroit manufacturers, on a state by state basis for the right to distribute its innovative electrical automobiles directly to consumers. The Tesla wars showcase the important relationship between product innovation and innovation in distribution methods. Incumbent technologies may block competition by new technologies by creating legal barriers to innovative distribution methods necessary to secure market acceptance of the new technologies. While judicial review of such special interest capture is generally weak in the post-Lochner era, the Tesla wars are creating new alliances in the political struggle against crony capitalism that could contribute to a significant re-telling of the conventional public choice story.

I can, I hope, perform a useful service by explaining the significance of Lochner v. New York, 198 U.S. 45, (1905), a case which marked the beginning of what is now called the Lochner era in the Supreme Court, marked by the Court's using its interpretation of substantive due process to strike down laws held to be infringing economic liberty or private contract rights, including state legislation that regulated business. The relevant Wikipedia entry will tell you probably all you need to know, perhaps rather more. The era came to an end with the Court's decision in West Coast Hotel Co. v. Parrish, 300 U.S. 379 (1937), where it upheld minimum wage legislation introduced in Washington State and thereafter took an attitude more favourable to the New Deal than had previously been the case. (It is thought that Roosevelt was about to pack the Supreme Court with new appointments who would take a different view of the constitutionality of his policies, but in the end it was not necessary.)

Four former Chrysler dealers could reopen under U.S. appeals court ruling

Four former Chrysler dealers could reopen under U.S. appeals court ruling according to Automotive News. This comes as the result of a decision of the 6th Circuit Court of Appeals, which held earlier in January that the federal law which created the arbitration process in which the dealers won against the manufacturer prevailed over state laws that would on their face allow nearby competitors to challenge the reopenings.