Fleet News

Warning shot fired in price war

THE Competition Commission has fired a warning shot across the European new car distribution system but reserved judgement on the prices of new cars in the UK. The commission's New Cars Inquiry this week issued a remedies statement which asked for views on matters which may 'operate against the public interest'.

The statement questioned whether manufacturers and importers should be 'required to offer dealers terms no less favourable than those offered to fleet customers buying cars in the same volumes.' It also sought industry reaction to a possible prohibition of recommended retail prices, which if outlawed would cause chaos to the current company car tax system, and queried whether manufacturers should be allowed to discriminate in the terms they offered to the business and retail customers of contract hire companies.

On the issue of pricing, the commission said it had 'not yet reached any conclusions'. But the main focus of the remedies statement was the selective and exclusive distribution system (Block Exemption) which governs new car supply across Europe. The Competition Commission is not convinced that the advantages of the Block Exemption outweigh its disadvantages, and has invited views on whether the exemption 'should be succeeded (in 2002) by a further regime which would be specific to the car industry but considerably less restrictive than the existing one'.

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