The European Commission has proposed revised competition rules for new car retailing which it claims will increase price competition, boost cross-border purchasing and provide fleets with more choice of aftersales servicing and maintenance suppliers.

The new draft regulation aims to remedy the problems identified in the commission's evaluation of the current Block Exemption in 2000.

Competition commissioner Mario Monti, who has been one of the most vocal opponents of the existing scheme, said: “This bold initiative encourages diversity and choice in motor vehicle retailing and puts the European consumer firmly in the driver's seat.”

The EC insists it is not putting forward a 'rigid formula', but rather leave carmakers, distributors and dealers with a set of choices.

Key points of the draft regulation include:

multi-brand dealerships
Retailers will have a choice as to whether they sell more than one brand, giving dealers greater 'commercial independence' and increasing their profitability potential.

make it easier for consumers to exploit lower prices in EU countries
Existing restrictions on operators who act on behalf of consumers to buy cars will be lifted. These intermediaries will 'only have to produce a mandate showing they are acting on behalf of a consumer'.

greater freedom for dealers to transact across EU borders
Dealers will be able to advertise outside of their territories and send personalised emails and mailshots to consumers anywhere in the EU without having financial penalties imposed on them by manufacturers or made subject to stock quotas.

improve choice while maintaining quality in the service and repair sector
Dealers can choose to carry out repairs or sub-contract them to another authorised member of the manufacturer's network. Provided a repairer meets a manufacturer's quality standards they do not, however, need to sell new cars.
Independent repairers must also be given access by manufacturers to technical information, tools, equipment and training. They must also be allowed to supply original parts, or parts of a matching quality.

recalls
For recalls, free servicing and repairs under warranty, authorised repairers 'may be obliged' to use original spare parts supplied by the manufacturer.

The draft regulation is now subject to consultation and discussion by 'eurocrats'. It is due to come into force on October 1, 2002.

Earlier this week the Office of Fair Trading released a wish-list of changes in Block Exemption, the selective and exclusive car distribution system. The EU's proposals largely concur with the OFT's expectations which were:

exclusive sales territories for dealers should be abolished

suppliers' dealer selection criteria should be as open as possible

the requirement for dealers to sell only one make of car from their showrooms should be removed

the link between sales and servicing should be broken

independent garages should be able to compete on a fair basis with authorised dealers for servicing and repair work, for example, by manufacturers giving them better access to parts, equipment, information and training.