Members of the European Parliament voted last week to delay the introduction of elements of the new car distribution block exemption rules until 2005, and tabled a series of amendments to the proposed new regulation.
The non-binding vote casts doubt on the September 30, 2002 deadline for introducing new rules to govern the relationship between car manufacturers and their dealers within the European Union.
The European Commission has proposed major reforms to the current rules to enhance competition in the new car market and facilitate cross-border trade. The EC also wants to see keener competition in the service and maintenance aftersales market.
MEPs, however, want to delay until 2005 rules that would allow dealers to advertise outside their exclusive sales territories.
Trade and Industry Secretary Patricia Hewitt said she accepted the current shape of the European car market was not working, but added that she also understood the concerns of dealers and manufacturers about the potential effect of proposed changes.
Hewitt said: 'Because of industry concerns about the possible disruption caused by the reform of geographic limits on dealer operations coming into force with the rest of the proposals in October next year, we have listened to requests for more time to adjust and therefore have indicated to the European Commission that we would not oppose a six month delay. However, this change is an important part of the reforms and so should come into effect in due course, without further review.'
Chancellor of the Exchequer Gordon Brown gave his backing to changes to the block exemption as a catalyst to lower new car prices.
He said: 'Competition law is an important safeguard of the consumer interest. These proposals will deliver benefits to consumers, and I am confident that the necessary decisions will be taken to ensure they become a reality.'