Conferences and Training
The 2003 Motor Law conference, was chaired by its regular Chairman,
David Evans of the Retail Motor Industry Federation.
Chairman David Evans of the Retail Motor Industry Federation set the scene for the first session of the day at the recent Motor Law Conference as he reminded delegates of the recent statements by Mario Monti, the European Commissioner for Competition Policy, that just as he was determined to see the reform of the motor industry block exemption through, he is as determined to see that it works.
The conference was attended by more than 80 delegates and held at the Royal Automobile Club in London on 19 February. Delegates were reminded that in a speech made on 6 February by Mr Monti, he had commented “In the 19th century, a respected scientist stated that no vehicle could possibly go past 30 miles per hour, since past this speed the driver would suffocate. Last year, some people were making similarly ominous predictions about the new block exemption. I am therefore glad to see that we are all still here now that the critical moment has passed and that we can consider the implications of the regulation in a more objective manner. Whatever you think of the detail, you cannot escape the fact that the Regulation is now a reality, and it is a reality that I am determined will not be ignored…The injection of competition brought about by the new block exemption will lead to a real Single Market in motor vehicles, to better customer service, and to more competitive prices in an area which currently accounts for around 16% of the average household budget”.
During a lively session which continued after the coffee break, a panel of speakers gave their different perspectives of the impact of the regulation, and responded to comments and questions from the floor. Fred Maguire, Chairman of Lookers plc, and President of the RMI started the discussion by identifying the main issues for franchised dealers and their major causes for concern. Manufacturers had the balance of power by controlling contracts, and retaining the right to appoint and terminate dealers. The new Regulation might have created a new playing field, but the ball still belonged to the manufacturers. He was concerned about a lack of consistency between manufacturers, and the failure of some to produce their new contracts. Franchised dealers had to fight to keep the aftersales business, which their customers expected, and were prepared to pay for. Independents coming in as authorised repairers would have to invest heavily in order to compete, and he wondered how far they would be able to match the service offered by franchised dealers. Finally, he felt that the parts side of the business offered an opportunity for increased margins by using non-OE equivalent parts, but wondered how vehicle manufacturers would react.
A critical view of the reaction so far to the new Block Exemption from vehicle manufacturers was given by Colin Parlett, Chief Executive of independent repairer CB Motors. He highlighted the areas where he felt that vehicle manufacturers had not yet taken the steps that the regulation required, for example publishing the criteria for authorised repairers, and the provision of access to technical information. He believed that it was vital for independent repairers and franchised dealers to work together to get benefits from the Regulation. The issue of service and warranty work by non-franchised repairers was discussed by delegates. One view was that the manufacturer would be concerned that work done outside the network would be done by people with unknown skills, but that manufacturers do not police who actually does servicing work. Servicing paid for by the customer could be distinguished from warranty work, and servicing done by a non-franchised repairer might not be a problem for some manufacturers unless the work was relevant in respect of the warranty claim.
Adrian Watts, a solicitor and legal adviser to DAF then gave the truck manufacturer’s perspective of the effect of the new regulation. The truck industry has special features – a different product, customers and market, but the Regulation only differentiated it from cars on one point – the location clause provisions. The aim of the new pan-European dealer agreement being developed by DAF was not to lose market share, or customer service, but at the same time to ensure full compliance with the Regulation thus avoiding marginal calls. He felt the major challenges were to remove any interdependence between sales and service, the setting of proper standards for applicants and the terms for access to training, equipment and information.
Peter Groves, an independent legal adviser and the editorial consultant to Motor Law, was the final panellist. He reminded the delegates of the legal background to the regulation and the aim of competition policy to benefit the consumer, but asked – was the Commission prepared to enforce the Regulation? There had only ever been one withdrawal of a block exemption and that was not in the motor trade, and there were difficulties in complying with a complex regulation, while the European Commission were not able to deal with the distortions caused by VAT and other price differential issues. The point of enforceability was picked up by the audience, and comparisons drawn with the lack of enforcement of the UK New Car Pricing Order. It was pointed out that the OFT were now taking on more enforcement officers, and the industry could not afford not to comply. The Chairman reminded delegates again of other recent comments from Mr Monti: “ This regulation will not be like some kind of concept vehicle that looks very pretty, but has no real use in practice. Put bluntly, where we detect problems, we can and will act vigorously to enforce the rule. In the past, we have done so in areas such as price fixing and export bans. We will be equally tough when it comes to the new freedoms offered by the block exemption, and will react decisively if there is any attempt to prevent their proper implementation. In line with the recent modernisation of EC competition law, enforcement will be carried out in close cooperation with the national competition authorities”.
Other topics discussed at the conference included the criminalisation of cartels under the Enterprise Act, and the difficult issues of conflict of interest between companies and their directors who could have personal liability, the new OFT approach to codes of practice, the consumers' view of the new amendments to the Sale of Goods Act, and a review of product safety and product liability legislation.