Brussels, 12/09/2001 (Agence Europe) - On 11 September, the European Parliament gave its word to the various actors involved in reform of block exemption in the automobile sector. The block exemption was set to expire end September 2002 and the Commission must decide by the end of this year whether it is appropriate, or not, to extend the system. The public hearing allowed stock to be taken of the way in which the current system works, and, if all participants agree, to consider that pure and simple renewal of the block exemption, without amendments, is not desirable. Opinions differ considerably between automobile manufacturers, those who support minimal changes, and the consumer associations, represented by BEUC, which recommend radical reform. Regarding the decision-making process, EUROPE recalls that the Commission is the only body qualified to deal with the matter. The Commission has, however, organised broad consultation with the actors concerned in order to have maximum information before taking a decision. The European Parliament's Economic and Monetary Committee has, for its part, entrusted MEP Christoph Konrad (EPP-ED, Germany) with the task of establishing a working paper that takes stock of the situation and whose conclusions were the point of departure for Tuesday's discussions.
Opening the debates, Mr Konrad stressed the need for reform of the current system that he does not find works very satisfactorily. He said that this does not mean there will no longer be a Regulation, but that one should work towards a compromise, a bridge between the old Regulation and the new. He went on to urge the European Executive to speed up the drafting of the new project. He said he found it unacceptable that information should take so long in coming and thought the Commission should recognise what road it should take. The MEP was in favour of extending the current system as long as it was significantly updated. He proposes a transitional period of seven years during which the exemption would remain, while reforms get underway.
First to take the floor, it was no surprise when, speaking on behalf of the automobile manufacturers, Mr J.-M. Folz, President of the PSA Peugeot Citroën group and Mr W. Schneider, Vice-President of Ford Europe, recommended renewal of the current system accompanied by changes more appropriate to developments in the sector. Mr Folz, who addressed a warning to those who support overturning the system, stressed that the current system is fragile and that the socio-economic stakes are heavy. He also refuted the argument whereby the current system prevents full competition. He said Europe is the world market where competition between car makes is the strongest and that competition has promoted a continued fall in real prices in Europe. Mr Schneider admitted, for his part, that there were weaknesses in the current system but that the system was the best for consumers who will find it difficult to find the most reassuring solution in a fully liberalised market. "Evolution, yes; revolution, no", he concluded.
The debate then allowed traders to express their views. Mr R. Branson, President of VirginCars, recommended the abolition of current block exemption regulations which, in his view, "do not benefit the consumer". Distributors must be authorised to sell different makes of cars, without discrimination, he said, advocating that there should be many brands on the market and that the sales and after-sales services should be quite distinct. Furthermore, he stressed that the administrative procedures of the current system are an "unbearable" burden. Mr J. Creutzig, President of CECRA (the European Council for Motor Trades and Repairs) said he was in favour of making multi-brand rules more flexible, but at the same time he defended the system in force, whose effectiveness has been already been demonstrated and whose abolition, he believes, would not entail fundamental price falls.
On the side of those defending consumer interests, Mr J. Murray, Director of BEUC (the European Consumer's Organisation), sought to convince the assembly of the need to make fundamental changes to a system that restricts competition, entailing a price increase and fragmentation of the single market which, he believes, is detrimental for consumer interests. Seizing the opportunity provided, he presented concrete proposals for drafting a new project that would put an end to the current anti-competitive practices due to the "abusive" control of automobile manufacturers on the choice of cars and sales conditions. BEUC nonetheless acknowledged the fact that the automobile manufacturers must be able to continue establishing strict norms in order to promote sales and maintenance security. Security and quality may, however, be reconciled with consumer choice, says BEUC, which also urged for the automobile repair and servicing services to be open to competition, thus allowing independent garages to have access to technical information and spare parts. The independent car repairers, represented by Mr F. Svedborg, expressed themselves along the same lines, stressing the extreme difficulty that operators in the sector have to provide a quality service in an environment characterised by rapid technological developments requiring major investment.
The Commission now has all the elements it needs to develop a new project that meets the concerns of all parties involved. The exercise looks as though it will be a difficult one, given the power of the automobile lobby which could put decisive pressure on to renew the system. The call for radical change in the system, made by the consumer associations, cannot leave the Commission indifferent. An intermediary system would therefore be a solution that the European Executive might prefer.