Tuesday, June 20, 2023
On 17 April 2023 the European Commission (the “EC”) published Regulation (EU) 2023/822 extending the duration of Motor Vehicle Block Exemption Regulation (EU) No 2010/461 (MVBER) for a further five years, until 31 May 2028, along with the updated Supplementary Guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles (2023/C 133 I/01).
By way of background, in July 2022 the EC launched a stakeholder consultation and a call for evidence on the draft Regulation prolonging the MVBER for five years and draft Communication amending the Supplementary Guidelines.
As advised in our Newsletter published on 1 August 2022, the EC has focused on updating the General Verticals Block Exemption Regulation (EU) (VBER 2022/720), left Reg. 461/2010 unchanged (other than extending its duration) and only issued Amendments to the Commission Notice “Supplementary guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts”. The new Supplementary Guidelines state that independent operators should now have access to vehicle-generated data as essential inputs for repair and maintenance services. Apart from these amendments in the Supplementary Guidelines, the EC’s approach to market definition and independent repairers’ access to authorized repairer networks has remained unchanged.
The EC has retained the 40% threshold for quantitative selective distribution. Point 56 of the old Supplementary Guidelines which states that “quantitative selective distribution will generally satisfy the conditions laid down in Article 101 (3) of TFEU if the parties’ shares do not exceed 40%” remains.
As presented in detail in our previous newsletter, the EC’s positions regarding market definition in the automotive sector remains unchanged despite the changing landscape of the automotive market. Specifically, the relevant parts of the previous Supplementary Guidelines (Points 13, 15 and 57) concerning the bifurcation of the markets into a “primary” market relating to the distribution of new motor vehicles (primary market) and an “after-market” relating to the spare parts and repair and maintenance services(after-market) remain unchanged. It is recalled that the EC acknowledges that market definition may differ in circumstances where consumers or businesses take after-market costs seriously into consideration when purchasing a motor vehicle, such as trucks and busses, in which case there is a “system” market, which includes motor vehicles and spare parts and technical support (footnote 1 of Point 57). It is disappointing that the EC did not address the changing automotive landscape, the advent of electromobility or the changing ownership patterns in favour of long-term lease vehicles, subscription schemes etc.
Therefore, the notion of a “brand specific” aftermarket, will continue to cause uncertainty and raise concerns an lead to qualitative selective distribution after-market networks.
As a consequence of the “brand specific” theory, the position of the EC as regards entry to authorized repairer networks has also not been revisited. The EC insists that as the after-market is still dominated by the brands and hence all firms that meet manufacturers’ specified quality criteria should enjoy access to authorized repair networks. Refusals to allow entry will continue to generate legal disputes. The EC chose not to respond to market developments, such as electrification, changing consumer preferences and new mobility patterns. Overall, the motor vehicle industry is currently undergoing multi-faceted and complex transformations, which put the entire sector under pressure. The current flux in the motor vehicle sector should suffice to advocate in favour of manufacturers enjoying an increased degree of flexibility to adapt the authorized after-market networks to changing market circumstances.
The extension of the MVBER’s term allowed at least a new look at aspects of digitalization.
The EC has updated its Supplementary Guidelines for the motor vehicle sector, in particular to address the increasingly important issue of vehicle-generated data, which is now viewed as an input to which independent parties in the repair and maintenance sector must have access:
Newsletter drafted by Mariangela Papageorgiou, Associate; Nikolas Papadopoulos, Associate; and Catherine Kouvaris, Junior Associate, in collaboration with Gregory Pelecanos, Senior Partner. The newsletter is not intended as legal advice. For advice on this and other competition law matters please contact Gregory Pelecanos at [email protected]