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UNFAIR TRADING PRACTICESBack

EuropeanFollowing the removal of the sector specific Block Exemption for the automotive sector in 2013, there has been a need for more protection for franchised dealers in their relationship with their manufacturer.

Until the sector specific Block Exemption was removed dealers were afforded a number of protections. These included the ability to multi franchise, and were able to choose who they sold their business to. In addition, manufacturers had to give a dealer objective and transparent reasons for termination. These protections all disappeared into 2013 and significantly shifted the balance of power in the dealer manufacturer relationship.

Since the new Block Exemption landscape was announced the NFDA and its members have been increasingly concerned that manufacturers will use the changes to put more restrictions and controls on dealers, and indeed over recent years we have seen some significant changes to dealer contracts that increase the power of the manufacturer to control a dealer’s business.

The NFDA has been campaigning long before the Block Exemption Regulations changed for an industry Code of Practice to enshrine the key protections mentioned above. This has been a long running battle which so far has not borne fruit with only a cursory voluntary Code being developed by the European manufacturer body, ACEA.

We have continued to lobby the European Commission to investigate the relationship between dealers and manufacturers and two years ago the Commission undertook a study into Unfair Business to Business Practices. The study was broader than the automotive sector and included other sectors where there is a dominant partner, including groceries. However, respondents to the study were numerical greater from the automotive sector than any other suggesting there is a serious problem.

The NFDA responded to the study having first carried out a survey of members. We had a very large response rate to our survey with dealers making comments such as:

  • Manufacturers frequently and unilaterally changing dealer contracts.
  • Contracts are becoming more complex and less transparent.
  • Manufacturer practices undermine dealers’ ability to plan and manage their operations efficiently and effectively.
  • Increasing controls over sales are being used to limit competition.
  • Dealers pressurised to comply with unfair manufacturer requirements.
  • Dispute resolution is largely inaccessible.

Since the study, the NFDA, along with European car dealers, have lobbied hard for the Commission to take action. Recently, through the Cars2020 project, the Commission have instructed manufacturers to develop a voluntary Code that gives proper protection to their trading partners, in other words dealers. If they fail to come to an agreement, the Commission have said they will legislate. This is a huge win for the NFDA and its dealer members.

We are now in the process of setting up meetings in Brussels with key officials from the European Commission to take this forward. We will keep you informed of our progress.

 

 

 

 

 

 

 

Posted by Sue Robinson on 20/07/2014