12 May 2000

The existing European car distribution system, which gives manufacturers control over automobile retailing, does not work to the benefit of consumers or dealers, believes EU competition commissioner Mario Monti.

Speaking to a conference of motor manufacturers in Brussels, Mr Monti hit out at the car industry over its restrictive sales system, signalling that he could seek radical changes to the current regime which extends to car-makers competitive exemptions not enjoyed by any other European industrial sector. These historical concessions, which allow the industry to operate tied dealer systems, are due to end in 2002.

Said Mr Monti: "The car manufacturers at least do not seem to have much respect for the 'highway code' (block exemption) which is very generous towards them. Such misconduct will of course also play a role in the evaluation exercise now under way", adding that effective competition in the car sector was “questionable”. He stressed that his mind was still open on what should succeed the current system. EC officials are currently preparing a report on the way the existing system works but, said Mr Monti, he could not ignore protests such as the petition organised by the UK Consumers' Association and signed by 20,000 people complaining they were being "ripped off".

The manufacturers’ view was put by Paolo Cantarella, chief executive of Italy's Fiat Auto, who claimed that car-makers needed the current rules so that they could provide “a better service for customers” through an exclusive dealer organisation. Europe’s consumer groups, on the other hand, have long argued that the special distribution rules have helped keep prices for cars high and restricted cross-border sales.

News source: Financial Times