On 8 October 2012, the French Competition Authority ("FCA") published the results of its sector inquiry concerning motor vehicle maintenance and repair. In its opinion, the FCA has made several recommendations intended to address the five barriers to competition that it previously identified in its preliminary report and in respect of which it launched a public consultation (see VBB on Competition Law, Volume 2012, No.4, available at www.vbb.com).
First, the FCA pointed to the high level of protection given to visible spare parts (wings, bumpers, windscreens, mirrors, etc.) by industrial design rights whereby only the vehicle manufacturer has the right to distribute these parts to repairers. This results in vehicle manufacturers holding a legal monopoly over 70% of visible spare parts, and a duopoly with automotive equipment manufacturers over the remaining 30%.
In its report, the FCA has suggested amending the law by introducing a so-called "repair clause" which would remove the protection in respect of spare parts destined for repairs. Such a clause has already been introduced by 11 other EU Member States, including Germany and the UK. In order to take into account of the current economic difficulties faced by the car industry, the FCA proposes to remove this legal restriction gradually and in a controlled manner per family of parts.
The second recommendation relates to the limited availability of spare parts to independent repairers compared to authorised network repairers and, in particular, the difficulty encountered by original equipment manufacturers ("OEMs") to market spare parts that they manufacture on their own behalf. In its report, the FCA promises to scrutinise, on a case-by-case basis, any contractual restrictions between OEMs and motor vehicle manufacturers whereby OEMs are discouraged from selling spare parts to independent repairers or, where they do make such sales, causing them to sell at higher prices. The FCA also recommends that the law be changed so that OEMs producing parts on behalf of a vehicle manufacturer may remove the latter's logo from the parts without breaching IP law, thereby encouraging the sale of spare parts directly to the aftermarket by the OEM.
The third barrier to competition identified by the FCA is the limited access for independent repairers to technical information necessary for repair and maintenance under conditions similar to those enjoyed by authorised network repairers. In the view of the FCA, competition law is not designed to deal with sporadic denials of access but it will apply in cases where there are significant obstacles which may result in competition barriers on the downstream market. With that in mind, the FCA is of the view that efficient control mechanisms and also credible deterrents should be set up in respect of access to technical information. In addition, the FCA is in favour of an extension of the current standardisation process in this respect.
The fourth recommendation relates to the inclusion of clauses in the warranty of a motor vehicle manufacturer that discourage consumers from turning to independent repairers because they believe they will lose the benefit of their warranty if they do so. The FCA has stated that the provisions of a motor vehicle's warranty should be as clear as possible with regard to the possibility for the consumer to use the services of an independent repairer without losing the benefit of the warranty. Otherwise, such clauses may fall to be assessed under competition law on a case-by-case basis.
The final barrier to competition identified by the FCA concerns the widespread practice of issuing recommended retail prices for spare parts. A particular concern of the FCA is that this practice may lead to a convergence of recommended prices between the independent and the manufacturer channels. The FCA has stated that, where this is the case, the recommended price mechanisms and exchanges of information in question would fall to be assessed under competition law.
The full text of the FCA's report is available (in French) at: http://www.autoritedelaconcurrence.fr/pdf/avis/12a21.pdf.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.