France: French Competition Authority Launches Sector Inquiries Into E-Commerce And Motor Vehicle Repair And Maintenance Markets

On 4 July 2011, the French Competition Authority announced the launch of two sector-wide inquiries concerning, respectively, the motor vehicle after-market and the e-commerce market.

Motor vehicle after-market

As regards the motor vehicle after-market, the French Competition Authority made two main observations in deciding to initiate the inquiry. First, it noted that vehicle repair and maintenance prices have increased by 35% since 1998 (i.e., 2.5 times the rate of inflation) and that the price of spare parts alone climbed by 30% between 2000 and 2009 (compared to a price increase for new motor vehicles of 8%). According to the Competition Authority, this price inflation can only be partly explained by the rise in raw material and labour costs. Second, the Competition Authority recalled that the previous Motor Vehicle Block Exemption Regulation (Commission Regulation 1400/2002) guaranteed equal terms of access for independent and authorised repairers alike to spare parts and technical information and that the new block exemption regime applicable to the motor vehicle after-market (in force since 1 June 2010) similarly confirms the importance of unrestricted access of independent repairers to spare parts and technical information. Yet, according to the Competition Authority, in the majority of cases vehicle owners still seem to have their car repaired and maintained in a garage which belongs to a network authorised by the manufacturer (these networks having over 80% market share for cars under two years old in 2006).

By means of the sector inquiry, the Competition Authority will seek to determine the causes of this situation. In particular, the Competition Authority will first examine whether the conditions of access to manufacturers' spare parts and to technical information permit proper and effective competition between independent and authorised repairers. Second, the Competition Authority will examine whether all spare parts manufacturers have access to spare parts distribution networks under equivalent conditions. Finally, the Competition Authority will examine the market impact of the monopoly rights of vehicle manufacturers stemming from the design rights over visible parts (i.e., windows, lighting or bodywork components) granted to them under French IP law.

E-commerce market

Turning to the initiation of the inquiry into the e-commerce market, the French Competition Authority noted that online sales only account for 6% of the retail market in France (compared to 8% in Germany and 10.7% in the UK). Nonetheless, the Competition Authority conceded that online sales are growing very fast in France (sales grew by 29.5% between 2008-2010 compared to 19% in all European countries).

Against this backdrop, the sector inquiry aims at examining how competition works in the e-commerce sector and will focus on two main issues. First, the inquiry will evaluate the impact of online sales on traditional distribution channels (notably with respect to prices). To this end, the Competition Authority has announced that it will examine the price differences between online sales and sales in physical stores for certain product categories. Second, the inquiry aims at examining the various factors which are likely to reduce the competitive pressure of online sales on traditional distribution channels. According to the Competition Authority, these factors may include:

  • The fact that some online distributors may have market power. In the Competition Authority's view, practices which would have the object or effect of maintaining such market power, by impeding the emergence of competing online websites, are likely to create competition law issues.
  • The commercial relationships between manufacturers or distribution networks, on the one hand, and online distributors on the other hand. In this respect, the Competition Authority announced that it will examine restrictions on online sales imposed by manufacturers or by distributors.
  • The behaviour of the various online intermediaries (such as online intermediaries providing electronic payment, delivery or price comparison services). In particular, the Competition Authority announced that it will carefully examine the way price comparators work to ensure that the comparison of products and services is transparent and objective.

The Competition Authority will invite the main players in the e-commerce sector to attend hearings during the investigation.

In each sector inquiry, the Competition Authority will ultimately make the recommendations which it deems appropriate to ensure effective competition in the respective sectors.

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.

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