On 21 December 2011, the Düsseldorf Higher Regional Court (the Court), sitting as the court of last instance, decided an important case concerning the right of a manufacturer of passenger vehicles to refuse to appoint a repairer applying to be admitted to its authorised repair network. The European Commission's position is that, in general, all qualified repairers must be admitted to an authorised network owing to the market power enjoyed by an authorised network in the brand specific after-market where services are provided to end customers. However, this judgment rejects the relevance of any brand-specific downstream market in assessing the limitations on membership of the repairer network and, instead, considers that the assessment should be conducted on the basis of the competitiveness of the relevant purchase market on which repairers source the inputs necessary to provide repair and maintenance services.
In an earlier case, the German Federal Court of Justice (BGH) issued in March 2011 its MAN judgment concerning access to an authorised repairer network for commercial vehicles (MAN, see VBB on Competition Law, Volume 2011, No. 4, available at www.vbb.com). In that case, the BGH defined an upstream market on which repairers, on the demand side, sourced from vehicle manufacturers, on the supply side, products, services and rights which would facilitate entry into the downstream market(s) for the provision of repair and maintenance services for commercial vehicles to end customers. This upstream market was not defined as being brand-specific. The question of whether or not the downstream market(s) on which repairers offer vehicle repair and maintenance services is/are brand-specific was considered to be irrelevant. As a result of this market definition, the BGH concluded that the manufacturer, MAN, did not hold a dominant position on the relevant upstream product market.
The new judgment of the Court in question confirms the BGH's reasoning regarding market definition and applies it to the markets relating to the repair of passenger cars. The facts were very similar to MAN. An independent repairer (the claimant) had requested to be admitted to the authorised repairer network of a certain passenger vehicle manufacturer (the defendant). The defendant refused to appoint this repairer as an authorised repairer. The claim made to the Court was based on Article 102 TFEU (abuse of dominance) and on Section 20 of the German Act against Restraints of Competition (GWB). Section 20 GWB prohibits, among other things, the abuse of economic dependence.
The claim was dismissed as the Court did not consider either that the manufacturer had a dominant position or that the repairer was in a position of economic dependence vis-à-vis the manufacturer.
These conclusions result from the market definition applied by the Court which is identical to that applied by the BGH in MAN. The claimant had argued that the reasoning in MAN could not simply be transposed to a case involving the passenger car sector as (1) there is a separate (downstream) market for warranty services in the passenger car sector and (2) it was necessary to be admitted to the authorised repairer network of the manufacturer in order to compete on this market as a supplier of warranty services to end customers. The Court rejected this argument. It held, in particular, that the ability to provide warranty services was not critical to the viability of a downstream repair business concentrating on a particular brand. The relevant market remained, as in MAN, the non-brand specific market comprising all products, services and rights which facilitate entry into the downstream market(s) for the provision of repair and maintenance services in respect of passenger cars. In this market, the repairer had a number of alternative suppliers to the manufacturer in question.
It will be interesting to see how the Commission addresses these German cases in the FAQs concerning motor vehicle distribution which it is expected to issue soon as a supplement to the block exemptions and Guidelines issued in 2010.
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