EU Revises Antitrust Rules For Car Sales, Repairs

The European Commission Thursday revised its antitrust rules for car sales and repairs, making it harder for automakers to dictate where cars are fixed and which spare parts are used.

The commission, the European Union's regulatory arm, for years has tried to open up the EU automotive market to more competition, restricting pacts between car manufacturers and dealerships and trying to encourage more sales across the bloc's borders.

The latest revision to the so-called "block exemption" for automakers -- a kind of antitrust roadmap for the industry -- restricts exclusive agreements between automakers and authorized repair shops. The rules also make it easier for garages to use spare parts from independent manufacturers.

"I strongly believe the new framework will bring tangible benefits for consumers by bringing down the cost of repairs and maintenance that represent an excessive share of the total cost of a car over its lifetime," the commission's top antitrust official, Joaquin Almunia, said in a statement.

The commission estimates that repair bills account for 40% of the total cost of owning a car. Over the past few years, it has opened antitrust cases against four automakers, Fiat SpA (F.MI), Toyota Motor Corp. (TM), General Motors Co., and the former DaimlerChrysler AG (DAI), to ensure they give independent garages access to the technical information needed to make repairs.

Under the new antitrust guidelines, an automaker with more than a 30% share of a national market won't be able to force customers to use authorized repair shops. Car manufacturers also will be barred from making warranties conditional on having services like oil changes performed at authorized garages. These new rules will come into force on June 1.

For car sales, the commission revised its antitrust guidelines to treat the automotive sector like any other business. The commission's previous guidelines had tried to force automakers to do more business with dealers that sell multiple brands, rather than just one.

Automakers imposed new conditions in response to this rule, forcing dealers to spend more on presentation of their brands. This pushed up overall car distribution costs by 20%, according to the commission.

Car manufacturers now will have more flexibility to organize their sales networks, using both single-brand retailers and dealerships that sell multiple types of cars. Still, automakers with more than a 30% market share in a single country won't be able to insist on single-brand dealerships. Also, manufacturers will only be able to restrict dealers to exclusive sales arrangement for five years. These new distribution rules will take effect in June, 2013.

The commission noted that if these sales arrangements lead to competing brands being shut out of the market, it could subject individual car manufacturers to stricter antitrust regulations by excluding them from the industry's block exemption.

-By Adam Cohen, Dow Jones Newswires; [phone]; [e-mail]