An analysis of motor vehicle distribution in the framework of European competition law

Abstract

Article 3 of the European Community Treaty lays down as activities of the European Community, amongst others, the establishment of an internal market characterised by the abolition between the Member States of obstacles to the free movement of goods, persons, services and capital and of a system in order to ensure that competition within the same internal market is not distorted. Free competition is the basic principle of all economic activity within the European Community. On the basis of Article 4 (1), the European Community economic policy is to be 'conducted in accordance with the principle of an open market economy with free competition'. Competition rules are set out in Article 81 and Article 82 of the same treaty. Article 81 prohibits agreements between undertakings, decisions by associations of firms and concerted practices which may affect trade between member states of the European Union and which have as their object or effect the prevention, restriction or distortion of competition. However, this rule is subject to exemption by the European Commission either on an individual basis or as block exemptions in accordance with Regulation 19/65/EEC, which regulation grants the Commission the possibility of issuing hlock exemptions in respect of certain categories of agreements prohibited by Article 81. Since 1985, the motor vehicle industry within the EU has enjoyed the luxury of a specific block exemption regulating vertical agreements between undertakings in the industry, which agreements would otherwise fall foul of Article 81 (1) of the EC Treaty and would therefore be considered illegal. Throughout the years the EU' s motor vehicle industry has undergone far reaching transformations and European competition rules on the matter have had to adapt to such changes. These adaptations have reached their peak this year with the adoption by the Commission of a new regulation on the application of Article 81 (3) of the EC Treaty to categories of vertical practices in the motor vehicle sector which shall come into force on 1 st October, 2002. This thesis delves into the background of the above mentioned regulation, the reasons for a specific block-exemption for the motor vehicle sector, the previous block exemptions, the case law emanating out of the application of such block exemptions, the various studies regarding the impact of these regulations on all the interested parties, the studies made regarding the industry, the suggestions made for the new regulation, the actual regulation and its expected impact. Finally, this thesis is a study of whether or not the newregulation really achieves the 'bold reform' claimed by the Commission and whether it will really put the 'consumer in the driver's seat'.