May 2019

BY Neil Pattemore T his may sound like a very ‘dry’ subject, but read on. The impact that the Automotive Block Exemption Regulation 461/2010 has had on the UK aftermarket has been significant, but the European Commission has recently launched an ‘evaluation roadmap’ to consider if the existing Automotive Block Exemption Regulation (BER) should be revised or even renewed when it expires in 2023. This may sound a long way off, but the implications are profound and in legislative terms, this will happen in the next Commission’s five year tenure. Whatever they decide and implement will have an important role of the sector specific rules for maintenance and repair services and distribution of spare parts – i.e. the very basis of your business. Importantly, among many provisions concerning spare parts and the ability for independent workshops to buy the OEM diagnostic tools to allow equal abilities with authorised workshops, BER also provides the ability for independent workshops to repair vehicles while they are still in their warranty period and does not allow a vehicle manufacturer to restrict the ability of these workshops to service and repair vehicles during an extended warranty period as part of a new vehicle ‘package’. However, it is important to understand that the legal basis of the Automotive Block Exemption Regulation is in competition law and as such, if you need to challenge any non-compliance (e.g. a vehicle manufacturer withholding data, or original parts), it is via individual legal action in the courts, or via the legislator. This is important as the Regulation contains the ‘sector- specific guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts’ and these are specific legal instruments of competition law. The definitions of ‘original spare parts’ and ‘spare parts of matching quality’ have been included with the purpose of defining which kind of spare parts, as a minimum, dealers/franchised repairers are allowed to source from an independent parts supplier/wholesaler and equally, what that OEM parts are made available to independent workshops. Freedom One of the principle aims of the legislation is to avoid a monopoly of the exclusive supply of OEM-branded spare parts and to give all repairers the freedom to also purchase spare parts from the independent aftermarket or from the OEM’s dealers/franchised repairers – i.e. non-discrimination and a level playing field. An important detail for independent parts distributors and independent workshops, is that although the OEM’s dealers/franchised repairers must use spare parts that are at least of ‘matching quality’, these can include parts of lower quality, such as the OEM’s ‘economy line’ in order to respect the individual quality level of the respective vehicle manufacturer, but this equally applies to independent workshops fitting the same ‘economy line’ parts, whilst still meeting the requirements to fit ‘matching quality’ parts. It is also important to underline the context of ‘vertical restraints’, which means ‘what is the dealer/franchised repairer allowed to do without the risk of losing the contract with the OEM’. In this context, the vehicle manufacturer-specific individual quality criteria are taken as the benchmark. However, it is crucial to clarify that independent repairers, as they are not members of the franchised network of the vehicle manufacturers, are not subject to this obligation. They may provide the full range of all spare parts required by consumer demands. These can range from original parts, better quality parts, matching quality parts or parts which are adapted to the age of the vehicle (provided however that these spare parts duly fulfil legal obligations). As such, the legislator does not impose a general requirement onto the aftermarket to only use ‘matching quality’ parts, or to document the quality of replacement parts with a certificate. This for a good reason - quality is a matter of consumer choice and market forces (e.g. there are also big differences in quality between 12 AFTERMARKET MAY 2019 BUSINESS www.aftermarketonline.net BER – WHAT ARE WE TALKING ABOUT? In the first of a two part examination, Neil Pattemore looks at the potential impact of a new Block Exemption Regulation