June 2019

14 AFTERMARKET JUNE 2019 BUSINESS www.aftermarketonline.net continue - especially from the position of protecting small independent businesses – the backbone of the aftermarket. It is very welcome that the European Commission has rightly emphasized that competition policy needs to "make sure that our markets stay competitive enough to give consumers the power to demand a fair deal." However, this pre-supposes alternative choices exist. It is therefore critical that the legislator considers how small businesses can continue to compete, as only focusing on the repair level is too myopic and does not capture the influence that BER needs to have on the entire aftermarket and its competitive eco-systems. The complexity of the aftermarket sector and the nature of the respective economic activities throughout this value chain should be taken into account to allow a better understanding of the different competitive conditions at each level of the supply chain and then legislate accordingly. Examples of this include the trend for vehicle manufacturers to require replacement parts to be re-coded, but then either restricting access to the code (e.g. ADAS components) or charging a inflated price for the code for non-OEM parts to ensure that their own total price for the part and the code are cheaper. This is an example of another developing trend from vehicle manufacturers where ‘software as a product’ is becoming another way that competition can be distorted. As the vehicle becomes a ‘computer on wheels’, there is an increasing concern that the (already) existing imbalance between OEMs and the independent aftermarket will further increase due to vehicle manufacturers being able to control access to the vehicle data. Vehicle manufacturers have evolved since 2010 into new and additional roles, entering as direct competitors into traditional independent aftermarket areas. Increasingly repairs are being done today directly and remotely (e.g. resetting of fault codes, coding, reprogramming, software updates) via the ‘connected car’ and this also needs to be addressed in any revision of the BER. There are also now the first examples of vehicle manufacturers joining forces on a common Internet ordering platform for their original spare parts and consequently corresponding to the role/function of an independent multi-brand spare parts distributor. The main competitors of independent repairers/operators are no longer only the authorised repairers/networks, but are now also the vehicle manufacturers themselves, who have much more power and much more (in)direct technical and commercial means to frustrate effective competition by independent aftermarket operators. The traditional comparison between the position of the dealer/authorised repairer and the independent operator (the vertical ‘non-discrimination principle’) is no longer valid, due to the proprietary design of the in- vehicle telematics systems, the vehicle-generated data/functionalities go directly to the vehicle manufacturer, who then decides with whom it shares the data, or not and under what contractual conditions. The proprietary closed design of their in-vehicle telematics systems and the unique access to the vehicle, its data and functions, enables manufacturers to vertically integrate additional services, e.g. to offer bundled telematics services over the life-time of the vehicle, and even ‘free of charge’ (e.g. remote diagnostics, remote programming, fleet management, insurance policies etc.). This has a de-facto competitive knock-out effect on all other service providers around the car. Clearly a lot has changed since the original BER was implemented - given that it is the vehicle manufacturer itself who is now the privileged controller of the in-vehicle data and resources/function and subsequently the whole downstream aftermarket, so any new version of BER must now consider a different approach and re- assess how a competitive aftermarket can continue to offer consumers a competitive choice. xenconsultancy.com