Critically evaluate Commission Regulation (EC) No. 1400/2002 and its likely impact on the system for retailing and distribution of motor vehicles in the European Union

Seminar paper from the year 2003 in the subject Law - Civil / Private / Trade / Anti Trust Law / Business Law, grade: 74% with Distinction, Cardiff University (Großbritanien; Law School), course: Competition Law (Wettbewerbsrecht), language: English, abstract: In 2002 around 100,000 main dealers1 were involved in the distribution of 14 million new registered passenger cars2 throughout the European Union. This impressive fact describes only a small part of one of the biggest industries in the EU. The European car industry is described as a “national champion” among EU competition law experts. However, even the best industry is nothing without an efficient distribution system. Distribution of motor cars in the EU has been governed for nearly 20 years by the legal device of block exemption regulations. The latest block exemption, Regulation 1400/023, came into force on 01 October 2002 and brought fundamental changes. This essay intends to analyse these changes and to predict their likely impact on the car distribution sector. For that purpose it is first necessary to describe the present distribution systems used by car manufacturers throughout the EU (A.I.), to outline the approach of EC competition law towards these specific distribution systems and to explain the Commission’s general policy of granting block exemptions (A.II.). Part B of this paper is concerned with specific issues regarding the new block exemption. Major changes are highlighted and compared with the former regulation. The likely impact of the new regime on the distribution systems in the EU will be evaluated in part C. By taking into account current available data and trends in the motor industry I will give a projection of what outcome the new regulation may lead to.