The expiry of the current Block Exemption Regulation (BER) on May 31, 2010, is marked with confusion within the industry and possible changes are far from being decided even though it is less than a year away.

Current Block Exemption is much more detailed than the general BER which the rest of the retail industry adopts. The main differences are basic contractual standards such as termination notice periods, minimum notice periods for contracts and reasons have to be given for termination. It also contains many more aftermarket provisions.

At AM's Autoretailing in June, John Clark, DG competition official for the European Commission, told delegates: “There are fewer competition problems now than there were in the past. When I first joined DG, there would be a pile of complaints waiting for me each morning. Those complaints just don’t exist now.

“What we see from the dealers’ point of view is that the raising of dealership standards is partly linked to Block Exemption clauses and manufacturers feeling that their brand identity is threatened by selling brands of competing manufacturers in the same showroom.”

An impact assessment will set out what the regime for BER is expected to contain this summer.

The new European Commission

However, the new European Commission will be formed in November and between then and when BER expires in 2010, it will have to decide whether to push ahead or postpone changes.

According to Clark, there are four outcomes which could happen with BER when it is renewed, or not as the case may be: It will continue without change.

The car industry will adopt a general BER, which is much simpler It will adopt a general BER with some changes
or it will adopt a specific BER that focuses on the aftermarket
Clark said: “We’re not considering extremes. We don’t want a situation where there is no specific criteria for the automotive sector and we don’t want a complicated BER given the problems we’ve had enforcing the current one.”

Clark said independents had had problems accessing repair information from manufacturers and there had also been cases where manufacturers had refused to pay out on warranty work if an independent repairer had carried out the work.

Regulation uncertainty

Andrew Tongue, director of the International Car Distribution Programme, said: “Regulators are facing a period of uncertainty. There will be a new European parliament and commission in place and they will both want more time to analyse the outcome of where BER will head in the future.

“As a result, the current rules could be extended for a transitional period until 2011 to give more time for the regulators and to give the global economic climate time to become clearer and perhaps a bit brighter.”

Tongue believes that if there is a shift towards a simpler BER it could give manufacturers the opportunity to simplify standards, margins and process. 

However, he also said there was nothing in the current BER rules which meant manufacturers had to tighten corporate identity standards, so there was no guarantee they would put less pressure on dealers.