Peugeot violated competition law with franchisee, Austria court rules

The Austrian Supreme Cartel Court has banned Peugeot from tying dealers payments to customer satisfaction surveys and from subsidising vehicle prices sold at its manufacturer-owned sales outlets.

It follows a long legal dispute between Austrian Peugeot dealer Buchl and PSA's Peugeot Austria, in which Buchl claimed Peugeot's national sales company was abusing its market power and in breach of competition law.

CECRA, the European trade association for franchised dealers, said Buchl has turned to the cartel court because "like many other Peugeot dealers in Austria and Europe it claimed to suffer from PSA's suffocating system of requirements and non-transparent reimbursement conditions."

On March 22 the Austrian Supreme Cartel Court upheld the Cartel Court's decision of May 12, 2020, that the importer for Peugeot vehicles in Austria had abused its market power in relation to Buchl, in violation of Austrian and European competition law.

CECRA said this is "a breakthrough in the decade-long struggle for more fairness in the manufacturer-dealer relationship" in Europe's car markets.

"Especially in light of all current radical changes and challenges, the judgement  paves the way for a new partnership in the automotive industry," said its spokesman.

Stellantis, Peugeot's parent company, is now looking at the decision in detail to develop appropriate solutions.

CECRA reports that the supreme court has banned Peugeot from reducing the dealer's margin if they do not achieve "sales targets inflated by PSA", and forbidden it from competing with independent franchisees through subsidising its manufacturer-owned outlets' vehicle sales to end users.

Tying a dealer's margin to customer satisfaction surveys has also been outlawed, as is failing to ensure that warranty work rates are profitable for its franchised network.

The court also has stopped Peugeot Austria from passing on to franchisees the costs of its own mystery shopping and audit system for new cars and aftersales.

Peugeot Austria has been given three months to implement all these changes, and Austria's Cartel Court is also re-examining how the carmaker "economically forces" dealers to take part in promotions, said CECRA, thereby restricting dealers' freedom of setting their own prices.

A Peugeot Austria spokesman said the ruling is a local court case and "the decision of the Austrian court of last instance has been acknowledged and will now be analysed in detail".

"Appropriate solutions for the required points would be developed and implemented in Austria according to the local jurisdiction," he added.

Following the case, the Austrian Supreme Court pointed to parallel applicability of European competition law, and CECRA said "for other brands' networks, especially those of the newly formed Stellantis Group directly affected by the decision, the judgement can serve as a valuable guideline to legal safety", and the trade body warned that numerous Peugeot dealers will seek reimbursement for the loss of remuneration they suffered due to the "abusive conditions".

In 2014 the UK's cartel's watchdog, the Competition and Markets Authority, wrote warning all carmakers' national sales companies and dealer network of the threat of anti-competitive practices.

That followed a 2013 case when Mercedes and a handful of its dealers received £2.6 million fines for breaching competition law.