CMA understands implications of agency model, says NFDA

The Competition and Markets Authority (CMA) has made its final response to the industry’s questions on new agency models and regulations that will define the future relationship between automotive retailers and car manufacturers.

The National Franchised Dealers Association (NFDA) has been in discussions with the CMA to make sure it fully understands the sector and automotive retailers’ needs specifically when developing its Motor Vehicle Block Exemption Order (MVBEO).

The NFDA (with its advisers, TLT) has, through various meetings with the CMA, sought to apprise the CMA of developments in the sector, including the anticipated transition to direct and agency (including non-genuine agency) sales on the part of certain original equipment manufacturers (OEM).

The guidance indicates that the CMA is paying close attention to the evolution of sales in the sector and that, were the ability of dealers (or agents) to continue to be able to deliver the benefits expected by consumers compromised, this could prompt further intervention and possibly even the removal of block exemption or targeted investigations against OEMs before the expected expiry of the new MVBEO in 2028 (or Vertical Agreements Block Exemption Order).

Sue Robinson, NFDA chief executive, said: “This response from the CMA is positive as they understand both the financial and consumer implications that potential MVBER and agency models could have on the sector and will be paying close attention to its developments.”

The NFDA has recommended an expansion of the MVBEO guidance, so that it would not simply assist in the interpretation of the (aftersales-focused) MVBEO itself, but would also consider wider competition issues of relevance to the sector (sales as well as aftersales).

This included requests for ongoing scrutiny of different agency models and their potential impacts on affected markets, as well as a call for an industry Code of Conduct to promote fairer business practices.

Robinson said: “The NFDA and its retained specialist legal advisers, TLT, remain in dialogue with the CMA for on-going progression of MVBER guidance."

• Read an initial summary of the CMA's response to the NFDA. The NFDA is also preparing a more detailed summary of the MVBEO guidelines, which will also remind members of the core aftersales provisions of the regulation, which will be available to members upon request.