New competition rules (and guidelines) governing supply and distribution agreements in the automotive sector, came into force in the UK and European Union on June 1, and the National Franchised Dealers Association has.pledged to continue to assess the possible scenarios affecting dealer and OEM relationships.

With new dealer and agency agreements on the cards for many franchised retail networks, the role of these new rules in the vertical agreement block exemption order in providing 'a safe harbour' for certain agreements must be appreciated by companies in the motor retail sector, says the NFDA.

"Understanding the new block exemption regime is therefore a must for any business involved in sales and distribution, including those that operate across multiple channels (digital and offline), those that apply selective or exclusive distribution models and those that are transitioning from one distribution channel to another, such as agency," said a NFDA spokesman.

The NFDA and its legal advisers, TLT LLP, have been involved in making representations on the shape of these rules to the UK’s Competition and Markets Authority and the European Commission. 

"While some progress has been made, the exercise is far from over and there is still much to do, not least as notwithstanding the present changes, the sector specific (motor vehicle) block exemption regulation is still under review, as it is not due to expire for another 12 months. It is therefore feasible that, while an understanding of some aspects of the present changes is important, the application of competition law to the automotive sector could be adjusted further in the year ahead."

NFDA chief executive Sue Robinson added: “Going forward, NFDA will engage further with the CMA and European Commission to elaborate on any of the points identified.“

“The NFDA continues to be heavily involved in representing our franchised dealer in the shaping of vertical agreement block exemption regulation. We are working closely with our specialist legal advisers, TLT LLP, and leading counsel to assess the possible scenarios affecting the future relationship between franchised dealers and manufacturers.

The NFDA continue to engage with regulators, in particular, the European Commission, via the NFDA’s European partner, AECDR, and the UK’s Competition and Markets Authority (CMA) to outline franchised dealers’ views.”