EC Competition Law

Bringing Down the Cost of Cars

Last updated 17 Dec 2005

This article first appeared on the Lancaster Buildings website in April 1998

For many years motorists in this country paid considerably more than most for their pleasure. It was not only car prices that varied considerably from country to country, but also the cost of spare parts, insurance, car purchase finance and so forth. Some of those differences were accounted for by national fiscal policies, others by currency fluctuations, social factors and customer preferences. The Commission has tackled some of those disparities by mobilizing market forces to iron them out by monitoring and publicizing disparities and by taking action against manufacturers who tried to prevent consumers from buying cars in countries where prices are lower.

Monitoring and Publicizing Disparities

The means by which the Commission publishes disparities in car prices is to post on the Internet regular reports setting out the prices in tabular form of the top selling models together with a press release summarizing that information. Such a notice appears every 6 months.

Action by the Commission
The Commission continues to receive complaints from motorists of hindrance when importing new cars from another member state. It has taken action against manufacturers who obstruct parallel imports in a clear case. For instance, it fined Automobiles Peugeot SA and Peugeot Nederland €49.5 million for obstructing the export of cars from the Netherlands to other member states on 5 Oct 2005.

Enforcing the Right
Consumers from the United Kingdom or indeed any EC member state are entitled to buy a motor vehicle anywhere in the common market. Consumers from an EC member state can be required to complete only the same documents in the same manner as would normally and lawfully be required of a consumer from the member state in which the vehicle is purchased. Usually such documents relate to the consumer's name and address. The manufacturer and its dealers are bound to honour their guarantees and service warranties to the extent necessary for its safe and reliable functioning irrespective of where and from whom in the common market it was purchased. Anyone encountering difficulties should complain to their own national competition authorities. In the UK the Office of Fair Trading should be the first port of call.

Because consumers may be daunted by linguistic difficulties or other cultural differences or the inconvenience of shipping a car from the Continent, they may appoint intermediaries to act for them in the purchase or collection of the vehicle. Such intermediaries must have prior written authorization from a consumer signed by him and identifying him by name and address and specifying the vehicle by such essential details as make and model Armed with such authorization the intermediary enjoys the same right as the final consumer. The regulation provides other benefits to cut the cost of motoring. For instance, suppliers are obliged to make technical information necessary for the repair and maintenance of their cars available to garages outside their dealer networks subject to their intellectual property and trade secret rights. Even then, they may not withhold in such information on a discriminatory or anti-competitive basis.