05 March 2012

Auto retailers still hoping that the upcoming pan-European block exemption rules will offer them some form of contract protection through an official Code of Conduct seem likely to be disappointed. As always with matters of the European Commission, it’s hard to be certain but the latest noises coming out of Brussels do not seem particularly encouraging.

It helps, of course, if you understand the language.

Speaking by video-phone from Brussels to the Motor Law conference in the week, senior Commission official Jon Clark was at pains to point out that his department “cannot intervene” to promote one particular code to the industry.

“We can only act as honest broker,” he said which, in Brussels-speak, means: “it’s up to you lot to decide about this”.

At the heart of the matter is whether the new block exemption, due to come into effect next June but already being taken into consideration by some carmakers, will guarantee minimum termination notices and/or compensation for loss of franchise.

There is a glimmer of hope in the decision by the European Parliament to ask Commission officials to extend the scope of protection under current ‘agency’ law to auto dealers. But again, the language is not good.

“We’re watching this with interest,” said Mr Clark, “but it’s not really an issue of competition law.” Which means: “nothing to do with us”.

It’s dangerous to dismiss all this as ‘boring old Brussels-speak’. As of next year, you could spend £5 million on a new dealership and find your franchise contract terminated the day after it opened – with no right to compensation and no right of appeal.

Try telling that to your bank manager.

Rupert Saunders

Got a view on this? Share it with me at rupert@auto-retail.com

Tags: Block Exemption, Brussels, industry code, Jon Clark, Motor Law conference, pan exemption