The European Commission will today consider sweeping changes to rules governing how cars are sold throughout the European Union. The Competition Commissioner, Mr Mario Monti, claims that the changes will benefit consumers by making cars and servicing cheaper.
But a number of other commissioners are understood to be unhappy about the proposals, on the basis that the changes could disadvantage European car makers.
Under the proposals, dealers would no longer be tied to a single brand of car and could choose not to provide after-sales service. Among the most controversial elements is a proposal to allow dealers in one country to sell in another, as long as the brand they are selling enjoys at least 10 per cent of the market share in the second country.
The car industry opposes the proposals, which would replace the present exemption for car dealers from EU competition rules, which expires later this year.
The German government has written to Mr Monti to complain about the proposed changes. And four commissioners are believed to have reservations about the plan, which they fear could put small dealerships out of business.
Mr Monti's critics say that the 10 per cent rule for cross-border dealerships is unworkable, and one commissioner has asked if dealerships would be closed if their brand's market share fell below 10 per cent.
Others fear that European car makers would be disadvantaged because non-European manufacturers with a small market share would continue to enjoy protection from competition.
Mr Monti argues that the present rules benefit car makers and dealers but disadvantage the consumer, who is denied a full choice both in sales and service.
At present, dealers of new cars must undertake after-sales service for the brands they sell. The Commission wants to separate sales and service so that some companies could concentrate on selling cars while others service them.
Mr Monti wants to end the practice whereby manufacturers can insist that dealers order spare parts from the car maker rather than from cheaper, parts manufacturers.
The new rules would continue to allow car manufacturers to choose their dealers. But the manufacturers could not break a contract with a dealer who chooses to sell cars from other manufacturers. And the car makers could not insist that their cars are sold in a separate building by separate staff.
The rules would make it easier for customers to buy cars in other member-states and could lead to Europe-wide dealers selling cars from a number of manufacturers.
Even if the Commission adopts Mr Monti's proposal today, the changes will not come into force unless they win the support of the EU's 15 member-states.
