MVBER consultation assesses automotive competition

May 2021

In Leaseurope’s response to the Motor Vehicle Block Exemption Regulation (MVBER) consultation, we tackled issues such as the enforcement of the end user status, preventing restrictions on sales channels, spare parts availability, vehicle repair and warranty rights, fair access to vehicle data and widening the scope to two-wheelers.

Car repair workshop

Why is the MVBER important for automotive lessors and rental firms

EU antitrust rules usually ban vertical agreements and concerted practices, which are likely to restrict competition in a given sector. There is currently an exemption for certain agreements and practices in the automotive sector (covered by the MVBER), but this expires on 31 May 2023. Since 2019, the European Commission has been assessing whether this exemption is still effective, efficient, and consistent with other EU and national rules. The Commission consulted with external stakeholders, including Leaseurope, at the end of 2020 and is planning to publish their final conclusions in May 2021.

This regulation has important ramifications for our sector as it impacts how automotive lessors and rental firms interact with manufacturers. For instance, whether we are viewed as ‘end-users’ of vehicles or intermediary sales channels has a large effect on how lessors and rental companies buy vehicles, access parts, manage customer data and much more. While Leaseurope is supportive of the MVBER remaining in place after 2023, there are various aspects that require improvement to ensure fair competition in the European marketplace.

European Commission website

Areas requiring action against anti-competitive practices

Enforcing end user status for lessors and rental firms

A number of vehicle manufacturers have persistently refused to acknowledge leasing companies’ end user status, trying to prevent them from obtaining vehicles at competitive conditions as set out in the MVBER. Not granting the same level of price discounts to captive and independent lessees, requiring vehicle registration/use in the country of purchase, and compulsory disclosure to the manufacturer of customer or driver data are all actions that decrease fair competition.

Preventing restrictions on sales channels (tackling the “agent model”)

Manufacturers are increasing their control of sales channels and direct customer interactions. Requiring up-front direct contracting with the customer leaves leasing companies acting merely as an intermediary between the vehicle manufacturer and the customer (limited to fleet management tasks). Moreover, dealers are sometimes paid a fee by the manufacturer for administering a customer order and are instructed to respect the manufacturer’s price structure and not to sell a vehicle at a price considerably below the recommended retail price. The net result is less competition amongst dealers and subsequently a higher price paid by the customer. Especially with the launch of electric vehicles, most manufacturers took direct control of the ordering and dictate the level of discount/bonus granted to customers.

Addressing spare parts availability for independent repairers

Independent repairers have to use a burdensome registration process to receive branded vehicle parts from manufacturers, with the risk of them “re-routing” the customer to manufacturer authorised workshops for the work. Thanks to the current MVBER framework, competition in this area has increased, however anti-competitive behaviours still exist such as authorised repairers/distributors bundling the sale of branded parts to the purchase of what are normally “free” parts when dealing with independent operators. Concerns are also rising regarding whether independent garages have multi-brand tools with the ability to read QR codes for spare parts, as these codes and passwords are needed for ordering via separate manufacturer-linked systems.

Curbing misuse of warranty rights by manufacturers

Difficulties experienced with warranties include manufacturer affiliated workshops refusing to repair vehicles owned by independent leasing companies or warranties being voided when service work is carried out by independent providers. Extended warranties and service contracts are frequently bundled together, meaning access to extended warranties is only available if servicing is done by a manufacturer affiliated specialist provider. This hinders competition and limits the sourcing of spare parts from the independent aftermarket, while also confusing consumers when it comes to what their options are regarding warranties, maintenance and service contracts.

Access to vehicle data without disproportionate cost/technical hindrances

Access to data needs to be adequately regulated as no other legislation addresses this issue head on at this point in time, especially considering developments with regards to remote communications. This is crucial to ensure that leasing and rental companies, as well as other stakeholders in the vehicle aftermarket, have fair access to vehicle information to provide diagnostics, repair and maintenance, among other services. Our members experience a variety of issues related to in-vehicle data access, which are hampering competition and innovation.

Widening the scope to include two-wheelers

As motorcycles, scooters and electric bikes are an increasingly important part of the new mobility landscape, the MVBER scope should be widened to include two-wheelers in the vertical agreement exemptions for motor vehicles.

Read the full Leaseurope response

MVBER consultation respondents generally supportive

Overall, the feedback received from stakeholders during the consultation show a consensus that the MVBER rules have met their objectives and created legal certainty, however the competitive landscape of the automotive sector can be further strengthened. In particular, views are split as to whether competition for repair and maintenance services for motor vehicles has increased since 2010. A significant number of respondents encountered restrictions on independent operators’ access to technical information as well as misuse of warranties. At the same time, the most anticompetitive examples do not seem to be widespread. While it is too early to draw conclusions, we expect the European Commission will renew the MVBER and accompanying guidelines, while taking the opportunity to simplify and fine-tune the current regime, notably in light of market developments over the last decade.

Stakeholder feedback

Feedback from National Competent Authorities