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Saturday, 14 April 2012

Should the block exemption be less generous to independent spares?

An article from law firm Reed Smith here argues that the way the block exemption deals with independent spares is out of step with the realities of a market in which people hold on to their cars for longer. In particular, because the Commission starts from the (rebuttable) assumption that authorised networks will have more than 30 per cent of the market, because the markets for spares and repairs are brand-specific, the block exemption will never apply. The article calls this "favouritism" towards the independent sector, and argues that manufacturers and their networks need to be able to recoup from the aftermarket what they don't make on the primary market when they sell vehicles.

Twas ever thus, wasn't it? I remember a few years ago hearing Prof Garel Rhys explaining how cross-subsidisation between was never a good idea: vehicle sales, parts sales and maintenance and repair have to stand on their own feet, and that is what the Commission is trying, with the blunt instruments at their disposal, to achieve.

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