Owner of mileage correction business jailed for car clocking

This press release from the Office of Fair Trading reports that for the first time the owner of a mileage correction business has been convicted of, and imprisoned for, clocking. This must be a major step forward in the fight against this type of fraud.

Motor insurance certificates: paper is passé

The Department for Transport has announced a consultation on removing the requirement for insurance certificates to be issued. The web site says:

This consultation seeks views on amending the Road Traffic Act 1988 to remove the need for insurers to issue a motor insurance certificate when an insurance policy is taken out. At present the certificate is used as evidence of valid insurance cover and there are circumstances when it must be produced by the insured to demonstrate they have valid cover. 

Insurers are required by law to enter details of all motor insurance policies onto the motor insurance database (MID). This consultation document considers using the MID as the single source for checking if insurance cover is in place and considers what further changes and developments are needed to make this work.

 Comments are invited by 11 January.

DFT consults on speed limits for HGVs on single-carriageway roads

Examining the speed limit for heavy goods vehicles over 7.5 tonnes on single carriageway roads is the snappy title of the consultation launched today by the Department for Transport. Schedule 6 of the Road Traffic Act 1984 currently prescribes a speed limit on single carriageways forthem of 40 miles per hour. HGVs those between 3.5 tonnes and 7.5 tonnes are limited to 50 mph on the same roads. The government promissed in ‘The logistics growth review – connecting people with goods’ document published in November 2011, to consult on this issue during 2012, and (in the eleventh month, so not quite the eleventh hour) they are doing so.

The 40 mph speed limit has been criticised because it causes unnecessary costs to vehicle operators, congestion, and avoidable overtaking accidents, and it creates an uneven playing field for businesses. Raising limits should lead to quicker journeys, so lowering costs for the transport sector. This should assist economic growth and will also reduce frustration for drivers who stuck behind slower-moving lorries and unable to overtake. Against this are safety and environmental considerations.

The consultation document can be downloaded from the page linked above.

Consultation on consumer rights directive

The government has held a consultation on the Consumer Rights Directive, which has to be implemented in the next couple of years. The Directive demands important changes to the rules on distance contracts, including the information that must be given, cancellation rights, and performance. The official EU press release (from last year, when the directive was adopted) is here and the BIS page on the directive (including a link to the consultation documents) is here.

MoT certificates will record historic mileage

From 18 November, MoT certificates will show the mileage at the previous three test dates as well as the current one. VOSA announced the change last month (having trailed it earlier this year), but where this announcement can be found neither I nor Google can tell you. But it is in the trade press (Motor Trader here for example) so it must be right, and must have come from somewhere. And the NFDA welcome it, not surprisingly as it fits well with their desire to deal with the menace of clocking.

FLA publishes supplementary briefing on OFT guidance for credit brokers and intermediaries

As their press release said (back in September, when it happened):

A supplementary briefing designed to help lenders and their associates implement the Office of Fair Trading's (OFT) Guidance for Credit Brokers and Intermediaries has been published today by the Finance & Leasing Association (FLA). 

The briefing – which is designed for lenders who use intermediaries such as motor dealers, high street retailers and credit brokers – aims to assist companies in complying with the OFT’s Guidance on issues like transparency in credit advertising and disclosing the presence of commission.

The FLA has consulted finance companies, the OFT, and the National Franchised Dealers’ Association (NFDA), in developing the briefing. 

Paul Harrison, Head of Motor Finance at the FLA, said:

“The OFT’s Guidance sets out its expectations of intermediaries, including motor dealerships, when they offer credit to borrowers and so it is essential reading for all credit brokers and intermediaries. We have developed this supplementary and non-binding FLA briefing to help lenders work with their business associates to ensure compliance.”

You can download a copy here.

PS: the NFDA has also produced guidance on the topic, which is available to RMI members only. There is an information pack and also a tool kit, both tailored for the motor industry and available in web and print formats. Both demonstrate how to detect conflicts of interest when providing financial products to customers and what to information disclose about commission.

Netherlands: Court rules on refusal to appoint repairers

Although it happened in July (on the 25th to be precise , reports of the decision of the Court of First Instance in Amsterdam have been slow to reach me. Brussels law firm Van Bael and Bellis, who have fingers in every interesting EU competition law case affecting the motor industry, and probably every other industry too, publicised it in their imaginatively-titled newsletter VBB on Competition Law in September, so it will be covered in the next Motor Law newsletter - but meanwhile you can follow the link to the horse's mouth.

The story is that three former authorised repairers brought an action against Kia Motors Nederland BV, which took over from the bankrupt former importer, claiming that it had unlawfully refused to reappoint them as repairers. The President of the Court ordered their temporary reappointment on 3 December 2009, and the case came before the Court on the merits this year.

In Case T-19/92, Groupement d'Achat Édouard Leclerc v Commission [1996] ECR II-1851, [1997] 4 CMLR 995 and Case T-88/92 Groupement d'Achat Édouard Leclerc v Commission  [1996] ECR II-1961, [1997] 4 CMLR 995 the Court of First Instance (now the General Court), referring to earlier cases, held that a selective distribution system is compatible with Article 85 (now Article 101 TFEU) if:

1. The characteristics of the product in question necessitate a selective distribution system, in the sense that such a system constitutes a legitimate requirement having regard to the nature of the product concerned, in particular its high quality or technical sophistication, in order to preserve its quality and ensure its proper use;
2. Resellers are chosen on the basis of objective criteria of a qualitative nature which are laid down uniformly for all potential resellers and are not applied in a discriminatory fashion;
3. The system in question seeks to achieve a result which enhances competition and thus counterbalances the restriction of competition inherent in selective distribution systems, in particular as regards price; and
4. The criteria laid down do not go beyond what is necessary.

Both parties, oddly, agreed that Kia Motors' system did not meet these criteria - Kia conceding that they did not admit to the system all repairers who met the qualitative criteria - but they differed about the consequences. The excluded repairers argued that the system was automatically illegal, whereas the manufacturer contended that it was still necessary to consider the compatibility of the system with the competition rules before coming to a conclusion. The Court agreed with Kia that just because it did not apply the criteria in a non-discriminatory fashion did not mean that it automatically infringed the competition rules.

The next question for the court was whether Kia had refused to appoint applicants who were not also dealers as authorised repairers. This was not a hard-core restriction under the relevant version of the block exemption, but if it had happened the system would be likely to be in breach of the rules. However, the facts showed that Kia did not restrict admission to the repairer network to applicants that were also dealers, so the question of whether there was a breach did not arise.

The would-be authorised repairers also tried to argue that Kia's warranties breached competition rules, because they required vehicles to be serviced by authorised repairers: but the court found no evidence to show that a warranty would in fact be invalidated if the vehicle were serviced by an independent.

There was also an argument that Kia were abusing their dominant position in the repair market, and the court agreed that Kia were in such a position. However, they were free to choose with whom to contract. It was inherent in the system that authorised and unauthorised repairers would be treated differently, and the court was satisfied that the unauthorised ones were quite capable of competing.

Australia: GST on incentive payments

Moore Stephens quarterly automotive update - Spring 2012 covers a story I mentioned briefly in the latest edition of the newsletter: if you're interested in the topic (which is, it has to be said, a bit removed from our usual fare) that source will give you more detail than I did.

Oh, and don't wonder why it has taken so long for this story to be reported (as I did at first). Spring in Australia was much more recent than it was here.

Motor Law volume 13 number 4

Subscribers will have their copies of the latest edition of the newsletter now, so here's a selection of links to additional material on some of the stories covered in it:

Deloitte face disciplinary tribunal over MG Rover work
Regina (House of Cars) v Derby Car and Van Contacts Ltd
Amendments to The Motor Vehicles (Insurance Requirements) (Immobilisation, Removal and Disposal) Regulations 2011 (S.I. 2011/1120)

Government crack down on drug driving menace

Common European Sales Law

Volvo pays $1.5m for delayed US recall
Commission press release on wiring harness price-fixing proceedings

Seawell Ltd v Ceva Freight (UK) Ltd and another UKEATS/0034/11
OFT accepts undertakings from Shell

India: 'No evidence of cartelisation in tyre industry'

'No evidence of cartelisation in tyre industry' is the headline in India's Business Standard. The Competition Commission found no evidence of cartel activity among accused tyre makers, and closed its file, which sounds a little more generous than the way the Office of Fair Trading does things (or, I should say, did them: practice might have changed since I last had a cartel investigation case on my desk, but then the OFT's grudging closing of the investigation implied that they had merely been unable to prove what they seemed certain was happening). It sounds as if, like the case I was involved with a few years ago, it's not easy to distinguish the behaviour of a cartel from that of a bunch of rational oligopolists.

The All India Tyre Dealers’ Federation has already let it be known that it will appeal. One member of the CCI dissented from the ruling, which suggests that an appeal might have some legs, and it also appears that the official in charge of the investigation was convinced of there being wrong-doing. Another space to watch.

There is, it hardly needs to be said, a great deal of activity about cartel activity in the markets for component parts for cars: we seem to have been reporting various investigations, rulings and penalties for quite a while now, and in several different countries. Competition law has come on a long way in recent years.

US: legal action over mileage claims

Hyundia and Kia sued over gas mileage claims, says US legal website Inside Counsel. (There's a story on the Automotive News site too, but it's paywalled.) The complaint was filed on Sunday in the US District Court for the Southern District of Ohio, where voters currently hold the outcome of the presidential election in their hands - one or two hanging chads might be all it takes. The manufacturers have apologised, but that's not enough to see off a class-action suit. (Not that the action has class-action status yet, but that's what the plaintiffs are after at this stage.)

Apparently the mileage figures were overstated by one or two miles per gallon. And it's not as if these were typical American gas-guzzlers: surely the margin of exaggeration would be well within the effect of a slightly heavy right foot (let alone a godasse de plombe such as French motor-racing fans attributed, quite rightly, to Jean-Pierre Jarier, one of the more entertaining drivers of his time). Doesn't de minimis non curat lex mean anything in the States? Perhaps we'll see.