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Sunday, 22 December 2013

OFT suspends credit licence of Shropshire-based motor dealer  - The Office of Fair Trading

The OFT has suspended the credit licence of a motor dealer, issuing this press release (well, this is part of it):
The OFT has suspended the consumer credit licence of Jonathan Edward Rochford, a Shropshire-based motor dealer trading as Phoenix Car Centre.
The OFT took this step after concluding that suspending the licence is urgently necessary to protect consumers. The suspension means it is now a criminal offence for Jonathan Edward Rochford, or any other person, for example an employee, agent or company of his, to engage in any consumer credit, consumer hire or credit broking activity using his licence. This press notice has been issued to inform consumers and other consumer credit businesses. The principal place of business for Phoenix Car Centre is 9 Lake End Drive, Telford, Shropshire TF3 1NU.
Jonathan Edward Rochford has been invited to make representations to the OFT by 10 January 2014. If representations are made, the OFT's Adjudicator will take into account the representations and decide whether to confirm the suspension (with or without variation) or withdraw it.
This is an early example (perhaps the first) of the use of a power to suspend a licence immediately where there is an urgent need to do so. It's also worth including the notes to the press release - the first one is particularly interesting.
  1. The OFT is unable at this stage to discuss the detailed reasons for its decision to suspend Jonathan Edward Rochford's licence.
  2. Jonathan Edward Rochford's consumer credit licence is suspended as of 17 December 2013.
  3. An amendment to the Consumer Credit Act 1974 came into effect on 19 February 2013 and gave the OFT the power to suspend a consumer credit licence where it appears urgently necessary to do so for the protection of consumers. 
  4. The OFT published guidance in February 2013 setting out how and when it can use the new power to suspend a credit licence. The guidance establishes that in the most serious cases, which include those where there is evidence of immediate harm, the OFT will suspend a licence with immediate effect. In other circumstances, businesses will be given an opportunity to make its case to an adjudicator before the suspension takes effect.

Here is a link to the full press release.

The HGV Road User Levy (HMRC Information Gateway) Regulations 2013

The HGV Road User Levy (HMRC Information Gateway) Regulations 2013

Tesla retail model faces new legal challenge in Ohio

Tesla retail model faces new legal challenge in Ohio

Tesla vs. 'Te Si La': Brand's Chinese launch hits a snag

Tesla vs. 'Te Si La': Brand's Chinese launch hits a snag

Court of Justice appeal in Gas Insulated Switchgear case

Friday, 20 December 2013

Federal Register | Federal Motor Vehicle Safety Standards; Minimum Sound Requirements for Hybrid and Electric Vehicles

Federal Register | Federal Motor Vehicle Safety Standards; Minimum Sound Requirements for Hybrid and Electric Vehicles

Commission wants code of conduct between dealers and manufacturers before the end of the CARS 2020 discussions » Automotive World

So says a press release from CECRA:
During a meeting of the CARS 2020 Sherpa Group on 9 December 2013, the Commission reiterated its desire for dealers and manufacturers to reach an agreement on how to improve vertical relations in the sector.
The Commission informed CARS 2020 stakeholders that work still needs to be done on the issue of vertical agreements. The topic is very important for the dealers, who made it clear since the beginning of CARS21 discussions – now followed by CARS 2020 - that it is their priority to reach an agreement on this issue. In its CARS 2020 Action Plan, the Commission noted that:
The changes in the competition law framework for the distribution of motor vehicles in Europe (further to the expiry of the Motor Vehicle Block Exemption Regulation 1400/2002) may have an impact on the organisation of the vertical relations between vehicle manufacturers and distributors. In order to manage this transition in a balanced way, a self-regulatory initiative is encouraged by the Commission.
A majority of CARS 2020 stakeholders have expressed their strong support for a voluntary code of conduct in the field of vertical agreements. The Commission is currently examining different options to re-launch the dialogue between the parties concerned. At yesterday’s meeting, the Commission indicated that is has ‘other political tools’ at its disposal which could be used in case the dialogue is not successful. This is a clear message to the manufacturers, who have again been invited to reach an agreement with dealers on a code of conduct.
The European Car Dealers’ (ECD) division of CECRA welcomes this as a step forward in improving vertical relations in the automotive sector. The division has submitted concrete proposals to the manufacturers with regard to the self-regulatory approach promoted by the European Commission. In particular, the ECD and CECRA are asking for:
  • the freedom to transfer the sales contract to a member of the authorised network
  • the freedom to sell different brands at one site (multi-branding)
  • the compensation of investments after termination of sales contract by the manufacturer which was not caused by dealer.

Car insurance too high, says Competition Commission | Money |

Car insurance too high, says Competition Commission | Money |

Self-parking cars hit legal obstacles - Telegraph

Self-parking cars hit legal obstacles, reports the Daily Telegraph, and 'ha, ha', is the immediate reaction - but it's more serious than that. While it remains an offence to leave the engine of a car running while there is no-one in the driving seat (a rule that, surely, no responsible person will ever have broken) the idea of a car that will park itself remains just that - an idea.

Welsh court processes 86 people over 'crash for cash' insurance conspiracy | UK news |

Welsh court processes 86 people over 'crash for cash' insurance conspiracy | UK news |

Driving age increase to 18 and curfew for new drivers mooted | World news | The Guardian

Driving age increase to 18 and curfew for new drivers mooted | World news | The Guardian

TNO: Automatic braking for cyclists » Automotive World

TNO: Automatic braking for cyclists » Automotive World

New Consumer Protection Rules Adopted in the UK: Particular Note for Online Retailers and Suppliers of Digital Content

New Consumer Protection Rules Adopted in the UK: Particular Note for Online Retailers and Suppliers of Digital Content

Thursday, 5 December 2013

Motor Law volume 13 number 11

Here are links to further information on some of the stories in the latest Motor Law:

OFT on consumer rights bill
TSI response
Review of consumer protection co-operation
Prize promotions
'Made in EU'
The consequences of not mediating PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288
Spain: price-fixing in car market
Lookers merger with Shields
Parts supply: antitrust investigations,,,
South Africa: no spares protection Bayerische Motoren Werker Aktiengesellschaft v Grandmark International (Pty) Ltd and Another (722/12) [2013] ZASCA 114
CO2: Germany wants transition
Commission's Daimler dilemma
EU van emissions targets move forward
MEPs resist vehicle noise limits
Restrictive covenants: wide but valid Coppage & Anor v Safety Net Security Ltd [2013] EWCA Civ 1176 (11 October 2013)
US: Ford Truck dealers
CCTV for parking to be outlawed
Persistent fuel thieves will be prosecuted
Compensation for breach of Data Protection Act Halliday v Creation Consumer Finance Ltd (CCF) [2013] EWCA Civ 333
Phoenix: report of disciplinary hearing
Cooper Tire appeals merger ruling
 Case C95/ Commission v Germany (Volkswagen Law case)
Scrap Metal Dealers Act 2013 (Prescribed Documents and Information for Verification of Name and Address) Regulations 2013 (SI no 2276)

Chancellor's financial statement

 Two matters of interest to Motor Law readers in today's financial statement from the Chancellor:
The statutory maximum price of the MOT test for a car will be frozen at £54.85 until 2015, a total saving of £50 million for motorists.

The paper tax disc will be abolished, removing an administrative inconvenience for millions of motorists.

Saturday, 30 November 2013

BBC One - Watchdog - My Consumer Victory: Sale of Goods Act 1979

We all know that the Sale of Goods Act implies a condition that the quality of goods supplied will be “satisfactory”, and that this includes, in appropriate cases, that the goods will be durable. The standard the goods must meet is what “a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances”. Of course, there's nothing there that would give you a cast-iron answer to every problem with a defective car, but since satisfactory quality replaced merchantable quality as the touchstone back in 1995 we haven't had the sort of tricky problems that used to trouble the courts. But what damages is the customer entitled to if a car doesn't meet the standard?In a case featured on BBC TV’s Watchdog recently (although dating back to 2009), a dealer was ordered to pay £1,175 in compensation and interest, plus £170 costs, to a customer whose 16 month old ex-demonstrator C4 Picasso broke down on a family holiday in France. The repair that would take weeks, and although Citro├źn agreed to pay for it, they would not meet the cost of a hire car to continue the holiday, the flights home, or the cost of returning to pick up the car when it had been repaired – what lawyers call consequential or indirect losses.
The customer sued in the county court, claiming that there was a breach of the warranty of satisfactory quality and seeking damages for the consequential losses. He argued that the gear linkage failure meant that the car was not durable enough to be of satisfactory quality, and the court agreed that it should have lasted longer than 16 months. The fact that the manufacturer had repaired the defect at its expense would not have amounted to an admission that there was a defect, although it might have been pretty strong evidence: in any case the claim under the Sale of Goods Act lay against the dealer who had sold the car to the customer, not the manufacturer with whom the customer did not have a contract.
It is well-established that where someone suffers consequential losses they can claim them from the person at fault, provided the losses are not too remote. This means that the court has to be satisfied that there was a strong possibility of the losses arising from the breach. In non-consumer contracts liability for these losses is commonly excluded, and in business-to-business transactions this makes a lot of sense – if a computer fails and brings a business to a grinding halt the consequential losses could be much more than the price of the computer. It is also generally reasonable to expect businesses to take precautions against equipment failures like that, and “reasonable” is exactly what the Unfair Contract Terms Act 1977 says it must be. But in a consumer contract, any attempt to limit or exclude liability would be prohibited by the 1977 Act, and void.
There have been several cases in which car-buyers have been awarded consequential damages, going back to the 1978 case Jackson v Chrysler Acceptances where the customer had specifically said the car was needed to go on holiday and the court awarded £75 when the holiday was spoilt, although the more important aspect of that case was the finding that if the camshaft, exhaust, radiator and clutch assembly all needed replacing within a few months the car, which was new, was not merchantable, and that continuing to pay HP instalments did not amount to acceptance. Consequential losses also featured in another great merchantable quality case, Bernstein v Pamsons Motors, in which Mr Bernstein was awarded £150 for a spoilt day out, “comprising nothing but vexation”.
A dealer who faces a claim from a consumer for something like a ruined holiday has little room for manoeuvre. The contract cannot limit or exclude the liability, and if the manufacturer has agreed to fix the problem free of charge it would be hard to argue that the car was of satisfactory quality. In the Picasso case, the consequential losses arose because the car could not be repaired quickly, and if you find yourself in that position it could be a lot cheaper to get hold of the part needed and get it to where the car is. The customer is also more likely to be happy if you've saved his family holiday.

Friday, 29 November 2013

The perils of naming a new model

Coming up with a name for a new model of car is a fraught business. An excellent website which I frequently enjoy reasing, Letters of Note, provides in epistolary form part of the process by which one notorious model name was arrived at: May I submit UTOPIAN TURTLETOP?

Accidents caused by uninsured drivers - elsewhere in the EU

Bloy v Motor Insurers' Bureau [2013] EWCA Civ 1543 (29 November 2013) is an eye-opening case for one who hasn't paid much attention to insurance law since finishing the Commercial Law paper in the Law Society's Part II examination - and that, if you know about these things, will give you an idea about how long ago it was. The claimants (Mrs Bloy was the injured party's mother and litigation friend, the other claimant her infant son) sued for damages for extensive personal injuries that occurred in a car accident in Lithuania in 2007. The other driver was a local, and was convicted of driving while under the influence of alcohol, or whatever words Lithuanian law uses ('influence' suggests something subtle and external, or involuntary, doesn't it? Shall we just say 'drunk'?). She was also uninsured. The claimants were both British citizens.

Under the motor insurance directives (details of which you can find in the judgment, if you feel the need) the MIB is responsible not only for picking up the pieces left when uninsured drivers in the UK hurt people, but also when British citizens are injured by uninsured drivers in other EU countries. That's logical, although I suppose not inevitable: the Directives could have done the opposite, making the Lithuanian MIB (the judgment tells us that there is one) responsible. But, consistent with other consumer-orientated legislation I suppose, the Directives chose to make the injured party's home MIB the responsible one.

The question in this case was, whose law applies? The Directives set minimum levels for compensation, which the (UK) MIB comfortably, and generously, exceeds: its Lithuanian oppo chooses not to. The MIB wanted the amount of compensation to be governed by Lithuanian law. The matter was dealt with, one might think conclusively, in the judgment of Moore-Bick LJ in Jacobs v Motor Insurers' Bureau [2010] EWCA Civ. 1208, [2011] 1 WLR 2609 - but the MIB sought to distinguish the present case from that judgment.

To cut quite a long story short, they received short shrift from the Court of Appeal, and instinctively I feel that must be the right answer. The compensation payable to the injured party should surely be at a level appropriate for his home country, not at the lower level that might apply in the country where the accident occurred.

Tuesday, 15 October 2013

Emissions: supercredits out of favour, Germany wants long transition

Yesterday, the Environment Council discussed CO2 emissions from cars. The press release of the meeting says:
CO2 emissions from cars
The Council examined the final compromise text of a draft regulation amending regulation
443/2099 to define the modalities for reaching the 2020 target to reduce CO2 emissions from new passenger cars. The text was negotiated in informal trilogues with the European Parliament last June.
The Council confirmed its willingness to reach, at the earliest opportunity, a first reading agreement with the European Parliament on this file, and maintain a high level of ambition.
The Council agreed to support the presidency in seeking, together with the Commission, further
contacts with the European Parliament in order to explore the possibility of finding some limited
flexibility, while maintaining the overall balance of the compromise agreed in June and reach a
solution satisfactory to all.
The Commission presented its proposal in July 2012 (12733/12).
Which seems to mean that the Germans have kicked the issue into some longish grass: the 95g/km limit would not be fully operational until 2024 under the new proposals. Although this is a legal topic, it has has little to do with law, and everything to do with political horse-trading, at which the European Union and its predecessors have always excelled. Germany wants to protect its car industry, which on average produces cars that emit rather more carbon dioxide than most (especially when driven at Autobahn speeds, but that isn't up for discussion in this forum). The rest of the EU supposedly kept quiet over the summer, to avoid rocking the boat and interfering with the German general election, although presumably there are plenty of governments in EU countries which would be pleased to have seen someone other than Mrs Merkel win. France took an opportunity to remind the Germans of the importance of respect for Union legislation, banning sales of Mercedes cars with illegal refrigerant in their air-conditioning systems, as I reported at some length at the time (and that did have an interesting legal dimension).

So has everything changed after the election result? Not a bit of it. Now it seems that Britain (and Poland) are supporting Germany in its efforts to push back the lower emissions limits - reportedly because the British government wants German support against French proposals to cap bankers' bonuses. At least, they appear to be prepared to help Germany delay matters. The German government now proposes a solution that relies not on 'supercredits', which is what it has argued for (and secured agreement on) in the past, but on delaying the introduction of the lower limits. Exactly the uncertainty that the European motor industry does not want. And the delay could be considerable, as dumping the supercredits approach means restarting negotiations with the Parliament - this could go on for ever!

Thursday, 3 October 2013

Selecting Car Trademarks - Ford Mustang Was Almost Called What?

Selecting Car Trademarks - Ford Mustang Was Almost Called What?

Germany tries new objection as car CO2 vote returns | European Voice

Germany tries new objection as car CO2 vote returns | European Voice

NSK: Plea Agreement with respect to Bearings » Automotive World

NSK: Plea Agreement with respect to Bearings » Automotive World

JTEKT Plea Agreement with the United States Department of Justice Concerning Certain Automotive Products » Automotive World

JTEKT Plea Agreement with the United States Department of Justice Concerning Certain Automotive Products » Automotive World

Panasonic executive charged with price-fixing on Toyota components

Panasonic executive charged with price-fixing on Toyota components

South Africa: Appeal court confirms - no design protection for spares

In August last year, the Motor Law blog reportedthe first instance judgment in BMW v Grandmark, a case before the North Gauteng High Court, Pretoria. Ranchod J held that there was no infringement of BMW’s registered designs for certain spare parts (all being for external components of the 3 series, which were claimed to e ‘aesthetic’), nor was there trade mark infringement. Now the Supreme Court of Appeal has rejected BMW’s appeal.
The designs concerned did not meet the requirements for registration as aesthetic designs because, while the appearance of the car itself was no doubt an important factor in attracting customers, when they came to buy replacement parts they were not interested in the aesthetics of the article. All that mattered was whether it would do the job.
The trade mark point concerned the use of the letters ‘BM’ in parts numbers printed on the packaging. BM was a registered trade mark of the manufacturer, but the court held that there was no infringement because that use of the letters was not ‘trade mark use’. Trade marks function as badges of origin, and in the context of a parts number it would not be regarded by a customer as an indication of origin. In a thoroughly commonsense judgment, Nugent JA went on to say that the fact that a different origin was clearly indicated ensured that there was absolutely no danger of the letters being taken as indicating that BMW had made the components.
However, some commentators believe that the outcome of the design case goes against the spirit, but not the letter, of the law. They expect a further appeal.
Bayerische Motoren Werker Aktiengesellschaft v Grandmark International (Pty) Ltd and Another (722/12) [2013] ZASCA 114 (18 September 2013) and see the Afro IP blog here.

Magna, IAC, Faurecia part of German price-fixing probe

Magna, IAC, Faurecia part of German price-fixing probe

As autonomous vehicles gain traction, industry needs one standard, experts urge

As autonomous vehicles gain traction, industry needs one standard, experts urge

Monday, 16 September 2013

Prize promotions - guidance from CAP

The Committee of Advertising Practice has issued a new "Help Note" on promotions with prizes, which is likely to be of assistance to any business engaging in that sort of promotional activity - which is certainly not unknown in the motor trade ... You can find the page on the CAP website here.

Compensation for breach of Data Protection Act: (nominal) damages and distress

A data subject whose rights under the Data Protection Act 1998 are breached can claim compensation, for damage that he or she has suffered and for any distress suffered in addtion. (In rare cases, the Act allows a claim for compensation for distress only, too.) In Halliday v Creation Consumer Finance Ltd (CCF) [2013] EWCA Civ 333 (15 March 2013) the Court of Appeal had to consider a case in which the data subject, Mr Halliday, had been awarded only nominal damages for loss of reputation, and the District Judge took the view that the claim for compensation for distress failed because of the nominal award. To succeed in the second part of the claim, he would have to have been awarded substantial damages under the first head, and the damages that he was awarded were general damages rather than special damages designed to compensate a particular loss. On appeal, the county court judge agreed with this assessment. The Court of Appeal differed, though, and awarded him a modest sum for distress: this was the first case on section 13(2) of the 1998 Act to come before the courts and importantly the Court of Appeal proceeded on the basis that compensation for distress did not require an award of substantial compensation for actual damage - that was conceded by the defendant (respondent) before the court considered the case. So perhaps it proves little, but as the first case in this rather important area it certainly merits comment.

Volume 13 number 10 - links to source material (work in progress)

Subject access request: ICO's online checklist and Subject Access Code of Practice.

Fairstar Heavy Transport NV v Adkins & Anor [2013] EWCA Civ 886 (19 July 2013)

Daniel Stewart & Co plc v Environmental Waste Controls plc [2013] EWHC 1763 (QB)

Citroen Belux NV v Federatie voor Verzekerings- en Financiele Tussenpersonen (FvF) [2013] EUECJ C-265/12 (18 July 2013)

Thursday, 5 September 2013

Spain: competition authority launches proceedings concerning price-fixing in car market

Following an investigation in July (see this press release), the CNC, Spain's national competition authority, has initiated proceedings against several car manufacturers and their dealers for price-fixing and exchanging commercially sensitive information, and against some others for exchanging information only. Auditors and data processing companies also seem to be in the frame. The press release (in Spanish) is here, and there is also a report from Reuters.

Running the press release through Google Translate reveals little more information, other than a list of vehicle manufacturers and dealers who are under investigation, and that the authorities have 18 months in which to complete the exercise.

Wednesday, 4 September 2013

Lookers gives initial undertakings to OFT following merger with Shields

Lookers Motor Group Limited completed the acquisition of Shields Automotive Limited in May. The OFT is now considering whether the deal is within the scope of the Enterprise Act 2002 and if it is whether the merger might lead to a "substantial lessening of competition", in the awkward words of the Act. The OFT's website says:
The Office of Fair Trading is considering whether this agreement has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
On 2 September, Lookers plc and Lookers Motor Group Limited gave undertakings to the OFT that they will keep the businesses separate for the time being. Nothing there to suggest that this is anything more than the OFT looking into the market effect of a merger, which it does all the time: the undertakings preserve the status quo, in case the authorities decide that the merger has to be undone.

You can read the full text of the undertakings here, and the invitation to comment here. They ask for comments by 17 September, incidentally. Don't hang around!

Tuesday, 27 August 2013

Mercedes win in France (for now)

The Conseil d'Etat sided with Daimler against the French ban on sales of four models with arguably illegal refrigerant in the AC system. The victory is only temporary, though, and lasts while the judges give the matter some more thought. However, they did express the view that there was "serious doubt" about the legality of the French government's move. Read the Press Release here and the full judgment here. I'll be practising my French on them tomorrow, and it might be worth coming back to this blog after that - there will surely be more to say, though whether I can work out what it is remains to be seen.

The Control of Noise (Code of Practice on Noise from Ice-Cream Van Chimes Etc.) (England) Order 2013

The Control of Noise (Code of Practice on Noise from Ice-Cream Van Chimes Etc.) (England) Order 2013  must do exactly what it says it does. I plan to rush out with a printed copy next Sunday afternoon, when our peace and tranquillity is shattered, as it always is. Perhaps, though, I must admit to being fortunate that there was no such legislation in place when I spent my summer vacations driving an ice-cream van.

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Friday, 9 August 2013

The ABI and BIBA publishes consumer guide to help customers buying ‘pay how you drive’ insurance

There is also a guide for the benefit of insurance companies, which includes the helpful advice that "opt-in" consent should be obtained from motorists before sharing telematics information with certain parties. So telematics, which can be a very personal record of driving patterns, are to be regarded as personal data.

New Hampshire Supreme Court Holds Settlement Unenforceable Under Anti-Waiver Provisions Of State Motor Vehicle Franchise Law

In the US, where dealers enjoy protection that would cause apoplexy in the European Commission, state motor vehicle franchise laws often proscribe agreements that purport to waive the statutory protection given to dealers. When a new franchise relationship is formed, a manufacturer cannot pressure the new dealer into forgoing legislative safeguards against termination or encroachment, among other things. But what happens when a dealer waives such rights in connection with a settlement of litigation? In New Hampshire, at least, such a settlement agreement will not be enforceable, according to a recent ruling by that state's supreme court.

See the full story here from Day Pitney LLP.

Mercedes refrigerant and French sales ban

The French government last month imposed a ban on the sale of Mercedes A and B class cars and CLA model, which use a refrigerant prohibited by EU rules: they have been refused registration by the Systeme d'Immatriculation des Vehicules. The problem had been bubbling under for a while (see for instance this from Lib Dem MEP Chris Davies), but it shows no signs of abating yet and I will try to expand this posting as new facts emerge (or, having already emerged, come to my attention). The French government's action is claimed to be to protect domestic manufacturers against unfair competition from the German manufacturer, and Commissioner Tajani supports the French position.

The ban relates to cars assembled since 12 June and has been imposed because of the manufacturer's refusal to stop using the air-conditioning coolant R134a, a potent global-warming gas 1,400 worse than carbon dioxide, which has been banned from new models (not, note, new cars) since the start of the year. The German authorities decided to let Daimler continue to use it, though, because it was not happy about the replacement, R1234yf (or 2,3,3,3-Tetrafluoropropene, or CH2=CFCF3).

Directive 2006/40/EC came into effect in 2011 requiring all new car platforms approved after the start of that year to use a refrigerant with a Global Warming Potential below 150: existing models were given until 2017. The  new gas has a 100-year GWP of 4, compared with the old gas's 1,430, but the Germans have safety concerns. In December last year, Mercedes testers found that it created a fireball if sprayed on a hot engine - not an unlikely occurrence in a collision. R134a is also flammable, but at higher temperatures. Both also release toxic hydrogen flouride gas.

On 25 July the tribunal administratif in Versailles ordered the French government to re-examine the case after the manufacturer argued that the correct EU safeguard procedures had not been followed, but the French government shows no signs of lifting the ban. National governments have the right to stop products being sold when they fear an incorrect application of EU regulations, and when vehicles would seriously harm the environment, and it is this safeguard procedure which the French government has invoked. (There's a lengthy story on the French website,

The relevant German authority, the Kraftfahrt-Bundesamt or KBA, propose to re-certify the new Mercedes vehicles under earlier approvals granted for older models. Unsurprisingly, the Commission has warned against such a course, and safeguard procedures allow governments to halt sales until the Commission decides whether their KBA certification complies with European law. Daimler propose to challenge the ban on the grounds that the old compound does not pose a serious environmental threat. And given that the roads of Europe have plenty of cars on them with the old stuff in their air-conditioning systems, and it will still be put into new cars for another three years, the urgency seems a little misplaced. Although Daimler's claim that "virtually all new and used cars on European roads are equipped with the proven and safe refrigerant R134a" goes a bit far - my car's air conditioning depends not on some unpleasant chemical, but on folding down the roof, always the best way.

On 8 August, it was reported that the KBA considered that the replacement gas posed no real threat to vehicle occupants, which tends to weaken Mercedes-Benz's case a little. Its interim report, published that day, confirmed that the new gas was riskier but not dangerous, a fine distinction: its full report is due next month, but here is the Reuters story from today.

The next hearing in the litigation, an appeal against the decision of the tribunal administratif (presumably to the cour de cassation), will take place on 23 August. At the same time, the European Commission notes doubts have been raised about the "lack of transparency by authorities."

Greece: Fiat dealers asked to waive rights

The transition from one block exemption to the next has always been troublesome, although we seem to have got past the technique of terminating the entire network and offering reappointment to some or all of them. However, this time round Fiat Group Automobiles Hellas S.A. (FGAH) seem to have excelled themselves. Determined, it seems, to enter fully into the spirit of the new regulation, which of course contains nothing in the way of dealer protection, they are requiring their dealers to waive any accrued rights that they might have under the old Regulation.

They have sent out a letter of intent, in English as well as in Greek, which requires dealers to waive their rights against FGAH in relation to their existing agreements and the termination of those agreements. On 31 January next year, dealers will be required to declare that they have no claims against Fiat arising from the existing agreements and their termination, and irrevocably to waive any claims they do have.

Greek FIAT dealers are not amused. They consider the importer's and the manufacturer's actions unacceptable. The Greek car market, in common with much of the Greek economy, is in crisis, and dealers fear that FGAH is intending sometime probably next year (hence the date mentioned in the letter) to transfer the import contract to a third party. Waiving claims to protection from termination with that in prospect is not an attractive proposition for the dealers (though for the importer, in anticipation of handing over the franchise, it makes commercial sense to clear the decks).

Moreover, under Greek law I am told that a dealer may very possibly have a claim for a goodwill indemnity on termination based on the commercial agents directive (Directive 86/653 EC) and the Greek law which implements it, Presidential Decree 219/91. Recent Greek Supreme Court judgments (139/2006 and more recently 15/2013 and 16/2013, although I am not convinced that the first of those links is to the right case) indicate that dealers are more likely than not entitled to a goodwill indemnity. The Fiat letter seems to be designed to ensure no such claims will be possible, notwithstanding that Article 19 of the Directive specifies that the parties may not derogate from the indemnity and compensation provisions (Articles 17 and 18) before the contract is terminated. It would also rule out claims for sunk costs.

The commercial agents directive has been mooted by CECRA and the European Distribution Lawyers as an alternative source of protection for dealers, given the removal of their protection in the latest block exemption. But it could never serve such a purpose directly, for the simple reason that dealers are not and never have been commercial agents. At best, the directive could provide a model to be used to create a European equivalent, perhaps, of the dealers day in court acts found throughout the United States. What the Greek Presidential Decree says I do not know, but if it extends commercial-agents-style protection to dealers, it goes beyond what the directive requires, and I cannot see that a EU point involving Article 19 can arise - which is not to say that the Decree itself contains no such provision, just that if it does it's a home-grown Greek thing.

Fiat's action makes the conclusion of the new contract conditional upon the acceptance of unrelated terms and obligations, and takes undue advantage of the situation in which dealers who have significant sunk investments find themselves, especially in a crisis market with no alternatives. Lawyers acting for dealers contend that this approach is illegal under Greek law, so we might find ourselves watching this for quite long time.

Thursday, 8 August 2013

Commission brings wire harness cartelists to book

Alex Haffner, of Dentons as the firm is now, spoke at the Motor Law conference this year about the world-wide action being taken against cartels in the car parts industry. In this guest post, he brings us up-to-date with recent developments ...
On 10 July, the European Commission announced that it had imposed fines totalling €141 million on four Japanese car parts suppliers. The fines relate to the operation of five separate price-fixing and bid-rigging cartels for the supply of wire harnesses to Toyota, Honda, Nissan and Renault.
Wire harnesses are the "central nervous system" of a car and transmit electrical power throughout a vehicle. The Commision's investigation, which began with unannounced "dawn raid" inspections of the cartelists in February 2010, found that the companies concerned had coordinated the prices and allocation of supplies of wire harnesses. Contacts between the cartelists took place in both Japan and the EEA. Some of those contacts were designed to rig the tenders carried out by the car manufacturers over a significant period (in the case of Toyota, for more than nine years).
One parts supplier, Sumitomo, received full immunity as it was the first company to confess to its participation in the cartels to the Commission - it otherwise would have received a €291 million fine. The other companies also received reductions in their fines of between 20 and 50 per cent because they too subsequently acknowledged their participation in the cartels and their liability for them. This so-called "settlement procedure" helped to speed up the Commission's investigation significantly.
Somewhat surprisingly, this is the Commission's first cartel decision of 2013. Of greater interest to the automotive industry, though, is that it represents the first of what are likely to be a number of European decisions concerning cartel activity in car parts supply. Investigations are already ongoing into allegations of similar practices in respect of occupant safety systems, ball bearings, thermal systems and lighting.
The Commission's full decision will be published in due course. In the meantime, those affected by the cartelists' actions are likely to be considering how they might be able to obtain damages from them. Last month, the Commission adopted proposals for a Directive which aims to make it easier for such "follow-on" actions to get off the ground in Europe, where take-up has been slow compared to other countries such as the US and Canada. Several follow-on claims have already been launched in those jurisdictions following fining decisions issued by the local competition authorities.

Thursday, 1 August 2013

Hughes, R. v [2013] UKSC 56 (31 July 2013)

Hughes, R. v [2013] UKSC 56 (31 July 2013)  drives a coach and horses through the offence created by section 3ZB of the Road Traffic Act 1988, of causing death while driving while unlicensed, disqualified or uninsured. The defendant was driving, faultlessly though without insurance and with only a provisional licence (so I imagine that any insurance policy that might have been around was not going to help), along the A69 from Carlisle to Newcastle when a car came towards him on the wrong side of the road and collided with his vehicle. The other driver was under the influence of heroin, which he had apparently taken to overcome the fatigue that had been brought on by working a series of 12-hour night shifts at Largs power station in western Scotland before undertaking a round trip to Newcastle, some 200 miles each way, of which he was about 30 miles into the return leg. He was killed.

Clear enough who was at fault, but what about the the unfortunate driver whose camper van was hit? Section 37B says
A person is guilty of an offence under this section if he causes the death of another person by driving a motor vehicle on a road and, at the time when he is driving, the circumstances are such that he is committing an offence [under various sections dealing with being unlicensed etc].
He was not, you will note, prosecuted for driving without insurance or on only a provisional licence. The Recorder ruled that he had not committed the offence, because he had not caused the death: but the Court of Appeal followed an intervening case, R v Williams [2010] EWCA Crim 2552; [2011] 1 WLR 588, and decided that, in law, Mr Hughes was considered to have caused the death of the other driver.

The Supreme Court observed that a driver may not have insurance because he chose not to pay the premium, because he overlooked a renewal notice, or because he misunderstood the cover that was in place. Various degrees of culpability apply, but section 37B condemns drivers in all three categories equally. Parliament's intention, when inserting the new section (and its neighbour) in 2006, was to fill the gap between the offences of dangerous driving and causing death by dangerous driving - or, looking at it another way, the yawning gap between 2 years and 14 years, the maximum penalties for the two offences. Or, to look at it yet another way, a typical knee-jerk reaction by the government to create new, half-baked offences instead of dealing with the manifest shortcomings of what was already on the statute book.

However, it was plainly not just to punish an uninsured (etc) driver if a suicidal pedestrian were to run out in front of him, or a homicidal driver ram his car. Where, then, should the line be drawn? The offence should not impose a greater penalty than the underlying offence (driving without insurance, etc) where the difference is a matter for which the defendant is not culpable. Professors Sullivan and Simester ([2012] Criminal Law Review 754) described this as a colourable attempt to pass off strict liability as something else: the Supreme Court thought this was a pejorative description, but an accurate one. The Court thought that it must follow from the use of the expression "causes…death…by driving" that section 3ZB requires at least some act or omission in the control of the car, which involves some element of fault, whether amounting to careless or inconsiderate driving or not, and which contributes in some more than minimal way to the death. It is not necessary that such act or omission be the principal cause of the death. The appeal was allowed, and section 37B looks pretty lame.

Volkswagen Aktiengesellschaft v Garcia & Ors [2013] EWHC 1832 (Ch) (25 June 2013)

Car security isn't what it was when I was young. Leaving aside the fact that my old Frogeye didn't even have door locks (although there was a lock on the bonnet, so that might have foiled a thief, who'd have had to be pretty mad to go for a bright orange car in the first place)  let alone an immobiliser, even the locks on cars of that era left a lot to be desired. On a camping holiday with a schoolfriend and his family, he locked the keys to his Cortina GT in the boot, but his father (who ran a Ford dealership, although he himself drove a very exotic BMW 3.0CSi) opened it with the key to his caravan.

Nowadays, although there are still mechanical aspects to vehicle security, it's an area which has a great deal more to do with electronics. It was to protect the algorithm that lies at the heart of the security system it uses (along with several other manufacturers), the Magamos Crytpo chip, that Volkswagen found itself in court last week (Volkswagen Aktiengesellschaft v Garcia &amp; Ors [2013] EWHC 1832 (Ch) (25 June 2013)).

The facts were quite simple. A handful of academics had "attacked" (as they say in the field) that security system, and discovered some flaws. The vehicle manufacturers who stood to be embarrassed by those flaws might, you'd think, be grateful, but the academics proposed to deliver a paper at a conference, and in doing so would reveal the key algorithm to the world. In the name of "responsible disclosure" they had not simply gone ahead and done this: they had talked to the proprietor of the confidential information concerned. But they hadn't talked to VW, not until much nearer the date of the conference (which was last week, hence VW's need to seek an interim injunction).

To do this, the academics used a program called Tango Programmer, produced by an organisation called Scorpio, which is based in Bulgaria, and purchased by the academics for €1,000. There is some discussion in the judgment of how the program was devised, and where its authors found the Megamos Algorithm, which they might have arrived at by "chip-slicing" - cutting open the chip and examining the gates under a microscope. The important question was whether the software was legitimate or not. As the judge observed, "Just because it comes from Bulgaria does not mean it is illegitimate." And the fact that the website (not available when I went looking for it the other day, but back on line now) was written in "broken English" did not persuade him. In fact the website looks plausible, and the products shown on suggest that this is a business of some substance; it appears to be a limited company, and the strangest thing about it is its location bang in the middle of Bulgaria.

There was an issue about VW's right to sue. The algorithm was devised by Thales, who were not initially a party to the action, but the judge added them as a "proper and necessary" party, saying that it was likely within the meaning of Cream Holdings Ltd & Ors v. Banerjee & Ors [2004] UKHL 44 (14 October 2004) that "the confidentiality in the Megamos Crypto algorithm belongs to them", which is an interesting way to express it. This point did not stand in the way of an injunction being granted: Thales had standing to sue, but the judge held that VW did too, as they had a legitimate interest in being a co-claimant.

There is an old Jacob J case, Mars UK Ltd v Teknowledge Ltd [1999] EWHC 226 (Pat) (11 June 1999), [1999] 2 Costs LR 44, [1999] EWHC 226 (Pat), [2000] FSR 138, on reverse engineering, in which he held that it was not a misuse of confidential information to reverse engineer a product you had bought even to obtain information encrypted for security. The present case was argued on the basis that that case had been correctly decided, though that is in dispute, and (of course) it was the claimants' submission that it did not apply because the Scorpio Programmer software was not legitimate. The judge ended up relying on the "murky" origins of the program and the lack of effort on the part of the defendants to ascertain whether it had been produced by legitimate reverse-engineering or otherwise, and on that basis he held that there would be a breach of confidence. Should an injunction be granted to prevent publication? Not merely to save VW's blushes, said Mr Justice Birss, considering Article 10 of the European Convention, section 12(3) of the Human Rights Act, and the Cream Holdings judgment (but not American Cyanamid, which he said was clearly not the right test in the circumstances), which gave the guidance that the standard for not allowing publication is a flexible one, and that the court should be "exceedingly slow" to make interim orders if it is not satisfied that the claimant will probably succeed at trial.

Thales or VW would, he thought, probably succeed at trial, so that hurdle was cleared. Then the balance of public interest and the public interest defence fell to be considered. Freedom of expression and academic freedom were very important, but the epidemic of car crime that would be unleashed if the algorithm were published was more important. The software is sold by someone who understands that it can facilitate crime: there's a disclaimer that says (sic)
All devices and software developed by Scorpio-LK Ltd. are designed and sold with legal purpose to enchance and help people working in the sphere of car repairs and maintenance. The company doesn't take responsibility for any misuse of our products for illegal purpuses. Hence persons misusing our products for illegal purpuses bear their own responsebility for such acts.
And elsewhere:
Scorpio-lk Ltd accepts no responsibility for misuse of software for illegal purposes. The purchased softawre can only be used to repair vehicle immobilisers. On purchase of software client accepts responsibility for software use rendering Scorpio-lk Ltd unaccountable for illegal use.
The English, incidentally, seems no more broken than that of many native speakers. But the judge concluded that the claimants would probably be able to show that the software was not legitimate, and the defendants should have appreciated that.

The judge granted the injunction sought by VW, requiring "redaction" (the trendy alternative to "editing") of the paper they had written. They could still impress their peers by showing that they had derived the algorithm, and the claimants could remedy the problem identified with it: win win. The judge clearly came to the view that the defendants' protestations about "reasonable disclosure"  were nothing more than self-justification, and not the actions of responsible academics - a harsh view, but consistent with their reluctance to take even a few simple steps to ascertain where Scorpio-Lk Ltd had found the algorithm.

The judgment has been criticised by Prof Ross Anderson at Cambridge University, who is quoted in Automotive News Europe. He makes the valid point that the bad guys will not be prevented from doing what they have been doing all along - and the good guys won't know what the problem is. I'm not sure I understand his point: the important thing is that VW and Thales know, and can fix the weakness.

Thursday, 11 July 2013

Antitrust: Commission consults on review of safe harbour for minor agreements ("De Minimis" Notice)

The Notice on Agreements of Minor Importance has always been a key document in EU competition law (and EC competition law before it). It defines what agreements (and other arrangements) are too small to be worth bothering with, because they can safely be assumed not to affect competition, or at least not appreciably. Specialised car manufacturers can rely on the Notice to save them from having to comply with the block exemption. Now the Commission is consulting on a new Notice: here's what its press release says.
The European Commission invites comments on a proposal to revise its guidance notice for assessing when minor agreements between companies are not caught by the general prohibition of anticompetitive agreements under EU competition law. The proposal aims at updating the present Notice, in particular taking into account recent developments in the case law of the European Court of Justice (ECJ*). Comments can be submitted until 3 October 2013. In light of these comments, the Commission will then adopt a new notice in
Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements that are aimed at or result in appreciable restrictions of competition. The current De Minimis Notice (adopted in 2001) defines, with the help of market share thresholds, what the Commission considers not to be an appreciable restriction of competition (see IP/02/13 ). It creates a safe harbour for companies whose market shares do not exceed 10% for agreements between competitors or 15% for agreements between non-competitors. If an agreement contains a hardcore restriction, that is, a very serious restriction for which there is a presumption of anti-competitiveness, the companies cannot benefit from the safe harbour.
The Commission's proposal is aimed at ensuring consistency with other recently amended competition rules, in particular the 2010 Vertical and Horizontal Block Exemption Regulations (see IP/10/445, MEMO/10/138, IP/10/1702, MEMO/10/676) and with an ECJ ruling of December 2012 (case C-226/11 Expedia). 
Questions from a French court in the Expedia case raised the issue of whether agreements aimed at restricting competition (restrictions having an anti-competitive "object") can be considered as "de minimis" and therefore fall outside the scope of Article 101(1). The Expedia judgment has established that a restriction with an anticompetitive object constitutes, by its very nature, an appreciable restriction of competition. The proposal therefore clarifies that agreements containing a restriction by object are always seen as an appreciable restriction of competition.

The consultation documents are available at:

* It annoys me when lawyers lazily give the Court of Justice the adjective "European". It annoys me a great deal more when another European Union institution does so. The Court is properly called the Court of Justice of the European Union, but that title refers to the institution which consists of two courts, the General Court (which we used to call the Court of First Instance, which made it a bit easier to understand what it was for) and the Court of Justice - just that, which is utterly confusing but must be respected as best we can. Valentine Korah always used to call the Court of Justice "the Community Court", so I wonder whether she'd now call it the "Union Court"? I shall try to find out.

Friday, 21 June 2013

Trading Stadards assumes responsibility for approving Codes

With the OFT being shuffled out of the consumer protection area, responsibility for codes of practice has passed to the Trading Standards institute, whose new Consumer Codes Approval Scheme was launched on 21 June. It takes over the nine approved codes of practice, including of course the biggest (and oldest, and best), Motor Codes.

There's a piece about it on the Guardian's website here, too, and probably many others too.

Tuesday, 11 June 2013

Commission proposes legislation to facilitate damage claims by victims of antitrust violations

The Commission has adopted a proposal for a directive on compensation for victims of antitrust violations, such as cartels. The press release, and links to further information, is here.

Thursday, 30 May 2013

U.S. Department of Transportation Releases Policy on Automated Vehicle Development

The legal treatment of driverless or autonomous cars remains a fascinating area - so this press release from NHTSA will be of interest, even if it does not directly affect our law. And you can view NHTSA's statement of policy on automated vehicles.

Tuesday, 14 May 2013

US: Volvo opposition to LOVOL trade mark rejected

My friend John Welch reports in his TTAB Blog that Volvo's opposition to LOVOL, for vehicles, was dismissed by the TTAB. And, I think, quite right too. Likelihood of confusion? I think not. The Board seem to have been impressed by the fact that the junior mark is a palindrome, not something I have seen feature in trade mark cases anywhere else, and that the word "volvo" comes from a dead language. As John asks,
qui cogitat?

Thursday, 18 April 2013

IBC's annual conference on competition law challenges in the motor vehicle sector (25 June)

For several years now, IBC Legal Conferences' annual event in Brussels has been almost compulsory for block exemption aficionados (or should that be aficionadi? Evidently not, according to the Bloomsbury Concise English Dictionary, which came most easily to hand when I reached towards my shelf of reference books, as it comes from Spanish rather than Italian. I am however disturbed to find that its original Spanish meaning was a devotee of bull-fighting, so notwithstanding the broader sense it has acquired in English I will use it carefully in future). I have been to the conference several times - once even to speak at it, and last year to blog extensively (here, et seq) - and it is invariably excellent. Not uniformly excellent: the conference organiser who assembles a programme with no duff session is lucky indeed, but IBC maintain a generally high standard across the whole day. Details of this year's edition can be found here.

The cast is pretty consistent, too. Looking over the list of speakers for this year's event, much of it is exactly the same as last year's - and why not? If it works, don't change it. The regular speakers are all excellent, and well-informed about the subject (which is why, apart from the fact that he's a friend, I invited one of them, Joseph Vogel, to speak at this year's Motor Law conference).

This year, the programme ranges a little wider than just the block exemption (as it did last year, too). There will be a session on the global parts cartel (which Alex Haffner of SNR Denton covered at our conference in February), another on information exchanges, and one on telematics, a subject which raises some fascinating competition problems.

I will preview the conference in more detail over the coming weeks, during which the block exemption will be very much in my mind. Of course, the date of this event is close to the long-awaited day on which the new regime comes fully into operation, although dealing with implementation of the legislation isn't a key area for discussion - everyone will have that sorted out by then, one hopes. We'll be presenting our own block exemption seminar in September, but the events will be complementary - no reason not to take in both. In previous years, we have been able to offer Motor Law subscribers a 10 per cent discount, and I hope we can do so again this year.
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Thursday, 28 March 2013

OFT issues five infringement decisions in the distribution of Mercedes-Benz commercial vehicles investigation

The OFT has issued the decisions that we have been expecting. Press release no 30/13 of 27 March 2013  says:
The OFT today issued decisions finding that Mercedes-Benz and five of its commercial vehicles dealers infringed competition law and has imposed fines totalling over £2.8 million.
Each of the five decisions relates to separate infringements that took place over different periods between March 2007 and January 2010, involving different parties. The nature of the infringements varies but all contain at least some element of market sharing, price co-ordination or the exchange of commercially sensitive information.
These decisions follow settlements with Ciceley, Enza, Mercedes-Benz and Road Range announced in February under which these parties admitted breaching the law and agreed to pay a fine and co-operate with the OFT. Northside, which also admitted infringing competition law, has avoided a fine under the OFT's leniency policy. The remaining dealer, H&L Garages, did not settle with the OFT and the two infringements it was involved in were not therefore part of settlement.
Today's announcement brings the OFT's investigation to a conclusion. The full decisions will be published on the OFT website later this year.
So we still don't get to see the details: this is merely a formality, as far as the outside world is concerned.

Tuesday, 12 March 2013

Penalty clauses

A common problem in contract drafting is avoiding writing a liquidated damages clause that manages not to be a penalty. I thought the touchstone was whether it was a genuine pre-estimate of loss - an honest attempt to put a value on the damages that would be suffered if there were a breach. Not so. In Cavendish Square Holdings Ltd v El Makdessi [2012] EWHC 3582, a case on a restrictive covenant in a share sale agreement (a breach of which meant that future instalments need not be paid and the seller would have to sell the rest of the shares at a lower valuation) the High Court decided the matter on the alternative "commercial justification" test. The court held that the adjustment of consideration would reflect the loss of goodwill. The provisions were not extravagant or oppressive and the purpose was not to deter breach. The provisions had been negotiated on a level playing field (and yes, those words do appear in the judgment).

So, the commercial justification test is more flexible than the old genuine pre-estimate one, although I have a feeling that the one will often include the other - that the commercial justification for a dodgy clause is that it does represent the loss that might be suffered. But there will be cases that go the other way too: and the key element in deciding what is a penalty and what isn't must be whether it is designed to deter breach or not.

There's another point to watch out for: in the case, the consideration adjustment clause was held to be a penalty because it covered a loss which had already been compensated, by damages for breach of fiduciary duty. So make sure you don't include anything that looks like double counting!

March happenings

On 6 March, the report on the BIS consultation on implementing the consumer rights directive was published.

The deadline for implementing the late payments directive is 16 March. Legislation has already been passed and will come into effect on the day.

The end of March sees the conclusion of the Law Commissions' consultation on unfair terms and the definition of "exempt term" in consumer contracts, and its report and recommendations to government. The government will respond by the end of May. The result will feed into the Consumer Rights Bill, the government's flagship consumer protection measure.

That other block exemption

There is, of course, more than one block exemption, though in the motor industry it is possible to lose sight of all but one of them. To many people, strange as it may seem, the most important one is on technology transfer agreements - the regulation which started off, many years ago, as the patent licensing block exemption and the related (but later) know-how licensing one, which were later merged.

Now the Commission is preparing a new TT block exemption, and guidelines. It won't be very different from the old one, which expires on 30 April, but there will be a change to the key definition which sets the regulation's scope, to include agreements that containg provisions relating to the purchase of products or the assignment of other intellectual property rights, provided that these are "directly and exclusively" related to the production of the contract products.

Also, the 20 per cent market share threshold will apply to agreements between non-competitors where the licensee owns technology which it only uses for inhouse production and which is substitutable for the licensed technology.

The Commission also proposes to revise the current excluded restrictions, to catch all exclusive grant-backs.

There is much more that could be said about this - but I'm working on the assumption that readers will either not be interested enough to read more, or will have found what they need elsewhere. A topic, I think, for my IP blog instead.
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Sunday, 10 March 2013

Queensland: specific legislation for motor dealers

Australian law firm, Holden Redlich, report that the Queensland Government is proposing to repeal the Property Agents and Motor Dealers Act 2000 (Qld) and split it into four separate industry specific Acts. No doubt both motor dealers and estate agents will be relieved no longer to be lumped in with the other. The idea is to reduce red tape and unnecessary duplication: but what government does not claim to be doing that? Four acts in place of one might be seen to be a multiplication of regulation.

Of course, over here the mere idea of having legislation on the activities of motor dealers is pure fantasy ...
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Friday, 1 March 2013

Motor Law conference report

We are greatly obliged to Motor Law's good friend Steve Hamilton of Auto Retail Manager for writing this report of proceedings at Motor Law's 2013 conference, and to Frank Dumbleton for the photos ...


Block Exemption and the car market
Joseph Vogel, a French avocat specialising in competition and distribution law, said most manufacturers appeared to be sticking with the qualitative and quantitative system that has been dominant under the existing regime – at least for now, and partly due to the fragile nature of the economy. “Manufacturers recognise that now is not the time to be making major changes,” he said.
Looking at the new clauses and obligations that were likely to feature in new dealer agreements, he said that overall there was generally less protection for retailers. For example, he said, most agreements have retained the two-year notice period, but the need to give good reasons for termination has gone.
Obligations around the transfer of contract business (i.e. if a dealer wants to sell to another dealer) have gone from most contracts – and that is a good thing, Mr Vogel said. Similarly, the possibility of opening a secondary outlet no longer exists in most contracts.
The requirement for referring to arbitrators or independent experts is no longer a condition, but remains in most contracts – albeit often limited to disputes about objectives.
Brand exclusivity can be enforced if a network has less than a 30% market share, usually for a period of up to five years.
Many networks are currently in the transition phase towards setting up a new distribution system and one way of doing that, according to Mr Vogel, is to terminate all contracts with two years’ notice, simply on the grounds of the need to adapt. Alternatively, a manufacturer could propose a new contract, or an amendment to distributors, and only terminate if there is a refusal to accept the changes.

Block Exemption and the aftermarket
Should spare parts be treated as brand-specific? That was the question posed by Marjorie Holmes of Reed Smith, and the answer will determine the nature of the contract that manufacturers can write with their dealers and repairers.
If you take the brand-specific view, she said, you have automatically defined a narrow market and inevitably the vehicle manufacturer will be deemed to have a dominant position – which automatically gives rise to competition law problems.
However, if you take a more generous view of spare parts and include all the generic manufacturers in the market as well, then the vehicle manufacturer’s position is much smaller.

Block Exemption FAQs
Barrister Jonathan Turner looked at the EC’s FAQ document on Block Exemption, noting where they go further than the competition regulations (such as the supply of parts to independent repairers), and where they are perhaps more lenient (for example on making bonuses or rebates for captive parts conditional on the sourcing of captive parts).
On the subject of supplying technical data to tool manufacturers, he said he would be nervous about restricting the supply of information about a new multi-brand tool on the market. And while the FAQs say a requirement to use specified electronic tools or equipment for servicing or repairs would be unlikely to lead to a breach of EU competition rules, Mr Turner said he was unsure about this – if it is more than five years it is probably anti-competitive, he said.
However he warned that the courts could take a different view on some issues, given that judges tend to operate based on the merits of the parties involved and not necessarily on the best interests of consumers.

Cartel investigations in the parts market
The world’s biggest ever competition law investigation is focused on the parts industry right now, Alex Haffner of SNR Denton said, involving a co-ordinated approach across different jurisdictions.  Australia is the latest country to come on board with regard to the supply of wire harnesses, and others are expected to join.
Ultimately, Mr Haffner said, it could lead to lower Original Equipment prices.
Japanese executives have already admitted that procurement processes have been rigged for more than the past ten years. Most manufacturers will have been affected, and follow-on actions for damages have already started.
In the USA for example, total fines of more than $800 million have been levied (including $471m against Yazaki) against suppliers of wire harnesses, thermal system controls, instrument panels and automotive bearings, and a number of executives have been jailed. There are also various investigations pending, in the areas of safety equipment, brakes, bearings and fuel systems.
Within the EU, no formal sanctions have yet been imposed, but formal proceedings have been instigated against some wire harness makers. There have also been some ‘dawn raids’ in relation to other car parts, including safety systems, ball bearings and thermal systems. Leon AG, for example, has confirmed that it is under investigation.
Mr Haffner suggested that, within Europe, the UK could become the forum of choice for would-be complainants – and that while the big losers in all this have been the car makers, because their procurement processes were rigged, potentially anyone who has bought a car in the past ten years could be in line for damages.
Summing up, he highlighted the risks involved in exchanging information, for example in collaborative ventures. Even bilaterally exchanged information between two suppliers could be enough for the authorities to take an interest, he said, adding that car makers would have to look at how they run their procurement processes. We could see non-price comparators like quality and innovation playing a larger role.

The return of copyright protection for car parts?

Patent attorney David Musker (Jenkins), a long-standing conference favourite, took as the title of his talk "Section 52 and all that", reviewing the history of copyright protection in designs for car parts from the Morris Marina to the recent Star Wars case in the Supreme Court (Lucasfilms v Ainsworth). Section 52 of the Copyright, Designs and Patents Act 1988 would be repealed when the Enterprise and Regulatory Reform Bill becomes law - a reform required by EU designs law. It would not mean the return of copyright to the car spares industry, because section 51 is the provision that prevents BL v Armstrong coming back to haunt us - but there is no guarantee that it will not fall victim to some similar tidying-up exercise. Meanwhile, the so-called "repair clause" (Article 110 of the Community Designs Regulation) has been considered by the courts, in BMW v Round, and found wanting, leaving the UK's "must match" clause still governing designs for replacement parts and the old Ford case still good law.

The connected car
IHS Automotive recently predicted that by the end of next year, for some of the bigger brands, “every vehicle they sell will offer some sort of connectivity” via internet screens installed on the dashboard, and looking further ahead several companies are working on driverless vehicles.
Adam Aldred of Addleshaw Goddard predicted that not only will we soon be able to stream movies from the web to the car, but that car promotions would start focusing on the apps that are available to go with certain models, for instance to aid the driver or to keep other passengers entertained. 
Given that today’s smartphones, for example, are out of date within a few months, marrying what’s happening technologically with the lifespan of the typical car will be a big challenge for manufacturers, Mr Aldred said. But rather than create an environment in which the technology could be updated for subsequent owners, he said it might be in the manufacturers’ interest for their products to become obsolete within a few years – potentially eliminating the used vehicle market.
He also said that, because of concerns about hacking, manufacturers would have to ensure that the multi-media element was separate from the vehicle’s critical systems, and that the issue of driver errors due to distractions would have to be addressed. It is a criminal offence to use a mobile phone while driving (unless it is hands-free) so where, he mused, will the law draw the line with in-vehicle infotainment?
On the subject of location-based services such as remote diagnostics/repairs provided in future by OEMs and roadside assistance operators, Mr Aldred said that data protection could be a sensitive issue.

The changing face of motor finance
Responsibility for the regulation of consumer credit will move from the OFT to a new regulator, the Financial Conduct Authority, from April 2014, although there will be a transition period that runs into 2016. The initial consultation runs from April to June this year.
The licensing regime will change and businesses will need to re-apply, Stephen Dawson of Shoosmiths said, adding that although there was very little detail at present the deadlines are set in stone and that the Treating Customers Fairly guidelines give a good indication of the regulator’s expectations.
He said retailers needed to look at the aspects of their business that might be affected, and at the relationship with their captive finance house. Are your policies and procedures up to date, for example?
The FCA will be a very pro-active body and will be able to move much more quickly than the OFT has in the past, Mr Dawson stressed.
He also had some good news for the industry with regard to electronic signatures on finance documents. “By 2014, every captive will be doing it,” he said. “From a legal point of view, they need to be no less effective than a handwritten signature and I am certain they pose no issue or risk.”
He said the best method of capture would be software solutions based around an electronic pad with a stylus in the showroom. Not only is it quicker and more convenient for customers, it also means a faster payout and lower costs for retailers. “It’s the future for sure,” he said.
Consumer law update
Adrian Watts of WattsLegal brought the conference to a close with an overview of some significant trends and cases in consumer law over the past 12 months.
These included FSA v Digital Satellite Warranty Co, where the Supreme Court affirmed that FSMA authorisation was required for contracts assuming ‘risk of loss attributable to insured person’ (regardless of whether it is an obligation to repair/replace or reimbursing the cost of doing so); and R v Derby Car & Van Contracts, concerning the sale of pre-registered vehicles. A car was initially registered in the name of a third party to obtain a fleet discount, but was not registered in the customer’s name until up to six months later. Because this information was not disclosed, it left the customer exposed to offences under the Vehicle Excise Act and could also prejudice any insurance claim they made.
A delegate asked whether there would be any scope in writing conditional contracts, but according to the DVLA, Mr Watts said, “de-registration is not an option”.
He also addressed the log-awaited implementation of the Consumer Rights Directive, and the Consumer Bill of Rights which will introduce individual recourse and refunds for misleading statements and high-pressure sales tactics. 
Referring to the creation of a new raft of enforcement bodies this year and next, he said a lot more people would start representing themselves in person but that they would be given less leeway in court than perhaps they are today.