The motor vehicle distribution sector has long been subject to a special legal framework under competition law. The complexity of its networks and the interdependence between the sale of new vehicles and the after-sales market have justified the introduction of specific rules, distinct from the general regime. For manufacturers, dealers, repairers and equipment suppliers alike, understanding these rules is essential if they are to secure their business. Relevant legal advice on competition in automobile distribution networks is therefore essential. The purpose of this article is to analyse the current framework in detail, focusing on the after-sales market, which remains an exception. It forms part of our wider analysis of the special case of the automotive sector in vertical restraintsoffering a technical insight into its subtleties.
Changes in the regulatory framework for the automotive sector
European competition law applicable to the automotive sector has undergone profound change. From a system of derogations, it has evolved towards a dual approach, clearly distinguishing between the sale of new vehicles and the market for services and spare parts. This transformation has forced players in the sector to review their contractual and commercial practices.
The old regime (Regulation 31 July 2002)
Until 2010, the automotive sector was governed by Regulation (EC) No 1400/2002. This introduced a single block exemption covering both the distribution of new vehicles and the after-sales market. Its approach was considered to be particularly "dirigiste": it imposed strict conditions on vertical agreements (agreements between companies located at different levels of the production or distribution chain) so that they could benefit from an exemption to the ban on anti-competitive agreements laid down in Article 101 of the Treaty on the Functioning of the European Union (TFEU). The aim was to stimulate intra-brand competition and ensure greater market access for independent repairers. However, this framework was judged to be too rigid and sometimes out of touch with the economic realities of the sector, which led to its non-renewal and an overhaul of the system.
Alignment with the general scheme for the sale of new vehicles
When the 2002 regulation expired, the European Commission chose to change its approach. Since 1 June 2010, distribution agreements for new vehicles no longer benefit from a specific sectoral exemption. They are now subject to the general regime of vertical restraints. In practical terms, this means that their validity under competition law is assessed through the prism of the General Block Exemption Regulation. The reference text is now Regulation (EU) 2022/720 governing general vertical restraintsThis change has given manufacturers greater contractual flexibility in organising their sales networks. This change has given manufacturers greater contractual flexibility in organising their sales networks, but has also meant that dealership contracts have had to be adapted to comply with the new framework.
The current specific regime for the automotive after-sales sector
While the sale of new vehicles has been brought within the scope of ordinary law, the after-sales market, which includes the distribution of spare parts and the provision of repair and maintenance services, retains a special status. The Commission considered that this market presented persistent competitive risks, justifying the maintenance of a stricter framework to protect consumers and independent operators.
Regulation (EU) No 461/2010: temporal and material scope
The cornerstone of after-sales regulation is Regulation (EU) No 461/2010. Unlike its predecessor, its scope is strictly limited. It only covers vertical agreements relating to the purchase, sale or resale of spare parts for motor vehicles, as well as those relating to the provision of repair and maintenance services. The aim is clear: to ensure effective competition on the secondary market, the one that most directly concerns consumers throughout the life of their vehicle. The regulation came into force on 1 June 2010 and was initially due to expire on 31 May 2023.
Supplementary guidelines and explanatory brochure (2012)
Aware of the complexity of the rules and the need to support market players, in 2012 the Commission published additional guidelines specific to the automotive sector. These supplement the general guidelines on vertical restraints. They provide interpretations and concrete examples on the application of Regulation 461/2010, particularly on sensitive issues such as access to technical information, the definition of original spare parts and spare parts of equivalent quality, and the use of diagnostic tools. An explanatory brochure has also been distributed to explain these principles to businesses and consumers, demonstrating the European authorities' desire to educate.
Renewal of the exemption regulation (Reg. (EU) 2023/822, Guidelines 2023/1331)
As the 2023 deadline approached, the Commission carried out an in-depth evaluation of the system. It found that the conditions of competition on the after-sales market had not fundamentally changed and that the risks of manufacturers foreclosing the market remained. Consequently, Regulation (EU) 2023/822 was adopted, extending the validity of Regulation 461/2010 for a period of five years, until 31 May 2028. New guidelines (2023/C 133 I/01) have also been published to take account of market developments, in particular increasing digitalisation, access to data from connected vehicles and the rise of new engines. The renewal of this scheme demonstrates the continued importance attached to preserving a competitive ecosystem for motor vehicle maintenance and repair.
Hard-core restrictions specific to the after-sales sector
Regulation 461/2010 identifies a list of "hardcore restrictions". The presence of even one of these clauses in an agreement automatically deprives it of the benefit of the block exemption. These prohibitions are designed to dismantle the most direct barriers to competition on the after-sales market.
Restriction on the sale of spare parts to independent repairers
The regulation prohibits any clause that would restrict the sale of spare parts by members of an authorised network to independent repairers. A manufacturer cannot therefore prohibit its authorised dealers or repairers from supplying original parts to garages that are not part of its official network. This measure is fundamental because it enables independent repairers to offer their customers repairs using original parts, putting them in a position to compete directly with the approved networks. Attempting to create a captive market for parts may, in certain circumstances, be tantamount to abuse of a dominant position.
Restricting the ability of parts manufacturers to sell their products
Any attempt by a car manufacturer to prevent an OEM that supplies it with components (for example, braking systems or filters) from selling these same parts on the independent market is also considered a hardcore restriction. The original equipment parts supplier must remain free to market its products to wholesalers, retailers or directly to independent repairers. The aim of this provision is to guarantee a plurality of sources of supply of quality parts and to prevent the manufacturer from indirectly controlling the distribution of parts that it has not manufactured itself.
Restrictions on affixing the manufacturer's mark to parts
A manufacturer cannot forbid an equipment supplier from affixing its own brand or logo to the parts it manufactures and supplies for original equipment. This apparently technical rule is in fact essential. It enables equipment manufacturers to build up a reputation for quality under their own name in the aftermarket. A consumer or repairer can therefore choose a "Bosch" or "Valeo" branded part knowing that it comes from the same manufacturer that supplies the carmakers, encouraging competition based not only on price but also on the reputation of the supplier's brand.
Design rights protection for visible parts
The regulation addresses a particularly contentious issue at the intersection of competition and intellectual property law: that of "visible" parts, such as body components (wings, bonnets), bumpers or headlights. The group exemption does not apply to agreements whereby a manufacturer seeks to use its intellectual property rights, in particular its design rights, to prevent an independent manufacturer from producing and marketing spare parts that reproduce the appearance of the original. This provision is a delicate trade-off. It aims to prevent the monopoly conferred by an intellectual property right from being used to create an absolute monopoly on the repair market, particularly for so-called "captive" parts. The management of design protection for products is therefore a strategic challenge for equipment manufacturers.
Withdrawal of exemption and non-application of the regulation
Even if an agreement contains no hardcore restrictions, the benefit of the exemption is not absolute. The regulatory framework provides for a posteriori control mechanisms to deal with situations where, despite formal compliance, anti-competitive effects emerge.
Conditions for withdrawal by the Commission or national authorities
The European Commission or a national competition authority (such as the Autorité de la concurrence in France) may decide to withdraw the benefit of the exemption from a particular agreement. This procedure may be initiated if, after analysis, the agreement in question is found to produce effects incompatible with the fundamental principles of competition law, even if it fulfils the conditions of Regulation 461/2010. Withdrawal is an individual measure aimed at a specific agreement and does not call into question the regulation itself. It can be used, for example, to sanction a network whose practices, although not explicitly prohibited, in practice result in competitors being excluded from the market.
Non-application of the regulation in the event of significant cumulative effects
A second, more radical mechanism is that of non-application. It is not aimed at an isolated agreement, but at a market situation. If on a relevant market parallel networks of similar agreements (e.g. non-compete clauses or exclusive purchasing obligations) cover more than 50% of that market, the Commission can adopt a regulation declaring that exemption regulation 461/2010 no longer applies on that specific market. This powerful measure is designed to remedy a "foreclosure effect" in the market, where the multitude of individually acceptable agreements collectively creates an almost insurmountable barrier for new entrants or existing competitors.
Regulation of the automotive after-sales sector remains a dense area of law, marked by a subtle balance between contractual freedom and the need to preserve open competition. For companies in the sector, constant vigilance is required to ensure the compliance of their contracts and practices. If you are faced with problems relating to the organisation of your network or the application of these rules, contact our firm for a tailor-made analysis of your situation.
Sources
- Commission Regulation (EU) No 461/2010 of 27 May 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector.
- Commission Regulation (EU) 2023/822 of 17 April 2023 amending Regulation (EU) 461/2010 as regards its period of validity.
- Communication from the Commission - Guidelines on vertical restraints in motor vehicle sales and repair agreements and motor vehicle spare parts distribution agreements (2023/C 133 I/01).
- Treaty on the Functioning of the European Union (TFEU), in particular Article 101.
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