European Union legislation affecting the motor trade

In October 2002, European Union legislation affecting the motor trade came into force. It`s full title is “Block Exemption Regulations 1400/2002″ (in short BER)This legislation changes the way cars may be serviced and repaired and gives motorists a lot more freedom in their decision as to who should look after their cars. Before BER it was very difficult to have cars which were still covered by the manufacturer`s warranty, serviced anywhere except a franchised dealer. Now, motorists CAN use any garage of their choice to service and repair their cars WITHOUT invalidating the manufacturer`s warranty (subject to certain conditions).

BER is subject to renewal in 2010. If the rules mentioned were to be lost then comsumers and independant repairers would suffer severely. The latest revision of the BER introduces four “freedoms” that are aimed at safeguarding free competition in the entire market for vehicle spare parts, service and repair. They affect the way in which the parts distribution can act in the market.

1. 1. Freedom for a franchised dealer and/or an “Authorised Repairer” to purchase up to 75% of their purchases of “original spare parts” and “matching quality” spare parts from independant market operations of their choice.
   This means…Parts factors can supply parts of appropriate quality to dealers and authorised repairers without the vehicle Manufacturer/Assember using dealer/repairer contrats or other means to prevent them.
2. 2. The freedom or parts Manufacturers/Suppliers to sell their original equipment (OE) components without restictions into independent wholesalers or independent repairers.
   This means…Parts Manufacturers can no longer be forced by their OE contract to limit supply of certain parts to the Vehicle Manufacturers/Assembler. The end of the “tied parts” arrangements.
3. 3. The freedom for parts Manufacturers/Suppliers to brand their OE parts with their own logo.
   This means… Motorists and garages will be able to identify the manufacturer of a component when it is removed from a vehicle and source its replacment from any distributor of the part. They will no longer feel that they “have” to go to a dealer for a part.
4. An extension to the obligation on Vehicle Assemblers to pass on technical information to opertators in the independent aftermarket. This information includes, for instance;
   Access to electronic systems for controlling the vehicle`s operation;
   Right of “re-programming” information to correct maladjustment.
   This means… Anyone with a legitimate need for technical information. i.e Parts manufacturers, Re-manufacturers, Distributors, Factors, Garages, Technical publishers, Security companies will have right of access to it ” in a useable form and “at a reasonable cost” (the same cost as charged to anyone within the Vehicle Assembler`s network).

The new BER also introduces certain defininitions of importance to the independent aftermarket. There is a new definition of “original spare parts” and “matching quality parts” that is based on the quality of the component. This definition can be used;

Where parts used are of the same quality as the component used for the assembly of a motor vehicle;

Where parts used are of the same specification and production standards as those used by the vehicle assembler;

Where parts manufacturers/suppliers are able to issue a quality self certification.

The new definition identifies “original spare parts” in the following ways;

Parts produced directly by the vehicle assembler;

Components produced by the OE supplier and branded with the logs(s) of the Vehicle manufacturer/Supplier;

Technically identical parts produced by the parts supplier, branded with its own logo and sold to the independent aftermarket.

Spare Parts of “matching quality” identifies parts in the following way;

“Spare parts made by any undertaking which can certify at any moment that the parts in question match the quality of the components which were are or were used for the assembley of the motor vehicles in question”.

An interesting point is that if the Vehicle Manufacturer himself offers spare parts of differing quality (e.g an “economical line”) he cannnot prohibit its contractual partners (i.e Dealers and Authorised Repairers) from buying spare parts from the independent market.

The BER also covers service and vehicle maintenance during the warranty period and PROHIBITS Vehicle Manufacturer`s warranties from including conditions required that:

All normal maintenance be provided with the vehicle makers network;

All parts used must be the Vehicle Assembler`s “original spare parts”

The European Commission declared that such clauses in a warranty document would represent “an unjustified restricition for the consumer!”

The OFT has confirmed that independant repairers can carry out normal maintenance and repair serviduring a vehicle`s warranty period without invalidating the Vehicle Assembler`s warranty conditions with two provisions…

Provided that the service is in accordance with the Vehicle Assembler`s servicing schedules and is recorded as such and…

Provided thtat the parts used are of “appropriate quality” and are recorded as such