Monti strikes back

Block exemption dispute: EU commissioner demands written responses from carmakers

Brussels. A clash is developing between the European Union's Competition Commissioner Mario Monti and European car manufacturers.

Brussels has demanded that BMW, the Volkswagen group and Citroen produce written responses to complaints from dealers about their handling of new block exemption contracts just weeks before the new rules take effect.

The move follows charges from dealers that the contracts being offered to them by manufacturers go against the new block exemption rules.

The European BMW Dealers Association claims BMW is trying to prevent its members from selling other makes of cars despite the new block exemption.

Peter Enders, the association's German spokesman, said: "Our main criticism is about the way sales/marketing and servicing are combined. Dealer margins depend nowadays to some extent on service criteria."

BMW confirmed that the EU Commission has asked the company for a written response to the complaint but declined to make any further comment.

The Volkswagen group's new dealer contracts also have led to complaints. The contracts allow a VW dealer to sell the models of competitors alongside VWs but not models from the VW group such as Audi or Seat.

Juergen Creutzig, president of the European dealers association Cecra, said: "That's absurd and an obstruction of multi-model sales."

The VW/Audi dealers association's German branch also objects to dealers having to cover the costs of the annual assessment of standards, said spokesman Eckhard Meyer.

Juergen Ensthaler, professor for antitrust law at Kaiserslautern University, predicts a flood of complaints about the manufacturers' actions and a tough reaction from Brussels.

Ensthaler said Monti had no choice but to demand that manufacturers reduce their requirements and revise their contracts with dealers.

Christophe Konrad, a German member of the European Parliament, warned that the Commission is not in the mood for compromise and it would be negligent not to take Monti seriously.

Monti's office made the terse comment: "We expect the manufacturers to produce new contracts which meet all the relevant points of the new block exemption before the end of the transition period."