Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers in the UK comments on the latest Vertical Agreement Block Exemption Order (VABEO) update:
“The NFDA continues to be heavily involved in representing our franchised dealer in the shaping of vertical agreement block exemption regulation. We are working closely with our specialist legal advisers, TLT LLP, and leading counsel to assess the possible scenarios affecting the future relationship between franchised dealers and manufacturers.
The NFDA continue to engage with regulators, in particular, the European Commission, via the NFDA’s European partner, AECDR, and the UK’s Competition and Markets Authority (CMA) to outline franchised dealers’ views.”
On 1 June 2022, new competition rules (and guidelines) governing supply and distribution agreements, including those in the automotive sector, came into force in the UK (and EU).
The rules they replace have played an important role in the automotive and other sectors, as they have provided (as will their replacements) a form of “safe harbour” for certain types of commercial agreement (including dealer agreements) that, while containing certain restrictions, are not considered to be unduly harmful to competition.
In practice, these rules (and their guidelines) serve as a blueprint against which OEMs (and other manufacturers and distributors) self-asses the compatibility of their supply and distribution arrangements (including dealer and agency agreements) with competition law.
Understanding the new block exemption regime is therefore a must for any business involved in sales and distribution, including those that operate across multiple channels (digital and offline), those that apply selective or exclusive distribution models and those that are transitioning from one distribution channel to another, such as agency.
The NFDA and its legal advisers, TLT LLP, have been involved in making representations on the shape of these rules to the UK’s Competition and Markets Authority and the European Commission.
While some progress has been made, the exercise is far from over and there is still much to do, not least as notwithstanding the present changes, the sector specific (motor vehicle) block exemption regulation is still under review, as it is not due to expire for another 12 months. It is therefore feasible that, while an understanding of some aspects of the present changes is important, the application of competition law to the automotive sector could be adjusted further in the year ahead.
Sue Robinson added: “Going forward, NFDA will engage further with the CMA and European Commission to elaborate on any of the points identified.“
To read the full NFDA Vertical Agreement Block Exemption Order (VABEO) document, please click HERE