Motor Matters - The future for vehicle block exemptions after Brexit?

13 November 2018

Motor sector legal commentators are pondering the question – what is going to happen to the block exemptions here in the UK after we leave the European Union?

Although the current versions of the block exemptions no longer include many of the dealer protection measures that were within the original versions, there is still the core dealer protection of allowing manufacturers to grant dealers exclusive territories.

‘Project fear’ in this context would be that the government of the day may decide that it would be a good vote-winner for them to open up new car selling (specifically motor vehicle distribution and servicing agreements) for consumers, by taking it out of the exclusive domain of dealers – enabling independents (with low overheads) to compete with franchised dealers (with high overheads from complying with manufacturer’s premises/CI standards etc!) on new car sales. (At the other end of the spectrum – governments in places like California in the USA have recently extended the legal rights of motor dealers!)

The easy part of the question to answer is that under the European Union (Withdrawal) Act 2018, EU law as it stands at the moment of Brexit will be converted into UK law. That means that the the two block exemptions relevant to motor dealers (exempting the exclusivity provisions under motor vehicle distribution and servicing agreements from being prohibited as ‘anti-competitive agreements’) will remain in force under our UK domestic law until their respective EU expiry dates. In the case of the motor industry specific block exemption relating to spare parts, repair and maintenance services, the expiry date is 31 May 2023. In the case of the general vertical agreements block exemption which applies to new car sales, the expiry date is 31 May 2022. 

The impossible part of the question to answer (unless you have a mystical crystal ball!) is what happens after that? Whether the government of the day puts back in equivalent arrangements to the current status quo for motor dealers – or goes for another option! For the moment this looks like being ‘just another’ key issue in shaping the long term future for franchised motor dealers in the UK.

For further information please contact Mark Henry or another member of Birketts' Motor Industry Team.

This article is from the winter 2018 issue of Motor Matters, our newsletter for those working within the motor industry. To download the latest issue, please visit the newsletter section of our website. Law covered as at November 2018.

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