CMA consults on new competition rules for automotive

The CMA has today published its proposals for a replacement of the Motor Vehicles Block Exemption, which expires on 31 May 2023. 

Initial observations are as follows:

• There will be a new UK block exemption. It will be called the Motor Vehicles Block Exemption Order, most likely to be abbreviated as “MVBEO” (not to be confused with the new UK Vertical Agreements Block Exemption Order, the “VABEO”).
• The scope of the new block exemption will be largely unchanged from the current position under the retained EU block exemption. The CMA has dismissed a suggestion by the NFDA that there should be a more comprehensive review of the block exemption’s scope and that it should be expanded to cover automotive sales as well as aftermarkets. 
• For the most part, the proposed changes seem largely to be limited to updating some of the definitions (eg of “spare parts”). 
• There will be a one year transition period. Agreements that comply with the current block exemption will continue to be block exempted until the end of May 2024.
• The CMA is proposing new guidance. The guidance - which in principle is to be welcomed - will cover (at least) warranty restrictions and whether limits on the number of authorised repairers within a brand pose a competition issue in the UK.

The CMA’s proposals are in parallel to the European Commission’s proposals regarding a new EU Motor Vehicles Block Exemption. Recent experience in relation to the VABEO suggests that the CMA is very keen not to depart from the Commission’s approach. That said, the final decision of the existence and scope of the new MVBEO will be made by the UK government, not by the CMA.

The CMA is inviting comments by 22 August 2022, following which it will finalise its recommendations to government.