What comes next threatens us all

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By: Andy Hamilton is CEO of LKQ Euro Car Parts

 

The current Motor Vehicle Block Exemption rules came into force across the EU in 2012 and expire in 2023. For now, the UK has carried over MVBER regulations but the question of what will replace it looms large over the aftermarket.

Andy Hamilton, CEO of Euro Car Parts

There are two very important issues.

The first is consumer choice. The more parts and new technology that lock out independent garages, the more motorists will be left with no other option than to use franchised dealerships for service and maintenance. Based on the higher prices charged there, UK motorists would end up shelling out an extra £2.4bn – or £100 per vehicle every year. Drivers also prefer to use independent workshops by a significant margin, with them delivering 78% of all entries into garages every year.

Secondly, the future of the UK’s independent aftermarket is in jeopardy without regulations that protect operators again anti-competitive practices. As more new vehicles, their parts and technology drift into closed, mini monopolies, the further each workshop’s ability to trade erodes. This is an industry that employs 350,000 people and has a presence in every town in the country – there are 40,000 workshops covering all marques, compared to less than an average of 200 franchise dealership per single brand.

 Outdated

The current MVBER regulations haven’t kept pace with the rapid technological advancement in vehicles over the last decade. This has allowed OEMs to siphon off specific areas to become ‘captive parts’ – or in other words mini monopolies – outside of MVBER’s scope.

There are other anti-competitive practices prevalent in the aftermarket that fall outside of MVBER’s range that we’d want to see included in a new, broader, and tougher regulatory framework backed up by greater enforcement form bodies like the CMA.

This includes vehicle manufacturers withholding Repair and Maintenance Information – despite separate legislation to MVBER that’s been in effect since 2020 and independent garages being unable to update online service records.

There aren’t many work-arounds, and garages have legal action as their only recourse. But what power does an independent workshop have in the courtroom, against some of the world’s biggest businesses?

As to what can be done by aftermarket parts suppliers to ensure that their products are safe and legal, there are already widely accepted standards of quality like ISO accreditations, CE marking and certificates of Original Equipment (OE) quality. Tier one factors are labelled so because of their ability to meet OEM standards. And major alternative parts manufacturers and distributors like ourselves offer guarantees and warranties.

How would the rules apply to the UK is what we urgently need clarity on. The UK will set its own course on what, if anything, replaces MVBER. It no longer needs to copy and implement what happens in Europe. But, given the highly integrated nature of automotive supply chains across the continent and UK and Ireland, there is sound logic behind the need for some alignment. The EU has started a positive dialogue with industry about what will replace MVBER and we’re hopeful that it will be more comprehensive and robust.

We need to understand what the CMAs plans are. It’s been slower to start a detailed dialogue than its counterpart at the European Commission. Obviously, as an entity it exists to protect consumers and markets from anti-competitive behaviours and it’s clear to see the risk of those if MVBER isn’t replaced by something that’s more fit for purpose. Such practices are already prevalent under the current MVBER regulations.

Silent

It’s worth noting that the CMA has been more proactive on the wider issue of VBER – Vertical Block Exemption. But the two are separate issues and so far, on MVBER, it has been completely silent.

We don’t see much room for debate. The arguments against allowing monopolies to emerge have been part of our economic DNA for centuries. Laws that prevent their formation are vital to ensuring that markets operate on a level playing field, and that consumers are protected from exploitation. We hope that reason and ethics will trump vested interests.

The CMA often looks at the volume of litigation taking place in a market when making a call on whether to intervene. This simply isn’t the case now with captive parts because no small workshop has the resources to challenge a global automotive business in court. So, what we need are as many examples of anti-competitive practices as possible, to take them to the CMA and show it why it needs to legislate. We’d urge anyone that’s been at the sharp end of captive parts or other unfair competitive behaviours to get in touch with UK AFCR.

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