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European Commission to decide whether to renew block exemption
The automobile industry is the only sector in the European Union to enjoy an exemption from normal antitrust rules regarding distribution. The block exemption will last until 2002. By then, the European Commission will have to decide whether or not to renew it. Recent remarks by Mario Monti, the Commission's Competition Commissioner, suggest that the current exemption will not be renewed.
Auto makers have been lobbying aggressively for the renewal of the exemption. They argue that the current situation benefits consumers as it allows for higher quality standards. On the other hand, consumer organizations (and some car dealers) are asking for the removal of the exemption and a complete deregulation of car sales in Europe.
The European (and the world) auto industry is undergoing a process of gradual consolidation. Currently, the six larger auto groups account for more than 75% of the market. The Commission is concerned that a law that effectively prevents competition in retail ``aggravates the oligopolistic effect'' of the increase in concentration, which created an ``urgent need for radical change.''
Source: The Wall Street Journal, May 12, 2000