CMA considers reforms to retained EU MVBER rules

Out-Law News | 09 Aug 2022 | 2:56 pm | 2 min. read

The UK Competition and Markets Authority (CMA) is considering reforms to retained EU legislation on ‘block exemption’ regulations for motor vehicles.

The 1998 Competition Act bans agreements between businesses that would restrict competition in the UK unless they create efficiencies and benefits that outweigh any anti-competitive effects. A block exemption regulation automatically exempts agreements of a certain category from the Competition Act, providing legal certainty for businesses.

When the UK formally left the EU on 31 December 2020, the EU block exemption regulations that were in force in the UK were retained in UK law, including the Motor Vehicle Block Exemption Regulation (MVBER), which is set to expire on 31 May 2023. MVBER sets out automatic exemptions for certain agreements concerning the purchase, sale and resale of spare parts for motor vehicles, as well as repair and maintenance services.

In its consultation document (66 pages / 537KB PDF), the CMA recommends that the UK government retain the MVBER – along with the current 30% market share threshold – and that the regulation continues to focus on aftermarkets and spare parts. It suggests that the definition of motor vehicle, which currently refers to “self-propelled vehicle intended for use on public roads and having three or more road wheels”, could be amended to limit the benefit of the block exemption to three and four wheeled vehicles. This would mean that trucks and other large vehicles are not covered by the updated MVBER.

Alan Davis of Pinsent Masons said: “The CMA’s proposals for the MVBER are relatively modest and are largely a continuation of the existing rules carried over post-Brexit. The main points of contention are how to amend the rules to reflect technological changes since the last MVBER, including a focus on driver assistance tech and connected vehicle data, and ensure independent repairers have adequate access to ensure they are not disadvantaged in the vehicle repair aftermarket.”

The CMA also proposes amending the definition of “spare parts” to include reference to “technological developments”. Davis said companies will be keen to see whether any updated definition of spare parts covers all technological developments which are as equally necessary for repairs as traditional components, such as QR codes, diagnostic tools produced by original equipment manufacturers (OEMs) and specific software required to repair vehicles.

He added: “Businesses should consider what difficulties and restrictions they have experienced in relation to access to these types of technologies and what should therefore be included in the definition. They should also examine whether a new hardcore restriction should be introduced.”

The CMA’s other proposals include making the restriction of access to technical and vehicle information – such as remote diagnostics, accident and breakdown insurance, traffic management and infotainment – an ‘excluded restriction’ rather than a ‘hardcore restriction’. The change would mean restricting access to such information would not automatically be prohibited but would not receive the benefit of the block exemption, and so require case-by-case analysis.

Davis said: “Businesses should consider the extent to which they have experienced restricted access to these information types and if it did so in the future how it could be impacted. If, for example, businesses considered access to remote diagnostic information was essential it could advocate for making restrictions in accessing this type of information a hardcore restriction similar to a spare part.”

He added: “The CMA will retain the rule requiring that OEMs allow consumers to choose independent repairers without losing the benefit of their warranty. The CMA does not propose updating the rule, but merely improving the guidance. If businesses have experienced OEMs or authorised repairers using such tactics to dissuade consumers from using independent repairers, then they could lobby greater guidance dealing with the specific issues they have faced.”

The CMA also clarified that there is no absolute obligation to admit a repairer to an authorised network just because they meet the necessary criteria. It said it will make further clarifications on this issue in its updated guidance. The consultation on the proposed changes to MVBER closes on 22 August. The CMA will issue its final recommendations to the secretary of state for Business, Energy and Industrial Strategy later this summer.