21 Jun 2024
The voice of the independent garage sector

Christmas came early for the UK aftermarket

The aftermarket may actually be getting a legislative environment that will mean businesses can thrive

By Neil Pattemore

Occasionally, just occasionally, something happens that has vital importance to your business that you have little or no control over. Sometimes this can have a negative impact, sometimes it can be of great help – a bit like Christmas come early.

I am pleased to report that in this instance it is firmly in the category of being a great present that will help your business a lot. So, what am I referring to that is such a great help?

It comes under the UK Government’s Department for Business and Trade, and in particular, the Competition and Markets Authority (CMA), as it is directly a part of the UK’s Competition Act. I refer to the sector-specific ‘Motor Vehicle Block Exemption’ (MV-BEO) which although initially came into force as European legislation in 2002 and was revised in 2012, following Brexit has been revised for a 3rd time directly into UK Legislation. I realise that you may be thinking that this is already of little interest to you running your business, but this new MV-BEO provides critically important abilities for you to be able to do so. Let me explain…

MV-BER to MV-BEO
Back in the mists of time (well actually around the start of the millennium) it was becoming obvious that with the increasing levels of complexity in vehicle technology, independent operators (e.g. technical data publishers, diagnostic tool manufacturers and ultimately workshops) were not able to easily access the necessary technical tools, information and training to allow the diagnostics, service and repair of their customers’ vehicles. This imbalance impacted the ‘competitive choice’ available to vehicle owners between franchised dealers and independent workshops, so the legislator brought in the first Block Exemption Regulation (MV-BER) which included two key aspects – the ability of a franchised dealer to operate as a monopoly within a defined geographical area (i.e. an exemption to competition law that forbids monopolies) and the basis of ‘non-discrimination’ between franchised dealers and independent workshops in their abilities to offer competing offers to vehicle owners.

In 2010 the MV-BER was revised and came into force in 2012 and had two key revisions – firstly that franchised dealers could operate in any geographical area of the country and secondly, that improved aspects were included to support the needs of independent operators and the wider aftermarket.

10 years later and post-Brexit, the third iteration has been created by the CMA and is now implemented (since 1 June 2023), but now with only a six-year validity (five years in the EU). The CMA has recognised that ‘technical progress’ is exponentially changing the way that vehicles are diagnosed, serviced and repaired, with embedded applications accessing and processing vehicle generated data that is accessed ‘over-the-air’ and wants to understand the impact that these (and other) changes will have on the Aftermarket and ensure that legislation to support effective competition is in place.

So, what have the CMA included in the MV-BEO, and their accompanying guidelines, and how will this help support your business in the UK aftermarket?

Key points
There are a number of key points – either new points or revisions of existing points that underpin your rights of access to ensure your ability to run your business. These include:

A new definition for ‘aftermarket goods’ that includes spare parts, software/codes needed for repair or
New definition for ‘System,’ which recognises it can be an assembly of parts combined to perform one or more functions on a motor vehicle and that those parts must be able to interact.

The revision of the existing ‘Hardcore Restrictions’ (e.g. setting fixed or minimum resale prices, or restricting cross-supplies between selective distributors) that although originally only related to spare parts, has now been expanded to include ‘Aftermarket goods’ (see above).

A new section has been included for ‘Excluded Restrictions.’ This new section is designed to ensure that independent operators are not disadvantaged in their ability to provide repair and maintenance services (see above), in that any restriction would result in the vehicle manufacturer falling foul of Chapter I of the Competition Act 1998.

Additionally, the MV-BEO has always been supported by ‘guidelines’ that explained the intent and the details of the legislation to ensure better clarity. However, although these have a lower legal status than the Order itself, they contain important information, such as:

A reference to Chapter II of the Competition Act 1998, which refers to ‘horizontal agreements’ and will help to address any ‘abuse of dominant position’ by a vehicle manufacturer – especially important for diagnostic tools and replacement parts suppliers.

A more expansive description of the ‘hardcore restrictions’ concerning ‘aftermarket goods’ and the access to ‘captive parts’ by independent distributors and repairers.

A revised description concerning restrictions in the supply of ‘aftermarket goods or repair or diagnostic tools’ to distributors, repairers or end users (relates to Chapter 2 agreements above).
An expanded explanation concerning ‘tooling arrangements’ to describe how a Tier 1 supplier can manufacturer parts to be sold under their own brand name/logo through the use of the tooling used to manufacture the original parts that are fitted on the vehicle production line.

The expanded explanation of ‘essential inputs’ and how these may be elements of the ‘excluded restrictions’ where a vehicle manufacturer may not restrict the ability of an independent operator to access ‘technical or vehicle information’ or ‘tools and training’ that are necessary for the repair and maintenance of motor vehicles of a particular type. However, this requirement is only necessary if (amongst other things) the vehicle manufacturer uses it for repair and maintenance services or provides it to their authorised repairers, distributors or other authorised partners.

Further clarification for the definitions of ‘vehicle information,’ technical information’ and ‘independent operators’.

There are many other details contained in both the Order and the Guidelines, but the above extracts illustrate how the CMA have recognised the needs of the aftermarket and how the third version of the MV-BEO is ‘good news’ for the UK aftermarket.

Evidence
Finally, the CMA have asked the aftermarket to help them. They need evidence of where vehicle manufacturers are not fulfilling the requirements of the legislation. The IAAF have a link to a webpage where any evidence can be uploaded, which in turn can then be assessed before being sent onto the CMA as evidence.

The link is https://www.iaaf.co.uk/lobbying/ (and then use the link shown in the centre of the page to the ‘SurveyMonkey’ form).