Block Exemption: Time to speak up...

Andy Hamilton says that, with the coming of the Block Exemption consultation, it’s time for the aftermarket to make its voice heard

Published:  18 July, 2022

 By Andy Hamilton CEO, LKQ Euro Car Parts

Last summer we helped to bring national attention to the threat posed by the expiry of the European Motor Vehicle Block Exemption (MVBER) regulation, both to UK motorists and the independent aftermarket. The UK inherited MVBER after Brexit, but it runs out in May 2023. Our warning was stark – Failure to replace it would be an existential threat to independent workshops.
    
More than the risk of it going altogether, we wanted to highlight the increasing inadequacies of the current MVBER rules, which had been in force since 2012, and the opportunity for the UK to create more robust legislation to protect British businesses and consumers rights.
    
Today, OEMs have found ways to exclude an ever-growing number of parts from MVBER’s scope. This even extends to practices such as parts needing to have a specific code,   implementing software before they will work or needing to have the OEM-supplied diagnostic equipment to activate replacement parts. This restricts the functionality of a part for independent repairers – even if the part was developed and made by a major aftermarket supplier.

Recent changes
While the EU was consulting on the future of MVBER last year, there was a worrying silence from the UK’s Competition and Markets Authority. But not anymore.
    
A consultation is due to kick off either later this spring or this summer. We, alongside our colleagues in UKAFCAR, the British arm of the Association for the Freedom of Car Repair, will be submitting evidence and we urge anyone in the aftermarket with first-hand experience of the inadequacies of the current MVBER to do so too – either directly, or via UKAFCAR.
    
The scope of the CMA’s consultation is, in broad terms, to establish whether MVBER meets its purpose for business and consumers and establish if it adequately provides for recent changes in technology and business models. The resounding answer to all three is ‘no, it does not’, even if its protection is certainly preferable to having nothing. I’ll briefly recap the most pressing reasons why.

Insurmountable burdens
For businesses, the UK’s 30,000-strong independent sector is finding it harder to repair and service vehicles. Certain parts have been purposefully misidentified by OEMs to fall outside of the MVBER’s jurisdiction and so are only available to the OEMs’ dealerships – or at a significant additional cost, or with insurmountable burdens for the independent aftermarket.
    
OEMs also continue to restrict access to data, like bulk Repair and Maintenance Information (RMI) that can be processed electronically, which prevents diagnostic tools manufacturers and automotive data publishers from creating products and solutions for new vehicles.
    
Consumers prefer to use the independent aftermarket by a significant margin; More than three-quarters of non-MOT trips every year are too independent garages. If they were unable to do so we estimate that this would cost each of them an extra £100 annually – or a staggering £2.4 billion in total. Hardly a helpful additional burden during the country’s worst cost of living crisis in 50 years.   
    
However, the CMA must be presented with overwhelming evidence of these risks and now is the time for the industry to speak up.
    
Our concern has always been that this could turn into an asymmetrical legal battle over the legislation between the might of the global automotive giants and thousands of diverse SME aftermarket businesses. Through the consultation and the efforts of UKAFCAR, my sincere hope is that we can push for an updated regulatory framework that ensures a level playing field and stops anti-competitive behaviour before it happens.
    
In the EU, an evaluation of MVBER has concluded that it remains useful, but its effectiveness could be improved. Something we hope the CMA takes note of.
    
There is also a concern in Europe that MVBER when renewed will not be given the additional strength it needs to protect consumers and motorists in today’s rapidly evolving automotive sector.

Opportunity
The UK now has an opportunity to forge its own path and set the standard by introducing much stronger protections. Of course, there is also the risk that the UK does too little, with the rights of consumers and the viability of independent businesses gradually eroded as OEMs create ever larger monopolies. This is perhaps the single biggest threat to ever face the aftermarket.

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