The Commission has announced the first results of its initiative to free up trade in cars between Member State, which will enable market forces to close the gap between prices. Following the launch of the Commission's new initiative in May, the Community's major car manufacturers have agreed to reassure their dealers of their rights concerning the sale of cars across EC borders, as well as agreeing to publish detailed six-monthly pricing data enabling customers to make a genuine comparison of prices between member states. Welcoming the new arrangements, Sir Leon made the following statement: "The new arrangements constitute an excellent start, increasing consumer and dealer knowledge of the options open to them within the Single Market, and boosting confidence in the operation of the EC's selective distribution system. The publication of right-hand-drive information in each market is a particularly important innovation. The letters to dealers are already helping to prevent cases, which were quite frequent in the past, in which dealers mistakenly believed that manufacturers were discouraging them from supplying cars into neighbouring markets; or in which consumers received misleading advice from dealers in other Member States about availability, price or delivery times of cars which they tried to order". "The arrangements will need to be reviewed after a trial period of one year, and adjusted to reflect comments by all interested parties on their operation. Above all, by clarifying dealers' rights and rendering prices more transparent, the new arrangements will give a major impetus to market forces within the Single Market, and will leave the Commission better placed to consider the future of the selective distribution system after it expires in mid-1995". The Commission's requests On 6 May 1992 the Commission published its report covering an investigation into car price differentials within the Common Market (see IP(92)355). The report revealed very large price gaps on certain models over some of the time periods examined. This reinforced concerns in some circles that Regulation 123/85 (which exempts selective dealership networks from the EC's competition rules) might be permitting the compartmentalization of national markets. To help overcome such concerns the Commission adopted a strategy which was outlined in a letter addressed by Sir Leon Brittan, EC Commissioner for competition policy, to all car manufacturers operating within the Community (see IP(92)441). The car producers were asked to take measures designed both to increase the availability of cars for cross-border trade, to increase public awareness of the options open to them to buy cars anywhere in the Single Market, and to increase price transparency between Member States. As to the availability of cars for cross-border trade, all European car manufacturers accept the principles of Regulation 123/85. Sir Leon asked them to write to their dealers to assure them that : - They were free to sell cars to customers from other Member States, either individually or through an intermediary, as well as to approved dealers in other Member States. - Cars would be supplied for this purpose without undue delay, and at prices which allow dealers to offer terms similar to those for customers within their own distribution territories. This would not affect the future supply of cars to them within their normal distribution territories. Concerning price transparency, the Commission asked the manufacturers to publish detailed price lists which would enable customers to make a genuine comparison of car prices in different Community countries. The reaction of the car companies So far, six car manufacturers (BMW, VW, Renault, Fiat, Ford, Volvo) have written to their dealers reminding them of these principles. The remaining car manufacturers have agreed to write too. In terms of reminding dealers of their rights, the Commission's initiative has clearly begun to bear fruit. Moreover, the number of individual complaints from consumers seeking to purchase a car in another Member State has decreased. Concerning the proposal for increased price transparency, the car manufacturers - through their industrial organisation ACEA - have now acknowledged this as a useful step, especially in view of the Single Market. The ACEA has agreed for its members to take the following action:- - Every six months car manufacturers will compile, on a standard form, comparable pricing data for one widely sold model in each car line. Details of the recommended retail price will be supplied in local currencies, with prices quoted both before and after tax. The relevant conversion rate to ECU will be given to facilitate comparison between prices in different Member States. This form will, in particular, show the prices for right-hand-drive versions and for the major options (air conditioning, automatic gearbox, power steering and Automated Breaking System), as well as information concerning the duration of the warranty. The standard form will state whether roadside assistance and delivery costs are included in the recommended retail price. The agreed price information will be given, for all Member States, to the Commission, which will pass on the information to consumer associations and to the specialised motor press. It is hoped that in a later phase the manufacturers will disseminate the information directly. The figures which are made public in this way will not include the prices in Denmark and Greece, because both these countries levy car taxes of over 100% which tends to drive down pre-tax prices. It was therefore accepted in Regulation 123/85 that cars from these markets would be available for trade into other Member States only at the price available in the next cheapest market. In these circumstances it would mislead consumers to publicize the prices available within Greece and Denmark. Now that the Commission and the car manufacturers have agreed on these arrangements, Sir Leon Brittan is confident they will be adopted by all car producers in Europe, including the Japanese manufacturers, all of whom have expressed their wish to cooperate fully. * * *
