Brake on car sale shake-up plan

Some MEPs want no change in the car sales laws until 2005

BRUSSELS, Belgium -- Euro MPs have attempted to put the brakes on plans for a major shake-up in the way cars are sold in Europe.

They backed a proposal to open up the Europe's new car market to competition -- but voted to postpone any changes until at least 2005.

The German-inspired move angered British MEPs, who said consumers had been waiting far too long already for cheaper car prices.

Observers say the European Commission, which plans to revise the current car marketing arrangements when the current regime expires in October this year, is unlikely to be swayed by the European Parliament decision.

The European Commission's proposals could lead to supermarket-style showrooms, with customers free to browse among different makes at more competitive prices in the comfort of one showroom.

Current special concessions for the European car market allow car makers to maintain showrooms selling only one brand, fix prices for different EU markets and oblige car buyers to stick to in-house service centres and warranty provisions.

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Technically such arrangements breach EU rules on free competition, but have been allowed by the Commission because of the specialised nature of the industry.

Carmakers argue that their product requires special sales and after-care service and should not be treated like any other consumer product.

But the so-called "block exemption" from EU rules expires in October, and consumer groups say they should not be renewed because car manufacturers use the system to prop up prices and restrict competition in different markets.

The Commission's recommended first step is to loosen the link between manufacturer and distributor, allowing different car brands to be sold in the same showroom, as well as permitting the sub-contracting of servicing and repairs without the loss of consumer rights.

The UK Consumers' Association expressed disappointment at the European Parliament vote, and urged the European Commission to "completely ignore" MEPs.

Consumers groups say there is too little competition in the market

"This is a sad day. Euro MPs had a chance to back Europe's consumers against the might of a rich and powerful industry lobby," said the association's principal policy adviser, Phil Evans.

"A vote to delay and review the overdue reform of the car market is really a vote to block reform. Anyone who voted against the Commission voted for the continuation of a rigged market."

But he praised British MEPs, who backed reform -- They had "shamed" many of their continental counterparts, he said.

Competition Commissioner Mario Monti will make the final decision on the future of the car market and Mr Evans said: "We urge him to completely ignore the European Parliament, as he has every right to do.

"Commissioner Monti has shown himself to be the consumers' friend. Our hopes for a free market in new cars and servicing now rest with him."

Labour MEP Peter Skinner blamed German lobbying for the majority vote to delay change.

He said: "German interests are threatening real consumer choice by keeping car dealers in restrictive regimes. But the Parliament must not be held to ransom by a powerful German car lobby with particular vested interests."