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July 1, 2010updated 12 Apr 2017 4:21pm

Brussels watch: Vehicle lessors win major competition battle

Europes vehicle leasing companies will continue to see their end-user status in relation to manufacturers protected under the latest Motor Vehicle Block Exemption Regulations (MVBER).

By Antonio Fabrizio

Parked cars

Lessors allowed to retain economic owner status under new Brussels regulations.

 

Europe’s vehicle leasing companies will continue to see their “end-user” status in relation to manufacturers protected under the latest Motor Vehicle Block Exemption Regulations (MVBER).

The legislation, originally introduced in 2002 to exempt the motor trade from normal EU competition rules, has just been updated and extended until 2013.

The set of new regulations, announced in June by EU Competition Commissioner Joaquin Almunia, include guidelines which specifically acknowledge the leasing industry’s view that lessors should be recognised as the “economic owners” of the leased vehicles – effectively protecting them from potential anti-competitive behaviour from motor manufacturers.

The EU Commission’s decision follows three years of efforts and lobbying activity by Europe’s leasing associations – including Leaseurope, the umbrella association representing Europe’s leasing companies, and national leasing associations such as the British Vehicle Rental and Leasing Association (BVRLA).

Jay Parmar, head of legal services at the BVRLA, explained: “The good news for us is that with the new regulations nothing has been changed. We needed to be regarded as the economic owners of the assets, not our customers, who are using the vehicles on our behalf.”

According to Parmar, this was a critical issue “because without the end-user status [in other words, lessors being end-user customers of manufacturers], a motor manufacturer could actually ask our members to see a mandate from our customers, whereas by having an end-user status, we could simply buy vans and cars without having to show a mandate to the manufacturers”.

Being recognised as the economic owner of the asset, Parmar continued, will therefore reduce the risk that motor manufacturers obtain details of the leasing companies’ customers, which could have created potential anti-competitive behaviour.

“It would have created an unfair level playing field, potentially putting the manufacturer in advantage, and compromising the leasing company’s position,” he added.

“Retaining the end-user status, we are not giving our entire customer list to a competitor, but are able to retain that and treat it as confidential.”

Leaseurope, which has been lobbying Commission officials and MEPs for the past three years, has also expressed satisfaction with the new legislation, highlighting “the significance of this development for the automotive leasing industry in Europe”.

Vincent Rupied, chair of the association’s Automotive Steering Group, said: “This is major achievement for Leaseurope and a very positive development for the industry it represents.

“Indeed, the new regime clearly recognises the vital contribution of automotive leasing to a constantly evolving and competitive market. It will enable leasing companies to enjoy improved protection vis-à-vis uncompetitive behaviour, for the benefit of their customers.”

The new guidelines – which cover all types of vehicles, from passenger cars to heavy goods vehicles – will come into effect when the motor trades’ current block exemption from EU competition law expires on 1 June 2013.

The aftersales market is also being addressed by the new guidelines, which will help preserve owners’ freedom of choice in getting their vehicles repaired, whether it is with a franchised dealer, brand specialist or independent garage.

This part of the guidelines is applied from 1 June 2010 – which is the date since when Commission’s new block exemption regulations on the aftersales market take effect.

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