Brexit and BER: IMPACT

By Neil Pattermore | Published:  18 July, 2017

What are the possible outcomes of Brexit for the UK aftermarket and should we be concerned?

The independent aftermarket has evolved from the village blacksmith into the well equipped workshops of today, who can work on anything that comes through the door.

As technology increased, the first software controlled systems became more commonplace and with these, the challenge of getting the technical information needed to be able to diagnose and repair them. As the vehicle manufacturers were in control of the access to this technical information, this was restricted to their network of main dealers, which created both an imbalance in the market and precluded fair competition that allowed a driver to continue to have a choice where their vehicle could be repaired.

Requirements

This consequently became the start of the legislative requirements to ensure that independent operators could have access to the required information. This may sound simplistic and easy, but this was a hard fought and expensive battle conducted at a European level, but which eventually became part of the wider Block Exemption Regulation (BER) that also provided the manufacturer’s main dealers with a protected area in which only they could sell their specific brand of vehicle, i.e. other dealers could not sell in their area.

In the BER, there was a requirement that independent operators would have access to the same technical information and diagnostic equipment as the main dealer, ensuring fair competition and non-discrimination. This was based on competition law, but still contained access restrictions, for example to security information, certain programming functions etc. However, the BER was insufficiently clear about some of the details and was open to interpretation, even to the point where some vehicle manufacturers were fined for non-compliance, but had to ask the European Commission. They had to ask for a ruling of what was/was not required to ensure compliance with the Regulation.

During the early part of the noughties, it became obvious that the BER was not working sufficiently well to address the increasingly complex vehicle technology and the subsequent need for greater access to the technical information. This was increasingly a problem, as some vehicle manufacturers were still not fully complying to the requirements of the Regulation, but were almost impossible to challenge under competition law, due to the David and Goliath scenario of a small workshop being able to effectively challenge a vehicle manufacturer.

Consequently, the legislators were asked to address this situation and decided that the requirements should no longer be under competition law, but should be part of vehicle type approval, meaning that the European Commission and Member States would be able to challenge the vehicle manufacturers if necessary. Therefore, vehicle repair and maintenance information (RMI) became part of the Euro 5/6 legislation for passenger vehicles and Euro V/VI for heavy duty vehicles in 2007.

A decade on and there are still elements of this legislation which have yet to be put in place, such as the access to security related RMI (the SERMI scheme) and access to ‘remote diagnostic support’ (RDS).

Threat

What is the threat of Brexit on this hard fought and continuing saga for access to RMI? Quite simply, if we are out of Europe, then European legislation may no longer apply. However, this is too simplistic a statement and has several scenarios.

Firstly, the UK Government has a well-known position of legislating only if really necessary, preferring to let market forces rule. This would be a disaster for the aftermarket and could strip out the access to RMI, not just for workshops, but also for diagnostic equipment manufacturers, data publishers, parts manufacturers, part distributors, training centres – in other words, the complete aftermarket value chain. This would increasingly force vehicle owners to take their vehicles back to the main dealers, which may appear to be great news for them, but it is unlikely that they could cope with the volumes generated and costs for the consumer would probably increase.

Consumer choice is a fundamental issue, but there is a complication between the primary market of selling cars (addressed in the current BER) and the secondary market of servicing and repairing them (addressed in Euro 5). This will become more blurred in the future compared to today’s business models. Please Bear in mind the current BER is set to end in May 2023.

Possibilities

If RMI remains part of the European vehicle type approval legislation (which seems likely), then UK vehicle manufacturers would need to comply to this legislation if they want to sell vehicles into Europe and the reverse would apply if the UK continues to use this legislation. Additionally, the UK is a signatory to the UNECE in Geneva who are increasingly setting the type approval requirements and that won’t change after Brexit, but these type approval requirements contain much poorer access conditions to RMI for independent operators. This could become a difficult issue, should the Government choose to use the UNECE rather than the Euro 5/6/Euro V/VI legislation which is currently being revised to update the RMI requirements. So, what may the UK Government choose to do?

They could just decide to use the UNECE Type Approval Regulations, but this would not help the UK vehicle manufacturers selling into Europe. It may also be possible that there is a selective use of the European type approval and that the access to RMI is separated out, but this would be detrimental to competitive choices for consumers, hence why the legislation exists in the first place. The greatest risk is that it is separated out back into competition law.

For sure, it is not a clear cut position, but if the UK aftermarket wants to be able to compete, based on the non-discrimination between the vehicle manufacturer, their main dealers and independent operators’ ability to diagnose, service and repair vehicles, then we must stand united behind the UK aftermarket organisations (the IGA, the IAAF, the GEA etc.) to fight for the continued rights of access. We may yet hear a familiar rallying cry – ‘never has so much been owed by so many to so few’ if we can maintain the ability to offer competitive services to UK drivers after Brexit!

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