Would you like to supersize that?

With the expiration MV-BER getting ever-closer, Neil has returned to look at whether plans for its replacement will address the changes the market is seeing

Published:  16 February, 2023

As you may have heard and as I reported in Aftermarket’s September 2022 issue, the Motor Vehicle Block Exemption (MV-BER) is up for renewal. The UK Competition and Markets Authority (CMA) issued a consultation in July 2022 on how any renewal may be structured, assuming that the MV-BER will be renewed when it expires on 31 May 2023.
The CMA’s final recommendations to the Secretary of State of BEIS (Department of Business, Energy and Industrial Strategy) were subsequently circulated in October 2022 and were a mixture of recommendations for good improvements, but with some concerning elements which would be detrimental to the UK aftermarket.

Direct legislative requirements
The basis of the MV-BER is in competition law and is based on direct legislative requirements in the main regulation, with additional ‘guidance’ to describe how these requirements should be met (which is a weaker legal basis).
Ultimately, the MV-BER seeks to ensure that there is non-discrimination between authorised and independent workshops in their ability to service and repair vehicles, which in turn provides motorists with the choice of where they can have their vehicles maintained. However, MV-BER has been in existence since 2002, and although it was updated in 2010, it is obvious to anyone reading this that much has changed in the last two decades in the automotive sector. Although the CMA’s recommendations needed to address some existing issues, it was even more important that they addressed new issues that have impacted the aftermarket during this period.
In effect, the CMA are proposing to ‘go supersize’ on the revisions of the MV-BER, but is this wholly beneficial to the UK aftermarket – and just what are the CMA recommending? Most importantly, the CMA recommends that the MV-BER should be retained, with no change to the existing scope, but that it would become a UK ‘Order’ in UK law – i.e. an ‘MV-BEO’ and be extended until 31 May 2029. The other key recommendations then fall into three distinct categories.

Hardcore restrictions
Firstly, there are recommendations to rectify “residual and novel issues” in the existing requirements which are not being implemented correctly.  These included the CMA’s revision in the guidance for improved clarity from the vehicle manufacturers and their authorised repairers: “...to produce additional and updated guidance to clarify that the clauses contained in all the documents proposed to consumers by OEMs/authorised dealers or repairers should clearly state the consumer's right to use the services of an independent repairer without losing the benefit of the warranty.”
The CMA also understood that the requirements of the existing “hardcore restrictions” that provide access for independent operators to OEM parts, or the ability for Tier 1 parts manufacturers to sell their parts through their Aftermarket divisions is not working as intended. Therefore, the CMA is: “...recommending that further guidance on this matter be issued in order to address residual and novel issues reported by stakeholders.”
Secondly, the CMA recognises that there is a need to address the definitions in the MV-BER.    Therefore, there is a recommendation to update the definition of ‘spare parts’ to address: “…access to software is increasingly a necessary condition to ensure providers of repair and maintenance are able to fit certain spare parts. In this context, the CMA considers that the definition of  spare parts should encompass all software, together with activation/configuration codes for replacement parts and components, which are strictly necessary to fit those parts and to replace or update components or systems of the vehicle, which are necessary for the use or operation of a motor vehicle…’
The CMA have also recognised the importance of “access to vehicle and technical information and ‘in-vehicle data” and recommend the introduction of a new definition. However, the details are not yet clear: “The CMA acknowledges that the manner in which technical and vehicle information is provided is a relevant consideration and notes that this issue is already covered in the EU Supplementary Guidelines in paragraph 67. Furthermore, the CMA is minded to issue further guidance on this subject in the context of any MVBEO Guidance. We also received comments that the legal instruments above mentioned do not cover in-vehicle generated data which may constitute an essential input for independent providers. The CMA agrees the in-vehicle data may amount to an essential input on which independent operators rely and recommends that this type of information is included in the definition of technical and vehicle information.”
Although the CMA recognises that this new definition is important, they are also recommending to include this as an ‘excluded restriction’: “...given the potential for these restrictions to distort competition, in particular, competition between authorised and independent providers, it would be appropriate to ensure that these types of restrictions are carefully self-assessed by businesses on a case-by-case basis, taking account of the specific circumstances.
This effectively states that the vehicle manufacturer will be responsible for defining what and how access to vehicle generated data is provided and be self-assessed on a ‘case-by-case’ basis.
This has partly been addressed by the CMA recognising: “...the CMA considers that this risk could be sufficiently mitigated by the issuance of revised guidance which could assist and help businesses to carry out the self- assessment and to distinguish restrictions which meet the conditions for individual exemption from those that do not.” However, for the aftermarket, this is still likely to be highly problematic, whilst also only providing a very weak legal basis for any challenge to be made by independent operators against a vehicle manufacturer.
Thirdly, the CMA recognises that they ‘should be mindful’ of what the EU is also considering in the EU’s revisions of the MV-BER: “The CMA has been mindful of the approach proposed in the EU by the European Commission. The CMA is conscious that there may be advantages in divergence from the EU in certain circumstances .....Equally, the CMA recognises that, all things being equal, there can also be benefits in consistency between the EU and the UK block exemptions...”

Distorting the market?
In both the EU and the UK, the remote access to a vehicle, its data, resources and functions is already distorting the market and should be included in the revision of the MV-BER. However, in line with what the EU is proposing, the CMA recommends a ‘wait and see’ approach: “It therefore seems likely that some parts of the motor vehicle sector will evolve rapidly over the coming years and that this will have an impact on the conditions of competition that cannot currently be quantified.”
So overall, although the CMA has recognised many of the issues that impact the UK aftermarket and which should be addressed, there are also well intended revisions that have yet to be detailed (i.e. the new wording in the guidance of the MV-BEO) and which if not handled correctly, could be very detrimental to the future of the UK aftermarket. Supersizing the MV-BEO will be good, but only if implemented correctly.

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