The Effects of the Block Exemption Regulation Reform on the Swiss Car Market

In 2002, the Swiss Competition Commission (COMCO) introduced a Notice on the Competitive Treatment of Vertical Restraints in Automobile Trade (‘Car Notice’). The objective of the Car Notice has been to strengthen competition in the Swiss car market, in particular by avoiding price-fixing practices and market foreclosure and stimulating intrabrand competition in the market for new car sales and competition in the service market. The Car Notice follows the key provisions of the EU Block Exemption Regulation of 2002 in the motor vehicles sector. In this paper, we investigate the effects of the Car Notice on competition in the Swiss car market. Based on a survey among Swiss car market players, we find that the Car Notice only had a small impact on competition in the Swiss car market. The most evident changes are observed in the service market and in the trade with car spare parts. In those two areas, competition is fostered through large dealers and independent service chains due to a simplified access to car spare parts of different qualities and to the necessary technical information. In the market for new car sales, a restructuring of the dealer network together with a partial dealer consolidation has been observed. The Car Notice eased this development as it has been taken as an opportunity to negotiate new contracts with dealers. However, the survey also revealed that the implementation of the Car Notice has created a lot of uncertainty and ambiguities between the dealers and car importers. As a consequence, entry in these parts of the car market has become more complicated. In addition, some (derived) aims of the Car Notice were not (fully) reached such as, for example, an intensified use of multibranding, a separation of service and sales, a larger independence of the dealers from the car importers, higher parallel imports as well as a fostering of intrabrand competition in the market for new car sales. In general, although some changes have been identified after the introduction of the Car Notice, these changes typically cannot solely be explained by the impact of the Car Notice. These changes rather result from general market developments that have led to stronger competition in Switzerland. However, we find some indications that this process was supported by the Car Notice. In general, the effects in the Swiss car market appear to be similar to the effects of the 2002 EU BER in the European car market.

Leheyda, Nina, Patrick Beschorner and Kai Hüschelrath (2011), The Effects of the Block Exemption Regulation Reform on the Swiss Car Market, ZEW Discussion Paper No. 11-034, Mannheim, published in: European Competition Law Review.