Monti issues price warning to European car-makers

THE European Commission has warned that the failure of car manufacturers to establish closer pre-tax prices on an international basis threatens the future of the car distribution block exemption.

EC competition commissioner Mario Monti is currently reviewing the selective and exclusive car distribution system that expires in September 2002. He is due to propose its plans for any future exemption before the end of this year.

Monti said: 'Manufacturers' behaviour will be fully taken into account later this year when I will present proposals for the future legal framework for motor vehicle distribution to the Commission, in early advance of the expiry of the current block exemption regulation in 2002.'

He confirmed that monitoring new car price differentials and possible obstacles to parallel trade in new cars 'remained a high priority' for the Commission, and described current pre-tax price differentials within the European Union as 'substantial'.

A spokesman for the EC said: 'Despite the recent depreciation of Sterling against the Euro, prices in the UK are still much higher than in the Euro zone. Greece, which joined the zone in January, as well as Finland, Spain, the Netherlands and Denmark, a non-member, are the markets where car prices before tax are generally the lowest.' The Commission found large pre-tax price differentials exist for medium segment cars popular with fleets.

In response to the Commission's figures, the European Automobiles Manufacturers Association (ACEA) said price differences for cars in the European Union are smaller than for other consumer goods. It also highlighted the fact that tax levels vary greatly in Europe from 15% in Luxembourg to 200% in Denmark.

It added: 'For ACEA, this proves beyond any reasonable doubt the allegation that the specific distribution arrangements in the vehicle sector lead to higher price differences is manifestly unfounded.'