UK: Motor Vehicle Block Exemption Regulation Updates

The Motor Vehicle Block Exemption Regulation ("MVBER") (which was set to expire on 31 May 2023) has been prolonged by the European Commission for five years and will now be applicable until 31 May 2028. The extension will allow the Commission to react in a timely manner to possible market changes (e.g. vehicle digitalisation, electrification and new mobility patterns). It is likely that the Commission will review the MVBER again at the end of the five-year period to re-assess whether they are still applicable and whether they require any updates or amendments.

The supplementary guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles have also been updated. The updates will assist companies in the automotive sector in assessing the compatibility of their vertical agreements with EU competition law, while ensuring that aftermarket operators (including garages) continue to have access to vehicle-generated data necessary for repair and maintenance. This amendment will ensure that European motorists continue to have a choice of affordable repair and maintenance providers.

Ordinarily, EU competition rules prohibit agreements between companies at different levels of distribution or production chains that have the effect of restricting competition. However, under the MVBER, these types of agreements are allowed as long as they meet certain criteria (e.g. improving distribution, promoting technical progress, while sharing with consumers some of the resulting financial benefits).

The motor vehicle sector (including both passenger cars and commercial vehicles) has been subject to specific block exemption regulations since 1985. The latest MVBER was adopted in May 2010. In May 2021, the Commission confirmed that it would be keeping the MVBER in place but launched public consultations that ran from July to September 2021 to evaluate any potential changes.

In the UK, when the UK formally left the EU on 31 December 2020, the EU block exemption regulations that were in force were retained in UK law, including the MVBER, which is set to expire on 31 May 2023. Between July and October 2022, the CMA consulted on its proposed recommendation that the Secretary of State replace the retained MVBER with a UK Motor Vehicle Block Exemption Order ("MVBEO"). On 4 October 2022, the CMA published its recommendation to the Secretary of State recommending the introduction of new UK-specific block exemption regulations for the automotive sector. On 18 April 2023, following acceptance by the Secretary of State of the CMA's recommendation, the CMA announced that it is consulting on draft guidance to accompany the MVBEO. The consultation is set to run until 16 May 2023.