Select Committee on Trade and Industry Annxes to the Report

Annex H


Vehicle Pricing, First Report of 1998-99, HC 64; Government Response, Third Special Report, HC 236

  1.  In July 1998 the Committee decided to undertake an inquiry into the reasons for the price differentials in new cars between the UK and other EU countries. The Report was published in December 1998; the Government's response was received in February 1999. One of the Report's principal recommendations was that the block exemption (the selective and exclusive distribution agreements car manufacturers enter into with their car dealers) in its current format was not operating in the consumer interest. The Government's response stated that they would be contributing to the Commission's evaluation of the current block exemption, due to be completed by December 2000.

  2.  Following the Report and in the light of its own inquiries, in March 1999 the OFT ordered an inquiry into car manufacturers and their exclusive relationship with dealers. In April 2000 the Competition Commission report found that selective and exclusive distribution agreements operated against the public interest in the UK and put forward a number of remedies. On 12 June 2000 the Secretary of State for Trade and Industry published a draft order which, amongst other things, requires suppliers to offer dealers who buy cars outright similar volume discounts to those offered to fleet buyers.

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