Select Committee on Trade and Industry Annxes to the Report

Follow-up Questions


It would be helpful to have an update on work in producing a thorough assessment of the costs and benefits of the current arrangements prior to the submission to the Commission of the Government contribution, and an indication of when DTI will be submitting its final contribution

  The Competition Commission has examined the new car market in the UK since the Committee's report. In their report published on 10 April 2000, the Commission concluded that the selective and exclusive distribution system underpinned by the cars block exemption had an adverse impact upon competition in the UK market and that car prices in the UK were on average some 10 per cent higher than they would be in a fully competitive market. The Government has implemented the Commission's recommendations which do not relate to the block exemption by an Order under the Fair Trading Act 1973. This requires suppliers to offer dealers who buy cars outright similar volume discounts to those offered to fleet buyers. It also contains measures to stop discrimination by suppliers over the terms of supply of cars for contract hire according to whether the end user is a fleet customer or not, to stop suppliers from putting pressure on dealers to advertise particular prices, to discourage pre-registration of new cars and to encourage dealers to parallel import. The Order came into force on 1 September. Suppliers must have made their first offer of volume-related discounts to dealers by 1 December.

  As far as the cars block exemption is concerned, however, the Competition Commission recognised that taking action against practices permitted under European law posed complex legal issues. DTI officials have been in discussion with their European Commission counterparts over the options open to the UK but no policy decisions have yet been reached.

  The European Commission has itself been undertaking a review of the operation of the present system. This concluded that it has not achieved the objectives it was intended to meet when it was put in place in 1995. In particular the market for motor cars is still dominated by manufacturers and the present system has not been particularly successful in its aims of promoting either cross-border trade or multi-brand dealerships. The case for continuing to link sales and servicing was also called into question.

  The European Commission intend to hold a hearing involving all interested parties after publication of the report. We expect their proposals on what regime should replace the current block exemption to emerge early next year. The UK will be pressing the Commission for radically different and pro-consumer proposals.

Telephone Numbering, Fifth Report of 1998-99, HC 139: Government Response, Sixth Special Report, HC 395

  1.  Telephone numbering was a controversial issue throughout the 1990s. In the light of public concerns, and following correspondence from the Freephone User Group, the Committee decided in December 1998 to inquire into telephone numbering and Oftel's proposals for change.

  2.  The Report was published in February 1999; the Government's and Oftel's responses were received in April 1999. The Report made a number of recommendations about Oftel's proposals for change, particularly on the controversial proposals for freephone numbers. The Committee found that there was no compelling case for 0500 numbers to be migrated into the 0800 range. Oftel agreed to reconsider the option of leaving 0500 numbers unchanged. Oftel accepted many of the specific criticisms levelled at it on its process of consultation and on the need for a cost-benefit analysis.

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