Select Committee on Trade and Industry Annxes to the Report

Follow-up Questions


It would be helpful to have an update on the Government's discussions within the European Community on clarifying or amending the legal framework taking account of the interests of consumers and brand owners, and on further study by the Commission and our EC partners of the economic effects of exhaustion regimes on competition and trade

  Studies to date have been carried out by Sweden, UK, Denmark and Ireland as well as the NERA (National Economic Research Associates) study which was on behalf of the Commission.

  The matter was discussed at the Internal Market Council on 25 May 2000. The Commission rejected change to the Community exhaustion regime to allow parallel imports and said that it would not be bringing forward proposals. Their view was that change in the regime would not benefit consumers through lower prices and there were risks to employment, innovation, product quality and after-sales service. The UK expressed disappointment with the Commission's line and argued robustly that change would favour consumers and competitiveness. Sweden, Germany, the Netherlands, Finland, Denmark and Belgium all supported further discussions, while Spain, Italy and Greece argued against change.

  The Presidency concluded that there were differing views within the Council. Further discussion is not likely during the current French Presidency. We are in contact with the governments of other Member States who support change with a view to broadening support for change when the Internal Market Council discusses this issue again. We are also in contact with Swedish government on the handling of this matter during its Presidency which begins in January.


It would be useful to have copies of the consumer information provided by the Government on the possible technical differences between grey imports and type approved cars together with advice and warnings about the possible consequences of buying a grey import, and an indication of the take-up of such information

  The Government provides the following consumer information on vehicle imports and the Single Vehicle Approval Scheme:

    1.  How to import a vehicle permanently into Great Britain (PI-4);

    2.  Single Vehicle Approval Scheme: A guide to non-type approved imported vehicles, amateur-built vehicles, "very low volume" approvals, vehicles constructed by manufacturers using parts from a previously registered vehicle (SVA3).

  These guides which are widely distributed (eg all Vehicle Registration Offices and to all known importers) offer advice and warnings about the possible consequences of buying a grey import. They will soon be revised to take account of major revisions to the Single Vehicle Approval Scheme (from January 2001) and will include information on possible safety-related technical differences between type approved vehicles and grey imports.


It would be helpful to know the Commission's response to the encouragement from the Government to ask distributors to make their selection criteria available regardless of whether they possess market power

  The Commission's view is that it is good practice for suppliers to be open about the criteria they use for selective distribution. If the Commission is investigating a selective distribution system it requires the supplier to disclose its criteria to the Commission. If a supplier notifies a selective distribution system to the Commission for exemption the criteria will be published for comment in the Official Journal.

  However, DG Competition's powers to engage with suppliers operating selective distribution systems are limited to those cases where there is a potential competition problem. Under revised EC competition rules, which came into force on 1 June 2000, agreements containing vertical restraints (including selective distribution arrangements) are generally not deemed to be anti-competitive if the market share of the supplier is 30 per cent or less, but there are provisions to examine individual cases where there is a competition problem. DG Competition's position on where there may be a competition problem is set out in Commission Notice Guidelines on Vertical Restraints of 24 May 2000, paragraphs 184-198.

  Where there is no apparent competition problem the Commission would be reluctant to ask suppliers to make their selection criteria available because at present it has no powers to follow up such a request.


It would be helpful to have an update on how discussions are progressing with the music industry on the role which trade marks play and how their concerns can be met should international exhaustion be applied to trade mark rights

  On 13 April 2000, Government officials met the record industry's two trade associations (Association of Independent Music and British Phonographic Industry) to discuss their concerns about the potential impact of changing our trade mark exhaustion regime. The trade associations outlined their case and agreed to provide evidence of how such a change could lead to a greater influx of counterfeit material that evidence is still awaited, but officials remain ready to discuss the issue further with the trade associations in the light of such evidence.

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