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Thursday, 2 December, 1999, 22:54 GMT
Car price cuts 'on the way'
car showroom There could soon be a revolution in UK car sales

New cars could soon be cheaper in the UK as manufacturers are expected to be banned from selling vehicles through exclusive franchised dealerships.

The Competition Commission, which has been investigating the industry, is reported to be preparing to recommend such a ban along with a range of other measures aimed at cutting prices.

The Commission - the former Monopolies and Mergers Commission - is to deliver its final report to Trade and Industry Secretary Stephen Byers by 16 December.

Manufacturers and importers are currently allowed to operate tightly controlled, selective dealership networks.

Friday's edition of The Economist reports that the Commission has written to manufacturers quoting an EU council amendment which allows member states to withdraw a block exemption to competition regulations if it is being abused.

The letter said the Commission would advise Mr Byers on the line the government should take with the EU when the car dealership exemption comes up for review in 2002.

The Commission also warned that it was considering recommending earlier action "to withdraw the benefit of the cars block exemption in the UK".

This could lead to the creation of new car supermarkets, selling a variety of different makes.

RRP 'should go'

According to the article, the Commission will also condemn other anti-competitive practices, including bonus payments for sticking to recommended retail prices (RRP).

stephen byers Stephen Byers is expecting the Commission's report
The report is expected to favour the abolition of RRP, and the separation of sales and service operations.

It is also said to be considering forcing manufacturers to give private customers the same discounts as fleet operators, and banning the practice of pre-registering vehicles.

Manufacturers do this to dump unwanted models on the market by pretending that they are used vehicles.

Exemption 'can't be scrapped'

A spokesman for the Society of Motor Manufacturers and Traders (SMMT) said the government could not unilaterally scrap the car dealership exemption.

"It's in force across the entire European Union. It is current legislation, member states aren't allowed to opt out of it."

The SMMT believed that the exclusive distribution system worked "effectively", he added.

He said he was not aware of any Commission proposal to recommend earlier action.

Manufacturers were still making submissions to the Commission and the December 16 deadline was "extremely tight", he added.

The Consumers' Association welcomed the news.

Senior public affairs officer Nick Stace said: "The ball will firmly be in the government's court to stop the great British rip-off once and for all.

"We will be calling on Stephen Byers to take the only sensible step which is to stand up for UK consumers and abolish the block exemption in the UK."
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07 Sep 99 |  Your Money
Car prices driven down

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