3rd ICAI 2024

International Conference on Automotive Industry 2024

Mladá Boleslav, Czech Republic

Competition Law Aspects of Transition to Agency Distribution Model Jiří Mňuk 1 , Michael Svoboda 2 ROWAN LEGAL, advokátní kancelář s.r.o. 1, 2 Competition and Regulation Na Pankráci 1683/127, 140 00 Praha 4 Czech Republic e-mail: mnuk@rowan.legal 1 , svoboda@rowan.legal 2

Abstract The car distribution model in Europe is prospectively about to undergo a significant shift. Multiple car manufacturers have signaled their readiness to implement a transition from a traditional independent dealership model to an agency model. The agency model allows the manufacturers to exercise greater control over price and other sale conditions. However, the model may reduce or eliminate competition between dealers of the same car brand (intrabrand competition) and increase the overall market transparency, which may in turn pose competition risks. A crucial aspect to consider is the appropriate setting of contractual manufacturer-agent relations, because such a setting will determine whether the EU competition rules concerning anticompetitive agreements will apply. Provided that an agent does not bear the risks related with the distribution activities, such a prohibition may not apply as the agent would not qualify as an independent undertaking. However, as the matter would be assessed on a case by-case basis, caution concerning antitrust aspects should be exercised. Keywords: agency, dealership, antitrust, competition, automotive JEL Classification: K21, L42, L62 1. Introduction The distribution model of multiple European car manufactures is set to undergo a substantial change in a foreseeable future. The change in question consists in the transition to an agency car distribution model (the “ agency model ”) (FleetNews, 2023; AutoExpress, 2023). The forthcoming change signals a broader trend related to the rise of electromobility and the related increase in competing car manufacturers in the market. The agency model, which is prone to experience a significant uptake, has already been adopted by the likes Tesla or Rivian and further car manufactures are set to follow suit (The Week, 2023). Most passenger car manufactures in Europe have so far built their distribution models around largely independent distributors – third-party dealers (the “ dealership model ”). Such dealers have typically operated under the umbrella of a selective distribution system with one or a few car manufacturers to sell their cars to the final consumer in a given territory (which is usually national in scope). The final price paid by consumers has then been set by the dealer who purchased the car from the

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