Automotive Blog

Coming to a telematics screen near you ... ?

Browserscreen Blog

Across Europe, many brands have been busy finalising and rolling out fresh or revised dealer agreements in response to the new Block Exemption regime, the final ingredients of which took effect on 1st June 2013.  Whilst this process continues to be a source of friction between brands and their dealers on the ground, up in the corridors of power in Brussels, the debate surrounding the new rules has gone relatively quiet, at least for the moment.

Indeed, running a word search on the European Commission’s recently published Report on Competition Policy 2012 (available from their web site) throws up no mention of ‘automotive’ or ‘Block Exemption’ whatsoever, suggesting that the regulators have not been particularly troubled by developments in the automotive sector over the past year.  But the report does give an interesting insight into the sectors which have been on their radar – financial services, “key network industries” including energy, telecoms, and postal services, and “knowledge-intensive markets” such as smartphones, e-books, and pharmaceuticals.  Across many of them, the competition concerns relate to consumer choice, especially in markets which are becoming increasingly ‘digital’.

Whilst many of these investigations have important learning points for the automotive sector, one of them is particularly relevant for the many brands busy working on the emerging generation of telematics-based services that drivers will access via in-car screens (or in-pocket smartphones); the ongoing feud between the European Commission and Microsoft over web browser choice.  To cut a long story short, in 2009, the European Commission sided with a complaint from Norwegian web browser maker Opera, who felt that Microsoft was unfairly stifling competition on the market for new PCs by bundling its Internet Explorer browser with its Windows operating system.  The resolution was the introduction of the ‘browser choice screen’, a somewhat clunky pop-up message that interrupts all PC owners as they get used to their new machine, giving them an opportunity to choose a different package instead.  The issue came back onto the regulators’ radar thanks to what Microsoft reported as a technical glitch, which meant that the pop-up screen had actually failed to pop-up for a 14-month period from February 2011.  The result of the investigation this March was a very firm message from the European Commission about the need for firms to comply with agreed competition commitments, in the form of some strong language, accompanied by a €561 million fine …

Why is this relevant for the automotive sector?  Firstly, because it shows the ongoing concern the European competition regulators have with ‘bundling’; where one product or service is included in the deal for another.  So, if a brand includes a package of telematics-based services as part of a new car sale, might that be seen as unfairly limiting the consumer’s ability to choose a rival package of services from elsewhere?  Secondly, because it is a further example (e-books being another topical one) in the debate over the extent to which technology can legitimately be used to restrict consumer choice.  So, if the in-car system is configured only to run the brand-determined package of services, is that unfairly restricting the market access rights of rival producers?  Or, as with the issue of technical information release, how far can a brand’s defence of needing to protect safety- and security-critical systems on board the car be carried?  And thirdly and finally, because it serves as a reminder of the European Commission’s power in setting retroactive fines on companies who have got things wrong; up to 10% of global annual turnover.

Just as Opera complained about the exclusionary effects of the bundled web browser, so the European interest groups representing independent repairers, parts suppliers, and motorists, are already starting to make noise about the potential exclusionary effects of brand-bundled telematics services.  How long before every new car gets its own version of the ‘browser choice screen’?

Written by Andrew Tongue

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