Changing Times

At recent ICDP meetings, we have been tracking the ongoing process of reviewing and replacing the Block Exemptions, the European-level regulations which govern franchise distribution in the automotive and in other sectors, ahead of their expiry in 2022 and 2023.  Over the next few years, we can expect to see a great deal of lobbying from brand-owners, retailers, consumer interest groups, online platforms, and others, as they seek to ensure that their interests are reflected in the new regulatory package.  Some will be winners in this process, others losers, as the European Commission works to balance the different positions against its commitment to free and fair competition.

So far, the focus of attention has been the initial public consultation exercise as part of the General Block Exemption review.  A number of common themes have arisen in the contributions from a broad variety of stakeholders representing a range of different sectors.  Many of them have relevance for the automotive sector, for how franchised dealer networks operate, and for the growing role of third party online platforms: in particular, how competition in the ‘digital’ world differs from that in the traditional ‘bricks and mortar’ world, how physical retail investments might be protected from online competition, how brands are increasingly transacting directly with their customers and what this means for their retailers, and how the ability to gather and process data is now a critical source of competitive advantage.

But even though we are only a few months into the review process, it is already becoming apparent that the overall policy environment has also been evolving since the current General and Automotive Block Exemptions were introduced back in 2013, and this evolution will inevitably be reflected in the new rules.  Over the past few years, we have continued to move from what might be termed ‘the age of manufacturing’, where suppliers and brand-owners held the market power and could as a result call the shots in how their products were handled in the retail- and after-markets, and towards ‘the age of data’, where consumers, products and channels are all connected, and where the ability to hold and to manipulate relevant data is all-important.  Relatively unconstrained by fixed assets and by long-term physical channel investments, data ‘platforms’ have shown that they have the ability to build themselves very strong and defensible market positions very quickly, and in doing so, they are increasingly attracting the attention of regulators.

Looking ahead, we can see clear indications that the focus of policy over the next few years will inevitably shift from the offline to the online world.  We have explored this shift in more detail in a new Executive Briefing, available on free download.