Karel Van Miert, the European Union's competition commissioner, will leave his post in September to head Nijenrode University, the leading business school in the Netherlands. Many auto industry issues he has been working on will remain unresovled. Among the most contentious areas is cross-border shopping and block exemption - the agreement that allows carmakers to operate exclusive dealer networks in Europe. Van Miert was interviewed recently by Automotive News Europe's Diana T. Kurylko.
Volkswagen has already been fined a record amount ($105.5 million) for obstructing cross-border car buyers, and a closed hearing was held 29 June to analyze allegations that DaimlerChrysler also violated competition rules. Why do you think you have a case against DaimlerChrysler?
We found evidence that was not in line with the regulations. The list has been made public, so I won't go into the details again. We found these practices in four member states.
It remains to be seen what the outcome of the hearing will be. The parties have a right to challenge the findings.
Could DaimlerChrysler be fined as much as Volkswagen? Or perhaps even more?
It is too early to say. But these alleged violations took place in several member countries, over a longer period of time, and there are several infractions. This points to a substantial fine. We consider this kind of thing to be very serious because it denies European citizens the right to buy their cars wherever they like in the European Union.
What did DaimlerChrysler do?
There were alleged threats and delays to the supply of cars. The problem wasn't simply denying citizens' rights, but also the way they were handling their dealers.
When does the case go before the full European Commission?
It is too early for the Commission. My officials will now evaluate the outcome of the hearing. The exercise consists of checking whether all points have been maintained or substantiated and if others have been weakened. This is very important because the outcome determines the next course of action.
The next move is to draw up the necessary documents, and then it goes to the Commission. If there are no further complications, a decision may be taken at the end of the year or early next year.
What is the status of the charges against Opel?
The charges are against Opel Holland - and they are similar to the D/C case. They allege that customers were denied the right to buy a car there - or it was made so complicated for them the situation was hopeless.
We are just beginning that. We are gathering evidence. There were alleged violations in France and Ireland. We are still getting complaints from customers - and not just about the companies we mentioned. It still strikes me that it is very difficult for consumers to simply buy a car where they like.
What does this say about block exemption?
On the basis of so many details and our findings so far, it tells us block exemption is not being properly observed. I have given my people ... a long list of questions that will go to all participants: consumer organizations, carmakers and dealers.
The study results should be available next year. On that basis, the discussion will take place on what will come next.
Would you advocate that block exemption be eliminated before it expires in September 2002?
No, not before it expires. A manufacturer can lose the benefits of block exemption - this is already part of the present situation. It is difficult to argue that the situation is satisfactory when every day we get new complaints. We found enough evidence to make several cases pointing to all kinds of practices that are illegal.
Doesn't this mean the industry could continue to violate the block exemption rules?
No, we are attacking individual cases and they know what that means. The more general debate is what comes next.
Why did the European Commission agree to extend block exemption in 1995?
The car companies originally asked for 10-15 years. Things were moving already. We tried to balance the benefits of a selective distribution system with the interests of others, like the consumer, and to reach a better balance between dealers and carmakers.
On the dealer side, we had complaints over and over again. They were usually oral complaints because many dealers were concerned about putting them in writing. Many of them usually, when you see them eye to eye, complain about the way they are treated.
Are the dealers charging that the manufacturers have too much power?
Yes. In the 1995 block exemption renewal at least we made a serious attempt to put the balance right. But apparently in the real world it is not yet settled.
So dealers aren't really permitted to expand?
They feel the guarantees we put into block exemption are not real, are not always fully respected, and they worry about what happens if you go against the manufacturers.
You appear to be concerned about the Rover governmental aid in the UK.
Yes, but this is not the first case. We have had several, such as VW in Saxony. (Two years ago, the EC rowed with the German state of Lower Saxony about aid granted to VW plants in the region.)
There are several aspects to state aid. For instance, public aid can only be given in depressed regions, and only up to a certain level. For the automotive industry, it is up to the Commission to set the level and determine what amount can be used without leading to unfair competition. What that means is once you talk about public aid, you have to consider alternative sites.
In the Rover case, we need to see if BMW was really considering an alternative site (in Hungary). There has been information and indications from the Hungarian side that that was not the case. We need to sort it out.
There are also other issues. You cannot give state aid to compensate for a lack of profitability.
Would BMW have had to receive a serious offer from the Hungarian government and negotiated with Hungary to qualify for aid?
It must be established if it was a game using the Hungarians to put pressure on the British government for maximum aid. That's not the kind of game we are prepared to accept.
It seems that frequently carmakers in the UK threaten to move.
And elsewhere as well. There is another case where three member states are competing and they are competing through public aid. The companies are making money so they are not in danger, but they try to squeeze governments.
When does a supplier become too big?
From our point of view, when a supplier becomes dominant. Eventually one could even talk about collective dominance on a global level. On one hand, if there is consolidation among the carmakers, obviously there is a matching consolidation on the supplier side. It remains to be seen whether such a consolidation is overstepping the mark. It needs to be looked at very closely.
There is concern that the mid-sized suppliers in Germany known as the Mittelstand are being wiped out.
This is a very tricky question. You have globalization and consolidation. But on the other hand, this leads to dominance. Our concern is to keep the markets open and to try not to allow the situation where there are only a few big guys left. It is not always easy to reach a balance.
What has been your impression of the auto industry in Europe?
Throughout my tenure, the industry has operated as a very strong lobbying group and still does. Automakers are rather reluctant to go along with updated rules. I remember one discussion we had about the present block exemption. I thought they would be careful to at least avoid practices that violated it. My thought was that even if block exemption wasn't balanced, we would try to do something for the dealers and something to protect the rights of European citizens. If they (carmakers) wanted to keep the block exemption system, they had to make sure the goods would be delivered. I am astonished at what happened. If block exemption disappears it will be largely because the auto industry did not live up to expectations and requirements.