Automotive industry again under scrutiny by Competition Protection Agency

It has not been long since the agency adopted commitments in the proceeding initiated against Hyundai Avto Trade doo and its authorised mechanics in connection with a suspicion that it was engaging in a selective distribution system which might have restricted competition and breached Article 6 of the Prevention of Restriction of Competition Act (for further information, please see "Competition Protection Agency adopts commitments for Hyundai Auto Trade").

Background

According to the agency, there are grounds to believe that Renault abused its dominant position on the market for the provision of technical information and technical training to authorised and independent mechanics of Renault vehicles in Slovenia and in a substantial part of the EU internal market, which could affect trade between member states.

In particular, the agency believes that Renault treated authorised mechanics and independent mechanics differently – namely by providing authorised mechanics with access to technical information and technical training for Renault vehicles, while impeding or even denying independent mechanics from obtaining this information and training. This information and training is necessary for quality repair and maintenance of Renault vehicles and, consequently, mechanics need these in order to compete on the respective (aftersales) market.

Potential infringement of competition rules?

Abuse of a dominant position is prohibited pursuant to Article 9 of the Competition Act, whereby, among other things, abuse can consist of the application of dissimilar conditions to equivalent transactions with other parties, thereby placing them at a competitive disadvantage. In essence, the wording of this prohibition clause corresponds to applicable EU competition rules (ie, Article 102 of the Treaty on the Functioning of the European Union).

The agency believes that Renault's practices might constitute an infringement of Article 9 of the Competition Act and Article 102 of the Treaty on the Functioning of the European Union, as Renault left independent mechanics at a competitive disadvantage compared to authorised mechanics when it gave access to technical information and training only to the authorised mechanics.

The agency is currently in the process of collecting relevant information and has made a public appeal for additional insight, which could influence the final decision.

Renault's options

At this stage, Renault has two (obvious) options:

• As Hyundai Avto Trade doo did in the proceeding initiated against it (for further details please see "Open floor after Hyundai Auto Trade proposes commitments to Competition Protection Agency"), Renault could propose commitments to the agency in line with Article 39 of the Competition Act in order to eliminate the circumstances leading to the likelihood of the existence of infringement.
• Alternatively, Renault could wait for the completion of the proceeding before the agency.

However, in the later scenario, if infringement is established, Renault could face a fine of up to 10% of its annual turnover in the preceding business year.

Impact on automotive industry

Considering that only one year has passed since the agency initiated proceedings against Hyundai Avto Trade doo – the agency's first venture into the respective industry – it seems that the automotive industry is in fact under scrutiny.

Taking into account the above and the fact that the nature and scope of the respective proceedings are still unknown, market players should exercise additional caution and ensure that they comply with applicable competition rules on the respective market.

This article was first published on www.internationallawoffice.com

author: Eva Skufca