Insights from practice: is dealer protection good for consumers?
by John Whiteman
International Journal of Globalisation and Small Business (IJGSB), Vol. 2, No. 1, 2007

Abstract: Most new cars in Europe are sold and serviced in a dealership operating under a franchise agreement from the car manufacturer. This system requires an exemption from EU competition rules and has been granted a Block Exemption 1400/02 which runs until 2010. The Block Exemption provides for various measures of dealer protection to be included in all franchise contracts, for example, a minimum notice period for termination. This is in contrast to the General Block Exemption applying to all other sectors, which makes no such provision. This paper examines the possible benefits to consumers from different dealer protection measures. It argues that there is no general case for such protection, but that it can be a robust precautionary device against possible defects in interbrand and intrabrand competition.

Online publication date: Sun, 24-Jun-2007

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