Things are rumbling in Europe's car trade

Things are rumbling in Europe's car trade

As reported, the Supreme Court in Austria has largely confirmed the first instance judgment against Peugeot in the legal dispute with the Upper Austrian Peugeot dealer Büchl. This leaves us with the assessment that Peugeot has abused its market power over dealers for years. This is exactly what has now alarmed the industry across Europe. The European dealer association Cecra has now organized a video conference at which the victorious lawyer and antitrust law expert Dr. Peter Thyri presented the case and answered questions from traders from all over Europe. There was a huge rush, a dealer from Great Britain emphasized that he himself had similar problems, and an industry representative with a Spanish name wanted to know whether, in Thyri's opinion, class action lawsuits could now also become an issue.

The Büchl case

But first things first. First of all, the Büchl case should be briefly presented here: The Büchl company had already turned to the antitrust court at the end of 2018 because it - like numerous other Peugeot dealers in Austria and Europe - was suffering from seemingly oppressive requirements from PSA. “PSA now has to stop selling new cars, link bonus payments to dealers with customer satisfaction surveys, reduce dealers’ trading margins if they do not achieve sales targets that are deliberately inflated by PSA, and compete with dealers through PSA’s own operations with subsidized vehicle prices on the end customer market,” summarizes Viennese lawyer Peter Thyri. The specialist in antitrust and competition law represented the Büchl company in proceedings before the antitrust courts.

PSA or its new parent company Stellantis, which emerged from the marriage with Fiat, must now react and redefine its relationship with the authorized dealers. The deadline for this is June 22, 2021. “The contracts must be redesigned,” emphasizes Thyri. In addition, the damage already incurred by the Büchl company must be calculated and compensated accordingly. Thyri also sees a direct bonding effect for all other Austrian Peugeot dealers.

“But apart from that, the other brands will certainly have to take a look at this now,” said the expert. And this goes beyond the borders of Austria, although local antitrust law also has its own peculiarities. But in its ruling, the Supreme Court clearly points out the parallel applicability of European antitrust law. “EU law also applied,” says Thyri. However, the judgment did not precisely define what or which law played which role in detail.

The fear of the consequences

Thyri points out a fundamental problem, which he calls the “Fear Factor” (the event was held in English). The fact that smaller traders who are in a relationship of dependence usually do not dare to take their powerful contractual partners to court. “That’s why there aren’t many adjudicated cases in the automotive industry,” explains the lawyer. “There would certainly be more lawsuits like this if people were more sure that they would get justice,” says the lawyer. For Büchl, the suffering would have been so great that he still dared to do it. And that may have now broken the vicious circle.

Economic dependencies are discussed in many countries, including France and Germany, but also in EU law. Antitrust law is not just about absolute numbers such as market shares, but also about dependencies in relation to overpowering contractual partners. He wouldn't put too much emphasis on class action lawsuits, as there is no tradition of this in Europe.  

Overall, the expert is confident that the Büchl case can have an impact beyond the Peugeot brand, but also beyond the borders of Austria. Because: "Ultimately it's about fairness towards the end consumer. You need competition in the market and that's why you have to protect individual retailers." These would need a certain independence and pricing power. Very often there is currently very little freedom for individual dealers in the European car trade. 

Bosman sends his regards

The Cecra dealer association is already reminded of the Bosman ruling - the ruling of the European Court of Justice (ECJ), named after a then unknown Belgian football player, which turned the football world upside down. The ECJ decision sealed the end of transfer fees after contracts have expired and the restrictions on foreigners in European football that had been common until then. Jean-Marc Bosman made the momentous decision to sue in 1990 after RFC Liège cut his salary and then denied him permission to move to. A transfer to the second French league failed due to the club's excessive transfer fee demands. Bosman reacted by suing and subsequently successfully fought his way through all instances over five years.

Cecra General Director Bernard Lycke speaks of a “breakthrough in a decades-long fight for more fairness in the relationship between manufacturers and dealers” in connection with the Büchl case. According to Lycke, the ruling could pave the way for a new type of partnership in the auto industry.