Car Makers Boycott UK Inquiry into Price Fixing Allegations

The world's biggest carmakers yesterday boycotted the UK's first public inquiry into alleged price fixing and manipulation of the car market, drawing scorn from consumer groups and disappointment from the Department of Trade and Industry. The boycott led by Ford, Volkswagen, and Volvo was a significant blow to the Competition Commission's nine-month inquiry into complaints that distortions in the £24bn-a-year new car market in the UK lead to consumers paying up to 40% more for vehicles than in other parts of Europe. The commission had hoped at least some of the 40 or so motor vehicle makers which trade in the UK would attend the hearing to answer questions about pricing policy. Instead, the carmakers avoided being pilloried in public by delegating responsibility to a three-man team from the Society of Motor Manufacturers and Traders, the UK trade body for the industry.

Key Takeaways:

• The boycott by Ford, Volkswagen, and Volvo was a significant blow to the Competition Commission's nine-month inquiry into price fixing allegations in the UK's £24bn-a-year new car market.
• The commission had hoped for at least some of the 40 motor vehicle makers trading in the UK to attend the hearing, but the delegation was restricted to a three-man team from the Society of Motor Manufacturers and Traders.
• The main reason for the boycott was the fear of having to divulge commercially sensitive information, as stated by Rover, part of BMW of Germany.
• Vauxhall, owned by General Motors of the US, expressed unhappiness about "time constraints" in the hearings, while the UK subsidiary of Volkswagen stated that leaving the SMMT to put the industry's general case was the most efficient way.
• The public hearings centre on the European Union's block exemption scheme, which allows carmakers to avoid competition rules by selling through captive dealers.

Statistics:

• Approximately 40 motor vehicle makers trade in the UK. (Source: Same as original)
• The £24bn-a-year new car market in the UK is the focus of the Competition Commission's inquiry. (Source: Same as original)
• The block exemption scheme allows carmakers to avoid competition rules by selling through captive dealers. (Source: Same as original)
• The scheme is due to expire in 2002 but will be reviewed next year. (Source: European Commission's competition directorate official, Konrad Schumm)

Sources:

• Source: Financial Times Limited, 1999
• Source: European Commission's competition directorate official, Konrad Schumm