Cecra Press release : Austrian court finds abuse of dominant position by Peugeot
Austrian court finds abuse of dominant position by Peugeot
In Austria, the Vienna Cartel Court handed down a very interesting decision on May 12, 2020, at first instance, in a dispute between the Peugeot Büchl dealer and the general importer of Peugeot vehicles in Austria.
According to Josef Schirak, spokesman of the Austrian CECRA’s member association, the balance of power between manufacturers and retailers has been deteriorating for many years, to the detriment of the contracting parties. "The Cartel Court has now clarified that in many cases there has been an abuse of market power," Mr Schirak said.
CECRA : a case to be followed by all dealers in Europe
In the meantime, although the decision is not final and it is possible that Peugeot may appeal against it, CECRA has taken note of the decision against the Austrian importer. "This decision is a positive signal for dealers in Europe because what is disproportionate cannot work smoothly," said CECRA's Director General Bernard Lycke. "We will now discuss the details of the decision and closely follow the development of the dispute which is important for all the European dealers we represent”.
The parties were bound by contracts granting the dealer the (non-exclusive) right to distribute new vehicles and light commercial vehicles (and accessories) of the Peugeot brand and to provide after-sales service for these vehicles.
The dealer complained that, like many other Peugeot dealers in Austria and Europe, he had suffered from disproportionate requirements imposed by Peugeot which were such as to cause him serious economic disadvantages and call into question his independence.
The Cartel Court found that Peugeot, which had relative market power in relation to the activities of dealers, had committed abuses and condemned the following practices of Peugeot:
- economically forcing the dealer to take part in promotions and thereby restricting his freedom to set his sales prices independently for the final customer
- linking the payment of bonuses to the dealer to customer satisfaction surveys, the Court emphasising that the results are manipulated and have nothing to do with a real assessment of the quality of the dealer's services;
- reduce dealers' margins if they do not achieve sales targets set by Peugeot (and an expert); the Court points out that those targets were notoriously exaggerated and that the system made it difficult for dealers to calculate essential risks;
- compete with dealers on the market of the final customer by practising, by dealers who are majority owned by Peugeot, conditions which dealers cannot practise.
In the context of after-sales activities, the Court condemned the complex control system and conditions which made the work economically unprofitable for dealers (failure to reimburse dealers' entire expenditure on carrying out work under warranty, in particular because of hourly rates which did not correspond to reality).
Lastly, the Court generally condemned Peugeot's passing on to dealers the costs of its mystery shopping and criteria auditing system, including them in the present case in the lump sum claimed for training.
On the other hand, the Court dismissed the dealer's criticisms of certain other complaints made by the dealer concerning:
- the investments imposed by Peugeot to ensure corporate identity;
- the prices charged for test and diagnostic equipment and the annual fee for access to technical documents;
- the economic pressure on dealers to deal with as few warranty cases as possible;
- the training (for sales and after-sales) imposed and the charging of training costs to dealers
In the meantime, this decision sheds light on common practices in the motor vehicle distribution sector where the balance of power between the manufacturer/importer and the dealers/repairers is increasingly deteriorating to the detriment of the latter, which are defended by CECRA and CECRA's European Dealer Councils at European level, and by CECRA's national associations at national level.