EU; Independents Must Also Be Authorized To Repair VW and Audi Vehicles

BRUSSELS January 20, 2003; Victoria Knight writing for Dow Jones reports that the European Union Commission said Monday that it has reached an agreement with Volkswagen AG (VOW) that will loosen the German auto company's stranglehold over repairs to its cars.

Only authorized dealers are authorized to carry out repairs of its brands, such as Audi . Under the new system, any independent garage that meets quality standards will be able to call itself an authorized service center and gain access to the auto company's technical information.

The settlement "provides the first example of action taken with respect to the new rules in the motor vehicle sector," said Mario Monti, E.U. Commissioner for Competition. Small repairers will "have a better opportunity to compete."

In a bid to boost competition and bring down prices, the Commission last autumn introduced new rules on how cars are sold and serviced in the Europe Union.

But the changes also raised the possibility that competition could be reduced because carmakers could break contracts with their repair shops.

Volkswagen apparently tried to do this, even though it didn't contest that the shops met its quality standards and should have been authorized to continue servicing its cars.

The Commission said it had received "many complaints" from repair shops with whom agreements have been terminated by the Volkswagen subsidiary Audi.

Volkswagen must now reinstate the contracts as part of the settlement, which also covers its Skoda and Seat brands.