Automakers warned that ‘agency’ retail model could break EU antitrust laws

Toyota and Renault have said they will stick with the traditional distribution model.

But some automakers are offering a non-genuine agency model for their dealers.

VW Group subsidairy Cupra, which was spun off from the Seat brand, signed such a contract with its French dealers last year for sales of future models, including the just-launched, full-electric Born. Current Cupra models would be sold using the traditional model, according to reports in the French media.

Under the terms of the contract, as reported by the French trade website, Cupra has responsibility for inventory and customer invoicing, and takes on more marketing costs, as with a true agency model. But there is no fixed price, although scope for negotiation is narrow because of the low commissions on EVs.

Such “non-genuine” models could potentially expose dealers to antitrust enforcement, CECRA says. Such laws regulate the conduct of independent parties, but true agency models fall outside the scope of competition laws because the agents are not independent of the manufacturers.

“From a legal point of view, this system of ‘false’ agent contracts does not hold water and presents serious risks both for manufacturers” and distributors that could become “stakeholders in an anti-competitive practice and thus potentially exposed to fines,” CECRA said.

The group said dealers could be “forced to sign these contracts under penalty of termination with the brand concerned.”

In the UK, the National Franchised Dealers Association, or NFDA, has also sent out an alert about “non-genuine” agency models. 

“For those OEMs who might propose a ‘non-genuine agency’ model on the basis that they are prepared for their agents to share commission with customers (and so retain some control over the transaction price), this can also create genuine antitrust risk,” the NFDA said in a position paper.

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