Delivering for consumers

How does the Commission apply competition policy?

Volkswagen: impeding car sales between EU Member States

Countries:

It is illegal for car manufacturers to discourage their dealers from selling to customers resident in other EU Member States. Competition law enforcement ensures that these illegal practises are punished.

After receiving several complaints from German and Austrian consumers who had had difficulty buying a new car in Italy, where prices were lower than in their home country, the Commission decided to investigate two car manufacturers: Volkswagen and Audi.

In October 1995, the Commission inspected Volkswagen's and Audi's offices in Germany, Autogerma (the official importer for both car-makers in Italy) and the offices of a number of VAG dealers in the north of Italy. The documents found during those inspections provided clear evidence of a market-partitioning policy pursued by Volkswagen, Audi and Autogerma.

Several illegal practices were identified during the inspections, including the threat for authorized car-dealers that their dealership contracts would be terminated if they sold to foreign customers, the reduction of margins and bonuses for dealers who sold outside their allotted territories and the rationing of car deliveries to Italian dealers among others.

Based on these conclusions, the European Commission fined Volkswagen AG in 1998. Volkswagen tried to challenge the decision in front of the European Court of First Instance, which upheld the Commission's reasoning but reduced the initial fine of EUR 102 million to EUR 90 million because it considered a shorter duration of the infringement.

Other car manufacturers had applied similar strategies discouraging their dealers from selling cars to consumers from other Member States. Following consumer complaints the Commission opened investigations cases and imposed fines of EUR 72 million on Mercedes, of EUR 43 million on Opel Nederland and of nearly EUR 50 million on Peugeot.

With the Volkswagen case and the subsequent decisions, the European Commission shows it values consumer's freedom in Europe. Every citizen has indeed the right to choose a car-retailer and to buy a car at the cheapest price, wherever in Europe. The European Commission publishes a yearly review of pretax car prices in each of the EU Member States to help consumers identify the country in which the car they might want to buy is cheapest.

Further information:

• Press release: Commission fines Volkswagen ECU 102 million following consumer complaints
• Press release: Commission decision of January 1998 against Volkswagen is confirmed by the Court of First Instance
• Case documents