February 19, 2019
Volume 3 Issue 3
UEIL Battles Anti-competitive Practices
Competition rules in the European Union allow automakers to recommend certain brands of replacement parts, including engine oils and other lubricants, but prohibit them from requiring or coercing customers to use them as a condition of maintaining vehicle warranties.
Lubricant suppliers say these rules get violated fairly frequently in a variety of ways, and when they do, the Union of the European Lubricants Industry offers to handle complaints. The number of complaints has risen multi-fold over the past decade, but the association claims a nearly flawless record in convincing original equipment manufacturers to amend their practices.
According to the UEIL’s own numbers, the organization handled four cases in 2009. In 2018, the number reached 32. The four most common issues that members raise are inadequate access to technical information, misleading communication by original equipment manufacturers, misuse of warranties and improper lubricant approval procedures, officials say.
“Most of the time, when a UEIL member faces a problem such as [these] with an OEM, it does not take direct action. It contacts UEIL, which will then deal with the issue,” the association told Lube Report in response to recent questions. “How an OEM goes about correcting their actions varies a lot. Some of them react quickly and correct their actions immediately. Others will do everything they can to do so as late as possible.”
The rules governing practices for replacement parts are part of the EU’s Block Exemption Regulation Number 461/2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector. UEIL officials say OEMs violate them in an effort to “keep competitors out of the market,” and that their action can originate at various levels, ranging from headquarters to the distributor level. The organization said it does encounter repeat offenders, cases where OEMs are “clearly aware of regulations.”
“It is obvious that an OEM concerned by UEIL action will think twice before repeating the same unfair practice,” the organization said. “But we have seen examples in which, some years later, OEMs repeat their offense. Usually, though, the problem is solved quicker the second time around.”
According to UEIL officials, the European Union has improved its rules over the years in ways that help ensure fairer competition in the supply of replacement parts, for example in its 2010 EU Commission notice, “Supplementary guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles.”
“If a vehicle manufacturer wants to contest the use of a lubricant, the OEM will have to prove that this lubricant does not meet the requirements of the definitions of ‘original parts’ or ‘parts of matching quality,’” UEIL said. “The burden of proof is on the OEM.” Still the organization sees room for further improvement, especially in terms of preventing the “trick of misinterpretation on the part of some OEMs.”
UEIL cited examples of some individual cases it has dealt with in recent years. In 2017 it was informed about statements by a Fiat Chrysler Automobiles distributor in Europe that only oils approved by FCA could be used and that failing to do so would void any warranty claim.
In 2012, the European Commission issued supplementary guidelines stating that “warranty conditions must not require the use of the vehicle manufacturer's brand of spare parts in respect of replacements not covered by the warranty terms.”
ACEA, the European Automobile Manufacturers Association, issues light- and heavy-duty engine oil specifications like its North American counterparts, the International Lubricants Standardization and Accreditation Committee and the American Petroleum Institute, but European automakers adopt their own specs to a much greater extent than those across the Atlantic. UEIL stresses that in such cases OEMs are obligated to make the technical information of those specs available to oil marketers so that they may develop products that meet them.
In the FCA case, UEIL reminded the distributor of the principles of the EU antitrust rules and invited the company to “reconsider its position and to amend its communication and its documentation accordingly.”
After consultations between UEIL and FCA representatives in Italy, the automaker acknowledged that oils proven by independent testing to meet FCA’s technical specification can be used without any limitation and with no warranty exclusion.
Another successfully resolved case dealt with the engine oil guidance in a Ferrari operation and maintenance manual. While it listed API, ACEA and SAE specifications for some replacement fluids, the manual failed to disclose such information for two specialized transmission requirements “except for the name of a product sold by a major oil company.” The EU regulation requires OEMs to identify specifications that products must meet in order to satisfy warranty requirements. UEIL said it ultimately reached a compromise where Ferrari agreed to list the specification for one product and to provide the other upon request.
While the FCA and Ferrari cases were resolved expeditiously, some are more difficult. In 2015, a UEIL member was denied a technical data sheet and safety data sheet for a lubricant used in the Schaeffer G5-7 front-end loader. Several months of “unsuccessful correspondence” with the German manufacturer resulted in the OEM advising it would only communicate through its lawyer. In its November 2017 bulletin, UEIL finally reported that a technical specification for the G5-7 was available upon request.
In March of last year, the association informed Ford Motor Co. of problems of interpretation of a communique to its network concerning practices involving Ford and Castrol co-branded engine oils. UEIL asked the automaker multiple times to send a communication reminding dealerships of regulations regarding requirements to use specific brands of lubricants. According to UEIL officials, Ford failed to react, so the association circulated an OEM bulletin stating that warranties cannot be conditioned on the use of specific lubricants unless they are provided free of charge; and that all oils meeting OEM technical specifications can be used for maintenance without voiding the vehicle’s warranty.
Except for cases that are still being discussed with OEMs, UEIL said that all but one of the cases it has ever taken up were resolved through discussions with the OEM. In October 2017 the organization announced it had for the first time filed a complaint with the EU raising objections about practices of an unidentified OEM. Officials have declined to provide any additional information about the case.