Supermarkets face online car sales ban

NEWS Supermarkets and other potential online car dealers may be blocked from selling vehicles on the web, following a move by the European Commission. The EC contends that opening up the market to such companies would reduce consumer choice and increase prices in the long term. Supermarkets have already expressed a desire to get into the market, with Tesco and French retailer Carrefour saying just last week that they are interested in selling cars online. They are not currently able to do so because EC rules dictate that dealers must provide repair services. That obligation will be scrapped once new legislation comes into force in 2003, although Brussels is now considering stopping supermarkets and dot-coms from selling cars. This morning's FT reports that EC officials believe that car manufacturers should be allowed to exclude supermarkets and online retailers from their network of approved dealers as their huge buying power and ability to sell high numbers of cars could distort the market. The paper quotes an EC report as saying: "In the long run [allowing them to sell cars] may however be counter-productive: it would reduce the range of vehicles offered, hamper innovation. [It would] lead to a strong concentration in the distribution sector with decreasing prices in the short term but less consumer satisfaction and higher prices in the long term."