Dealing with pressure from OEMs
It is no secret that larger companies can be in a position of advantage due to their size, financial power, and influence in the industry. EMISA keeps working to ensure that this advantage is not abused and that our members can continue their business. We are an association of independent manufacturers, suppliers, and service providers in the marine engine (after)market. Our aims are free access to the market, fair competition and a legal framework that supports these aims.
The following story is an example of our work.
The Story
In 2015, a few companies contacted us with a similar issue. A large, well-known manufacturer (“the OEM”) had introduced a new programme whereby only dealers they approved of could sell their parts. Companies, which re-sell and service the original manufacturer’s parts, could sign the agreement and join the programme. However, they would be required to work with original components only and not be allowed to sell them to any party outside of the programme. The reasoning given for this was based on safety concerns. The OEM stated that only original parts should be used and that the equipment would be serviced by qualified engineers who can reinstall it correctly. In reality, there are many independent companies with the necessary knowledge, facilities and many years of practical experience to do that, including those which contacted us.
The parts in question are very precisely built and customised, and as such were difficult to replace with non-original parts. For the original manufacturer, this meant that they had a big market share and a lot of power. However, independent companies in that sector rely on having access to the original parts to be able to re-sell and service them. In such a situation, the programme introduced by the original manufacturer not only posed a threat to free and fair competition, but would have created a de facto monopoly.
In 2016, after several meetings with the independent companies, EMISA decided to look for outside legal assistance. The first step was drafting and sending a letter directly to the original manufacturer, explaining the affected companies’ position and concerns and requesting that the programme be withdrawn. The letter did not produce a result, although it made the original manufacturer aware that they are being watched closely.
The second step was to look into competition law. After analysing the facts and rules, our lawyer concluded that, subject to the safety issue, the programme appeared to infringe European Union competition rules. There were two options regarding the next step:
- Filing a complaint with the European Commission
- Raising the issue with the Dutch Competition Authority (ACM)
The first option had many drawbacks. Even if the European Commission picked up the case, it would only result in a lengthy and costly investigation with no guarantee of a positive outcome for the affected members. We chose the second option. In 2017, our lawyer contacted the ACM and presented them with a detailed description of how the programme was applied.
We have no way of knowing how the communication between ACM and the manufacturer went, but in the end, the programme was withdrawn and all affected members were able to continue their business.
The importance of seeking support
This story is an excellent example of unity and the benefits of seeking support from others, especially as an SME in this industry. We aim to offer that and cultivate an environment for independent companies which share the same goals and values. Bringing these stories to the public eye can make other companies realise that they do not have to stay passive when faced with a threat.