New association calls for trade liberalisation
A number of tyre trading businesses have formed a collective with the aim of “defending the freedom of tyre trading within and outside the European Union, and also to preserve and protect its values expressed in the Charter of Fundamental Rights.” The new association, which is called LETA (European Liberal Traders Association) is based in Milan, but reports that it welcomes membership from businesses anywhere in Europe.
“We want to warn all traders who have found themselves faced with this problem, or could be faced with it, that they have the possibility of becoming members of the association and have the opportunity to document any behaviour deemed inappropriate or of any damages suffered because of this,” inaugural LETA president Fabrizio Baldizzone told Tyres & Accessories.
The formation of the association is born out of a wish to “create a common platform which counterbalances manufacturers who take advantage of their size and illegally exploit their dominance by scaring the tyre traders, in order to control market prices regardless of the market itself.” However no specific names and no specific examples have yet been attributed.
Warning that the honour of this part of the tyre industry – not to mention its livelihood – is at stake, LETA’s view is that tyre traders should get together to fight against this perceived “abuse” of power and regain respect. It is worth pointing out that the association offers to guarantee the anonymity of its members, adding that it “scrupulously respects” their privacy in accordance with regulations. All of which means Tyres & Accessories’ questions relating to the specific make-up, funding and structure of LETA are in danger of being somewhat unfruitful.
Trading, trademarks and tariffs
So what’s behind LETA’s formation? And what’s irritated its apparent tyre trading membership so much that they are using language of the freedom fighter?
According to the association it comes back to the EU. One of the fundamental parts of the European Community and subsequently the European Union is to promote the freedom of movement of persons, goods, services and capital better amongst its members. Despite the complexities of the credit crunch, few would argue the suggestion that this has largely been achieved. Duties, constraints, barriers and boundaries have literally and metaphorically fallen as citizens of the 27 member countries have become free to travel, work and do business with their relatively freely over the last decade or two.
LETA’s contention is that when it comes to the sale of tyres, things are 60 years behind and “perhaps even [go back] to the medieval ages.” The association continues the feudal analogy by arguing that where tyres are concerned unspecified “main brand tyre manufacturers” are opposed to free trade and wish act as barons of their own territories, ruling by their “own will and pleasure, relying on a sort of monopolistic control over sales.”
According to LETA, several tyre traders, in various countries, have been intimidated out of selling certain products within the EU by the manufacturers themselves, despite the fact that the product is already sold and marketed by the manufacturer itself in those same markets. “This very action implies that the manufacturer consents to the sale of its product in the EU. Furthermore it includes those same products in a pricelist specifically for this market,” LETA’s passionately argued raison d’etre continued adding: “What appears to be happening here is that the manufacturer is attempting to dictate the channels through which these goods are procured for sale by withholding its consent to such sale notwithstanding the fact that the source of the goods are the same in both cases.”
As you would imagine, LETA believes all this is clearly in contradiction with the principles of free trade and is even “incomprehensible” in the face of the global liberalization that has come hand in hand with the rise of the World Trade Organization (WTO).
LETA alleges intimidation and monopolistic characteristics present in tyre markets
According to LETA the alleged “intimidation” is carried out by preventing tyre traders by variety of means but centring on trademark protection. This in turn is said to lead to legal threats against those importing or exporting tyres from outside the European Economic Area (which is made up of 30 European countries, more than the members of the actual EU) despite the fact that the same tyre has been produced with all the certification required by European standards (E and S marks).
Much of the legal wrangling the nameless tyre manufacturers are alleged to have meted out against traders is based on trade mark law, but LETA argues that this is in conflict the European market’s competition rules, damaging and altering freedom of trade activities. “It should be noted that Articles 101 and 102 of the Treaty on the functioning of the European Union (which has been replaced by the European Community Treaty since 2009) ban those codes, amongst other practices, which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the single market. These rules also forbid the abuse of a dominant position gained in the market. The Regulation 1/2003/CE gives broad powers to the European Commission to its control,” Fabrizio Baldizzone explained. The result is said to confusion within the various tyre markets as to why an e and s marked tyre can’t be sold in Europe.
While LETA doesn’t give details of its members or indeed those with which it is particularly concerned, Goodyear Dunlop has been particularly vocal about its strict stance in this area. And this has been the case since the firm began warning what it called “unauthorised tyre importers” that they were in its view infringing “the authority of the trademark holder” by selling tyres in the UK that were not authorised for sale in the EU in July 2004. Since then a number of others have increased their focus on this area too. However one can only speculate as to the identities of the firms to which LETA refers.
Precepts and precedents
For the most part LETA’s arguments sound comparable with the oft-quoted Levi’s versus Tesco story of a just over a decade ago. Back in 2001 leading supermarket Tesco had been capitalising on the strength of sterling and sourcing lower priced premium jeans from the US. The European Court of Justice ruled in favour of Levi’s. The ruling set a precedent that implicitly upheld manufacturer pricing and the right to the protection of trademarks. In response Tesco stopped stocking the disputed jeans virtually overnight.
However the most significant difference between what LETA is alleging and what the Levis and Goodyear Dunlop cases illustrate is that both of these relate to products manufactured outside the EU for sale outside the EU. It would be clearer if specifics were given, but what it seems LETA is saying is that at least one manufacturer is seeking to control sale and distribution of tyres produced within in the same market as it is made. It is likely that the difference comes down to the definition of “market” (whether EU or the individual states) and indeed the whole legislation.
Furthermore, as far as the E and S mark references are concerned, one has to ask what effect the forthcoming tyre labelling legislation will have on this issue when it comes into force in November. It is however an intriguing question nonetheless.
Arguments relating to apparent protectionism continue to be raised, but as long as there are those that believe their livelihoods are impinged by such behaviour and as long as they believe the issues remain unresolved, is likely to continue to be subject of discussion and in this case – if LETA gets its way – action. The new association may well aim to protect rights, values and freedoms, but as the saying goes: one man’s terrorist is another man’s freedom fighter. Or in other words there are two sides to every story.
Related news:
Comments