Q: What is block exemption?

A: The exemption of the car distribution system from the competition provisions of the single market, allowing closer links between manufacturer and retailer than would otherwise be allowed.

Q: Why was it allowed to happen and why is it being changed?

A: Block exemption was designed to ensure the industry provided a cradle to grave service to car buyers. By law it is subject to periodic review. It is being changed because the European Commission argues the current system does not do enough for the consumer.

Q: Will the reform make cars cheaper?

A: The EC hopes that by making the distribution system more efficient and transparent, encouraging consumers who live in one country to buy cars in another where prices are cheaper, it will exert downward pressure on prices. Manufacturers argue the market is already fiercely competitive and the biggest factor influencing differentials is levels of national taxation.

Q: Does that apply to the UK?

A: Yes, though UK prices will also be influenced by the exchange rate.

Q: Will reform open the way to new entrants? Some supermarkets are said to want to act as car dealers.

A: Supermarkets will be free to buy cars in the cheapest markets. It does not appear, however, that manufacturers will be forced to supply them - though they may do so if they believe that it will produce higher volumes, albeit at lower margins. Don't hold your breath.

Q: I thought this was meant to be a consumer friendly reform?

A: It is, to an extent. Exclusive tie-ups have not been outlawed but dealers will be made more independent of manufacturers and will be able to offer brands from more than one marque which could lead to so-called supermarket style showrooms.

Q: What about after-sales service?

A: An important, and underrated, issue. The commission is insisting on opening up the after sales market by breaking the tie between sales and servicing. Independent repairers will get greater access to technology and spare parts.