Servitization and competition law

Click here to read the full article online

We are in the midst of an undeniable trend towards servitization, i.e. the provision of goods as services. While this process can serve laudable goals (e.g. sustainability), it can also be used to circumvent the competition law framework on vertical agreements. To show how, we examine three models of servitization or ’product–service systems’ (PSS): product-oriented PSS, use-oriented PSS, and result-oriented PSS. The car sector serves as a case study, given the financial/economic significance of cars for consumers, the enthusiasm with which car makers have embraced servitization, and the particular competition law framework applicable to this sector. In this sector, PSS—in particular the more far-reaching forms—can (a) lock out independent repairers by including repairs (and other aftermarket services) in the subscription price; and (b) completely prevent parallel trading by eliminating sales. Consumers may suffer the consequences. The prohibition of tying as an abuse of dominance could perhaps provide some counterweight, but its effectiveness remains to be tested in a servitization scenario.