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France escalates trade dispute with Germany's Mercedes

France has formally notified the European Commission of its move to block the sale of some of Germany's Mercedes car models in France over concerns for a banned coolant. Berlin has two weeks to issue a response.

France filed the notification using rules in the European Union which allow member states to take unilateral measures to block the free movement of goods in case of a threat to the environment.

France has refused to allow some Mercedes vehicles (A, B and CLA-class models) for sale as they use an air conditioning coolant banned for containing too many greenhouse gases.

The European Commission reported on Friday that it has "no set deadline" for answering France's formal notification that it has blocked the cars but that it should make a decision "sometime in September." Berlin, however, has until 19 August to make its response.

Daimler, the parent company of Mercedes Benz, is still using the older coolant, called R134a. It claims studies have shown that the new gas catches fire more easily and puts cars at a greater risk of explosion in case of a crash. Since January 1, EU norms demand that carmakers use a refrigerant called R1234yf.

In Germany, Daimler was given special permission to keep using the older coolant, despite initial approval by the German Automakers Association of which Daimler is a member.

Daimler argued that the cars blocked from sale in France were made during a six-month period of grace.

The trade spat has led to confusion in Mercedes car showrooms in France. Oussama Kaddoura, a Daimler Mercedes agent for the past 30 years said at his showroom in the east of Paris: "A customer is not going to take the risk of placing an order when there is a risk the car won't be delivered. Our rivals are happy," he said of competing German manufacturers BMW and Audi. 

Kaddoura said many of his clients were planning to drive their new cars on vacation but the dispute has left them without cars, and his showroom having to lend them substitutes: "I am trying to protect the image of Mercedes in France and find solutions for our customers," he said. "But what happens if this goes on? I can't lend out 400 cars."

jm/ccp (Reuters, AFP)