BRUSSELS, June 21 (Reuters) - European Union Competition Commissioner Mario Monti will delay a controversial proposal to abolish geographic limits on car-sales franchises until 2004, an EU source said on Friday.
That represents a compromise by Monti with the views of the European Parliament, which passed a resolution last month seeking a delay until 2005. Germany has also called for a longer transition period for freeing up the car retail market.
Parliament, which has no power in this issue except to make suggestions, has recommended that abolition of the so-called "locations clause" -- restricting sales franchises to one geographic area in the EU -- be reviewed before it took effect.
Instead, Monti has decided the industry will have a one-year transition period from October to his new car sales rules -- with the exception of the disputed location clause, which will have the longer delay to 2004, the source told Reuters.
The European Commission declined to comment.
Monti's whole package must be approved by the full European Commission, which will consider it on July 17 and has the power to modify the proposal.
Current rules on auto sales expire in September after 10 years, making it necessary to write new ones. With differences in car prices of up to 50 percent between countries, Monti has drafted rules aimed at opening the market to more competition.
Appearing last month before the Parliament, Monti emphasised his support for permitting retailers to compete across Europe, rather than restricting their territories to tiny fiefdoms.
"The abolition of the location clause has to take place," Monti said at the time.