The public outcry over high car prices has led to a formal investigation by the Competition Commission, the organisation said on Wednesday.
Commission manager Zodwa Ntuli said preliminary information gathered, as well as the public outcry over new car prices remaining high despite the country’s currency strengthening, shows the need for further investigation.
The probe, she said, will cover the whole market for new motor vehicles, but will at this stage focus on the practice of minimum resale price maintenance by specific manufacturers and dealers.
Initial interviews and information received over the past few weeks suggest that it is almost standard practice among manufacturers and importers of new motor vehicles to maintain minimum prices.
Minimum resale price maintenance occurs when a manufacturer imposes a minimum resale price on a dealer, thereby limiting or even excluding a dealer’s ability to offer discounts.
”If this practice truly exists, it really concerns us that a practice so anti-competitive and detrimental to consumers can be a norm in an industry, particularly in light of the fact that it is not allowed in terms of the Competition Act,” said commissioner Advocate Menzi Simelane.
”Information in our possession also indicates possible collusion among dealers as well as price coordination by manufacturers and we are determined to uncover these practices and eradicate them if we prove their existence in this industry,” the Competition Commission said in a statement.
Meanwhile, in a separate development, the Competition Commission concluded a consent agreement with Toyota in a complaint against the manufacturer involving minimum price maintenance.
Under the order, Toyota agreed to discontinue the practice and to pay an administrative penalty of R12-million.
”The penalty against Toyota sends a loud and clear message that the commission is determined to aggressively pursue violations of this nature,” said Simelane.
”Without prejudging the evidence against other industry participants, preliminary information gathered suggests that Toyota is not the only manufacturer of motor vehicles that may have violated the competition laws of South Africa. We plan to conduct a thorough investigation for the benefit of consumers.”
On Thursday, the National Association of Automobile Manufacturers of South Africa (Naamsa) said that, even though ”vehicle manufacturers in South Africa price independently and individual companies decide on their pricing policies”, Naamsa will cooperate with the Competition Commission in its investigation and it will open for scrutiny its records and minutes of its meetings. — Sapa