The Competition Tribunal has confirmed a consent order agreed between the Competition Commission and Toyota South Africa Motors, which followed an investigation by the commission of Toyota’s implementation and enforcement of a maximum discount policy.
The commission found that this amounted to the maintenance of a minimum resale price, which was unlawful and in contravention of the Competition Act.
The Competition Commission found that from September 16 2002 to September 1 2003 Toyota introduced a policy of prescribing maximum discounts on its list prices to dealers. Toyota enforced the policy through fines levied on dealers who did not comply.
Altogether eight fines of R25 000 were levied against eight dealers.
In a statement read into the record at a hearing on Wednesday morning, David Lewis, chairperson of the Competition Tribunal, said: “The parties to this consent order are to be commended for having arrived at this agreement.
“Toyota has, by admitting its violation of the Act and by consenting to the payment of a substantial penalty, enabled full, legal closure of this matter. In addition, Toyota has agreed to repay those of its franchisees who it had ‘fined’ for failing to comply with its price-fixing injunction. It has undertaken to introduce a wide-ranging compliance programme.
“The commission is to be commended for its robust and professional investigation and prosecution of price-fixing offences. In the wake of the Federal Mogul and Toyota matters, managers everywhere should now clearly understand that resale price maintenance is an offence that will be apprehended and penalised.
“Many other jurisdictions are following the United States by introducing criminal penalties on the individual corporate officers responsible for price-fixing offences. This may come to pass here as well. However, as long as the commission is able to demonstrate success in deterring price fixing through the effective utilisation of its existing powers, it will not be necessary to consider more robust remedies.
“It should come as a sobering thought to executives everywhere that the perpetration of a similar offence may, elsewhere, have resulted in a prison term.
“Finally, we must acknowledge the role of the complainant, Mr Graeme Tucker. He has demonstrated that South African consumers do not have to accept the appalling treatment to which they are commonly subjected. In so doing he has won a victory not only for himself — indeed as part of the consent order he has agreed not to pursue a claim for civil damages — but for the entire community.
“The competition system — in common with other systems of law enforcement — cannot flourish without the contribution of individuals who insist upon compliance with the law, just as it cannot prevail without an enforcement agency willing to listen to ordinary citizens. The complainant and the commission have proved to be a powerful force in promoting competition in an important corner of the economy.
“We are pleased, then, to confirm the consent order agreed between the commission and Toyota.”
In terms of the consent order, the Competition Commission and Toyota have agreed, among other things, that Toyota shall:
- Pay an administrative penalty of R12-million to be paid no later than 30 days after confirmation of the consent order by the tribunal;
- Desist from engaging in the alleged anti-competitive conduct of imposing a maximum discount structure;
- Take prompt and effective action in ensuring dealers terminate their part in the alleged anti-competitive conduct;
- Will not notify dealers or publish a price stated or calculated to be understood as the minimum price that may be charged on the resale of any Toyota South Africa products;
- Refrain in future from engaging in any alleged unlawful conduct in its dealings with its dealers;
- Circulate to all its dealers within one month from the date of the consent order a statement conveying the substance of the consent order;
- Institute a compliance programme to ensure that employees and dealers are informed about Toyota’s obligations under competition law;
- Require its employees to comply with the substance of the consent order and take disciplinary action if compliance does not take place;
- Submit a compliance programme to the commission that will include establishing a mechanism for consumers to report any contraventions of the Act; and
- Provide full continuing and complete cooperation to the commission in connection with the ongoing investigation being conducted by the commission into the automobile industry.
Nothing in the consent order amounts to an admission of liability and no statement shall have any prima facie effect in any subsequent private lawsuit that may be brought against Toyota. — I-Net Bridge