The motor industry denies it is guilty of anti-competitive practices, as alleged in a report released by the Competition Commission on Tuesday.
BMW SA, Volkswagen South Africa and Subaru, among others, all denied any wrongdoing.
BMW SA also vowed to contest any action brought against it.
”We have not seen any of the evidence referred to by the commission in its press statement this morning, and have not been informed of the contraventions it alleges we are guilty of,” said Richard Carter, spokesperson for BMW, on Tuesday.
”We co-operated fully with the commission during its investigation by providing information and documentation.”
Carter said his company was confident that it had not contravened the Competitions Act.
”BMW invites the commission to provide us with the evidence to which it referred,” he said.
”We also express our disappointment at the manner in which the commission handled its announcement through the press. We would have preferred to hear it directly from the commission prior to reading about in the media.”
Volkswagen South Africa also criticised the commission for releasing the information through the media and said it was surprised at the decision.
Subaru said it was ”mystified” at the finding of the Commission that it ” … either imposed minimum resale prices … or agreed on minimum resale prices … ” with its dealers.
”Subaru categorically denies that such practices were ever committed or sanctioned by it, and, on the basis of its submissions to the commission, fails to see on what basis the commission could have arrived at such a decision.
”Subaru welcomes the decision by the Commission to refer this matter to the [Competition] Tribunal, and believes that a proper consideration thereof by the tribunal will vindicate Subaru’s position,” the company said in a statement.
On Tuesday morning the commission announced that its investigations unearthed anti-competitive practices by motor manufacturers, dealers, importers and distributors.
Commission spokesperson Menzi Simelani said the investigation initially probed price fixing by manufacturers but became broader and came to include investigations into anti-competitive practices in the industry as a whole, including manufacturers, dealers, importers and distributors.
An investigation into the use of market dominance by manufacturers and importers to charge excessively for their products was still under way.
Simelani said evidence of anti-competitive practices included contraventions of the Competition Act such as agreements which imposed restrictions that had the effect of substantially lessening competition.
Simelani said evidence revealed Daimler Chrysler SA, BMW SA, Volkswagen SA, General Motors SA, Nissan SA and their dealers, had entered into franchise and dealer agreements which contained a number of restrictions that impacted negatively on competition in the market in which they operated.
The commission said it still had to decide whether the Ford motor company had entered into similar agreements.
Simelani said no evidence suggesting anti-competitive practices contravening the Competition Act was found against the National Association of Automobile Manufacturers of SA (Naamsa), which had been cited by the commission as one of the respondents in the investigation.
No action would be taken against Honda SA, Renault SA, Hyundai SA, Volvo SA and Peugeot SA, as no evidence was found suggesting these companies used anti-competitive practices.
The investigation found dealers were restricted and, in some cases punished, by manufacturers for seeking customers outside their franchise area, and for giving discounts above a margin set by the manufacturers.
”Dealers contravening the out-of-area sales restrictions posed by manufacturers would stand to be excluded from collaborate promotions for example,” said Simelani.
The investigation also revealed franchise agreements between dealers and manufacturers were such that dealers had to reapply for extensions to their contracts annually or every six months.
Simelani said having to argue every year or six months as to why one’s contract should be extended would encourage compliance on the part of the dealer to manufacturer’s restrictions.
Minimum resale price maintenance is banned by the Competition Act, but there was evidence that Volkswagen, Nissan, BMW, Citroen SA, DCSA and GMSA and Subaru SA either imposed minimum resale prices or agreed on minimum resale prices with their dealers.
”We have gathered correspondence that relates to dealers being advised about restrictions on discounts, being reported for transgressing discount limits, as well as being ‘threatened’ that their motor vehicle supplies would be limited or withheld if they did not comply with the discount limit,” Simelani said.
He said dealers were given price lists by manufacturers indicating recommended sales prices for each car model, the dealer’s profit margin, and a maximum discount allowable to customers.
Simelani said dealers were discouraged from giving bigger discounts than indicated as that would cut into their margins. – Sapa