Six motor manufacturers and importers are to pay over R31-million in administrative penalties for anti-competitive practices, the Competition Commission said on Wednesday.
The six companies are General Motors, Nissan, Volkswagen and its Gauteng dealers, Subaru dealers, Citroën and DaimlerChrysler.
This is after the commission’s investigation on excessive pricing revealed that prices of models sampled were on average 14% higher in South Africa when compared to similar models in European Union countries and the United Kingdom.
”The manufacturers and/or their dealers will, in terms of the consent agreements, pay administrative penalties collectively amounting to R31 650 000.
The manufacturers and dealers have also agreed to implement compliance programmes to ensure that their businesses comply with the Competition Act, in particular to eradicate the practice of minimum resale price maintenance and
collusion amongst dealers,” the commission said.
The commission has referred the consent agreements to the Competition Tribunal requesting that they be made consent orders of the Tribunal.
The Competition Commission last year launched an industry-wide investigation into the prices of new motor vehicles.
The commission found evidence of manufacturers imposing minimum resale prices on dealers, dealer collusion and anti-competitive franchise agreements.
The commission announced in May this year that it would refer cases against the manufacturers and dealers to the Competition Tribunal for adjudication.
Following this announcement, the manufacturers and dealers entered into negotiations with the commission to settle their cases.
The outcome of these negotiations are the consent agreements which have been referred to the Competition Tribunal for confirmation.
Under the consent agreements the manufacturers have agreed to:
- Not impose minimum resale prices or maximum discounts on their dealers, and to inform dealers that they are free to sell at whatever price they choose;
- Not be party to agreements between dealers as to the prices to be charged;
- Institute compliance programmes to ensure that their employees and dealers are informed about their obligations under competition law and the consent agreements;
- Establish a mechanism for dealers and consumers to report contraventions of the Competition Act;
- Review their franchise agreements with dealers to ensure compliance with the Competition Act; and
- Pay administrative penalties.
The commission is still in negotiations with BMW dealers and intends prosecuting this case should an agreement not be reached by the end of January 2006.
”As a result of the Commission’s intervention, dealers will no longer have the excuse that they are bound to a maximum discount.
This will give consumers greater power to negotiate better discounts with dealers and should lead to increased competition and lower prices,” acting competition commissioner Shan Ramburuth said.
”We encourage consumers to take advantage of their increased ability to negotiate prices and to alert the Commission should they encounter anti-competitive practices when making purchases.”
The National Association of Automobile Manufacturers of SA said it noted the outcome.
”Naamsa as a body remains committed to the principles of free enterprise and a competitive automotive industry,” the body said. – Sapa