BUSINESS NEWS
Motor manufacturers fined R31m
Posted Thu, 08 Dec 2005
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, Citroen and DaimlerChrysler.
This is after the commission's investigation on excessive
pricing revealed that prices of models sampled were on average 14
percent higher in South Africa when compared to similar models in
EU 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
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