The competition commission has been accused of inconsistency after it announced its investigation into high car prices.

The competition commission has been accused of inconsistency after it announced its investigation into high car prices.

Jeff Osborne, the chief executive of the Retail Motor Industry Organisation (RMI), said on Thursday it was pleased the commission had taken an interest in the reason for high car prices.

But the RMI was disappointed that the commission had not taken the organisation's earlier appeals about the imbalance of power in the motor industry seriously.

In May last year, CARtoday.com reported on the RMI’s appeal to the then minister of trade and industry, Alec Irwin, to declare the motor industry a designate under the Competition Act because it believed “vehicle suppliers were dictating the power relationship between themselves and the dealers”.

Osborne claimed this imbalance had allowed manufacturers to impose unfair franchise agreements on dealers and deprived dealers of their commercial independence.

DaimlerChrysler SA’s radical dealer rationalisation programme, launched just under two years ago, resulted in one single dealer group operating in Gauteng, Cape Town and Durban. Through Sandown Motors, DCSA now holds direct control of a large portion of its own retail market, eradicating competition between its dealers and limiting customer choice.

"The competition authorities have been inconsistent. The DaimlerChrysler dealer network reorganisation was not in the interests of consumers. They must be consistent in their application of the principles," one source told the .

Zodwa Ntuli, the commission's compliance division manager, denied it had been inconsistent.

"When there is a merger between companies, we look at that particular merger and that market. If it doesn't raise competition concerns, then it's approved," Ntuli said.


Industry consultant Roger Pitot, who is also chairman of the Motor Industry Development Programme, yesterday said there was no collusion in the car manufacturing industry and that government would find that out for itself.


Pitot said he was not concerned about the investigation, a spokesperson for DaimlerChrysler SA said he was confident the company's pricing strategy was consistent with the competition act and Volkswagen SA spokesman Bill Stephens said: "We are happy to allow the commission investigate our relations with the dealers."

Meanwhile, in a statement issued by Toyota SA with regard to the alleged transgression of a section of the Competition Act, the manufacturer stated that when the new Corolla was launched late in 2002 it sought to protect the viability of its dealer network by prescribing maximum discounts.

The parties involved came to a mutually acceptable settlement on the matter and the manufacturer was not required to appear before the Competition Tribunal. In terms of the settlement, Toyota SA is required to pay an administrative penalty.

The company has also stated that the alleged transgression was in no way prejudicial to its customers nor to the financial benefit of Toyota SA.