The competition commission’s preliminary investigations indicate minimum resale price fixing is a common practice, but Nada chairman Ray Nethercott says the probe into collusion in the motor industry is “a storm in a teacup and nothing will come of it”.
The competition commission’s preliminary investigations indicate minimum resale price fixing is a common practice, but the National Automobile Dealers’ Association (Nada) chairman Ray Nethercott says the probe into collusion in the motor industry is “a storm in a teacup and nothing will come of it”.
“There are 27 manufacturers and importers and 960 models in the market. Collusion is impossible. The market is far too competitive,” Nethercott said, but added there might be “one or two incidents like Toyota”.
CARtoday.com reported in May that having reached a consent agreement with the commission in May, Toyota SA agreed to pay a R12 million administrative penalty and discontinue the practice of maintaining minimum resale prices.
The commission’s investigation found Toyota SA introduced a policy from September 16 2002 to September last year of prescribing to dealers maximum discounts on its list prices, which was enforced through fines levied on dealers that failed to comply.
But according to , there may be many more incidents of uncompetitive minimum resale price fixing practices than Nethercott believes. The newspaper quoted from the commission’s newsletter, which states it appeared minimum resale price fixing was “standard practice” between vehicle manufacturers and the importers of new vehicles.
In other words, the commission got the impression that an agreement was reached on specific price levels. That impression arose from various Naamsa releases and an established pattern that producers and importers follow with the sales of vehicles, the commission said.
The competition commision’s Zodwa Ntuli said on Monday she didn’t want to pre-empt the final findings of the investigation, but mentioned that fairly good progress was being made.
The commission’s investigation “also indicated a possible conspiracy between retailers as well as price co-ordination among a number of manufacturers,” quoted from the newsletter. “A related issue is that manufacturers and the importers of new vehicles possibly charge exorbitant prices. If enough evidence is found, the commission will nail the alleged offenders.”
Nethercott will be a speaker at the upcoming CAR Conference. The 2004 conference (which will be held in association with Nedbank Vehicle Finance) takes place during the Auto Africa Expo at the
Expo Centre (NASREC) in Johannesburg on October 27. For more about the conference’s programme, speakers and booking details, click here.
