New guidelines for competition in South Africa’s automotive aftermarket industry will come into effect on 1 July 2021.
In preparation for the new guidelines, the Competition Commission hosted a workshop to discuss what they will mean for the average consumer.
The legal firm Bowmans commented on the workshop, as reported by BusinessTech, and provided valuable insight into the practical changes ahead.
According to Bowmans, the new guidelines are a result of more than a decade’s worth of complaints received by the Competition Commission from independent service providers (ISPs) and other industry participants.
The firm noted that the guidelines aim to promote greater inclusion of small-and-medium-sized enterprises (SMEs), as well as historically-disadvantaged persons (HDPs), in the automotive aftermarket industry.
However, it added that the guidelines do not have the force of law.
For the average consumer, the new guidelines aim to increase choice.
Once in effect, they will allow consumers to repair their vehicles at service providers of their choice – without voiding a manufacturer’s after-sales agreement.
Additionally, consumers will be able to fit original or non-original spare parts to their vehicles, as well as source these parts from their preferred ISP.
“Whilst consumers are afforded increased choice, the Competition Commission cautioned that consumers ought to still be aware of the potential risks involved with maintenance and repair work by a third-party ISP,” said Bowmans.
“The risk that certain provisions of the warranty on the motor vehicle may become invalid or void in circumstances where the selected ISP is found to be at fault.”
In the event of a dispute, the Competition Commission recommends consumers approach the institution’s relevant complaints department. If no resolution is found, the Motor Industry Ombudsman of South Africa can be contacted.
Where conduct is potentially in contravention of the Competition Act, consumers may also approach the Competition Commission directly, it said.
For SMEs and HPDs
A key objective of the new guidelines is to promote the entry and participation of SMEs and HDPs in the automotive aftermarket sector, said Bowmans.
This will be incentivised by encouraging stakeholders in the industry to facilitate:
- Increased entry, promotion, and supports of SMEs and HDPs as approved dealers.
- Dispensing of the practice of OEMs entering into exclusive agreements with motor-body repairers.
- Ensuring that ISPs can undertake in-warranty service, maintenance, and repair work.
- Ensuring the fair allocation of work by insurers to service providers on insurance panels, with no service providers serving for more than five years on a panel.
Although the new guidelines are not binding law, the Competition Commission notes that the policy reflects what it will consider as anti-competitive behaviour going forward.
To see how the guidelines are being implemented in the industry, the Competition Commission will meet with, and obtain information from, the relevant stakeholders.
Where compliance is commercially impractical, certain industry participants may need to adopt purposive interpretations, said Bowmans.
“To this end, it is not implausible that the guidelines may evolve over time based on experience and application.”