The Competition Commission has posted its final guidelines for the South African automotive market, with several changes planned for 2021.
Commenting on the guidelines, Dominique Arteiro – Director, Werksmans Attorneys Competition Practice – said the local automotive industry employs a large number of citizens and contributes significantly to the GDP.
Consequently, guidelines have been issued with the aim of promoting competition in the automotive aftermarket – and specifically to promote economic access, inclusion, and greater spread of ownership for historically disadvantaged individuals.
“In the Commission’s media statement, the Commission indicates that it consulted widely with industry participants. The Commission also states in its media release that it had engaged with independent repairer associations,” said Arteiro.
Measures proposed in the automotive guidelines – which Arteiro said will have cost, staffing, and legal implications – are as follows.
- Unbundling: The unbundling of the new motor vehicle price from the price of the service and/or maintenance plan of that motor vehicle. Consumers will then have the choice whether to purchase the motor vehicle and service/maintenance plan separately or at the same time.
- Maintenance Plans: Original equipment manufacturers and independent third-party providers must transfer a service and/or maintenance plan to a replacement motor vehicle in circumstances where the motor vehicle is written off by the insurer.
- Cancellation: In circumstances where there is no replacement motor vehicle after a write-off or its not feasible to transfer a service and/or maintenance plan to a replacement motor vehicle, the consumer must be afforded the right to cancel the service and/or maintenance plan contract and/or receive a refund for the balance of the product.
- Pricing: Approved dealers that sell new motor vehicles and products of competing OEMs must ensure that they do not engage in price coordination. Specifically, the prices of competing motor vehicles and products must be determined by different individuals within the dealership.
- Information: Approved dealers that sell new motor vehicles and products of competing OEMs must ensure that no commercially sensitive information is provided or shared with competing OEMs.
“Interestingly, the automotive guidelines do not apply to motorcycle dealers or finance and insurance institutions who provide products and services to participants in the motorcycle industry.,” said Arteiro.
“However, participants in other industries that have similar franchise, distribution, servicing and/or repair arrangements to the automotive industry will undoubtedly be keeping a watchful eye on how the implementation of the Commission’s automotive guidelines unfold in the automotive sector.”
The measures are set to come into effect on 1 July 2021 and organisations will have until then to meet compliance standards.