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More SA car makers to be investigated for price fixing

May 12, 2003

PRETORIA — A number of motor vehicle manufacturers have been told to prepare themselves for a price-fixing investigation, the Competition Commission said on Tuesday.

But as the competition commission takes the next step into allegations of price-fixing by motor vehicle manufacturers, industry sources fear the probe would have a negative impact on already slow car sales.

The Competition Commission's compliance division manager, Zodwa Ntuli, said "a number" of automobile manufacturers were told last week that they would be investigated following allegations of artificially maintaining high vehicle prices. She however refused to elaborate who or how may would be targeted.

"We will eventually be investigating the entire industry," she said, but noted the organisation worked on the premise of innocence until proven guilt, and would therefore not say who was next in the firing line.

"Only once the investigation is complete will we announce the findings," she said.

The Competition Commission said initial interviews and information received over the past few weeks suggested that price-fixing was almost standard practice among manufacturers and importers of new motor vehicles, to maintain minimum prices.

Minimum resale price maintenance occurred when a manufacturer imposed a minimum resale price on a dealer, thereby limiting or even excluding a dealer's ability to offer discounts.

"If this practice truly exists, it really concerns us that a practice so anti-competitive and detrimental to consumers can be a norm in an industry, particularly in light of the fact that it is not allowed in terms of the Competition Act," Competition Commissioner advocate Menzi Simelane said earlier.

Accusations of price-fixing surfaced when Toyota was investigated by the commission, found guilty and offered to pay an administrative penalty of R12m after an individual lodged a complaint.

Ntuli said Toyota's investigation set the ball rolling and now the whole industry would be investigated.

"There are also allegations of collusion between manufacturers and dealers that need to be looked into," she said But industry sources on Tuesday feared that the investigation would have drastic knock-on affects.

"We are quite happy with the investigation but we ask that it be fast-tracked to prevent any unnecessary instability creeping into the already quiet market," they said.

They feared that the rumours that car prices would be reduced once the commission's investigation had been completed could force possible consumers to delay a purchase. This they said would have a catastrophic affect on the automobile industry.

Preferring not to be named until the investigation had been completed, the sources also said that if dealer's profit margins were cut it would radically reduce the number of dealers able to stay in business.

"This will hit small dealers in rural areas particularly badly," they said. –Sapa

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