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
"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
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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