Autoboys welcomes CompComm decision to convert motor code into law
Johannesburg, 05 June 2019 — After hearing over 80 stakeholders’ viewpoints regarding anti-competitive behaviour in the automotive industry, the Competition Commission has commendably decided to take a draft motor code one step further by seeking to implement it in law.
Since 2017, the Competition Commission has consulted widely in the automotive industry with a view, at first, of creating a single, voluntary Automotive Code of Conduct to help open up the market, promote greater transformation and encourage increased economic participation of SMEs and black South Africans.
The second and final draft of the motor code — published in August 2018 — sought to play its part in achieving this above-mentioned goal by addressing issues such as car owners’ current lack of rights when it comes to repairing or servicing their vehicles at a provider of their choice.
Currently, South African owners of new cars are unique in the world as they are locked into using a vehicle manufacturer’s service centres, repair shops and parts in ‘embedded’ motor and service plans. If SA new car owners decide to use an independent service or repair provider of their own choice, vehicle manufacturers then typically punish them by voiding their warranties in what is a highly unfair practice.
Other key aspects of the final draft code included greater black participation in the maintenance and service segments of the market as well as provisions that vehicle manufacturers should not lock car owners into using their original parts – which are typically priced at a premium. In addition, the code sought other advances for the motor insurance industry as it stipulated that a consumer’s warranty would not be voided if an insurance company decided to go with an independent service provider for non-structural work on a customer’s car.
As a result, the contents of the code have been hotly debated in the automotive sector.
And because of a wide range of divergent views and difficulties with achieving consensus on a final voluntary code for the industry; the Competition Commission has communicated to stakeholders that it will “instead convert the Code into a Guideline of the Competition Act for the automotive aftermarkets sector, which it will apply in enforcing the Competition Act and prosecuting any breach of the Act.