Pretoria - Five local motor manufacturers, two vehicle importers/distributors and 845 car dealers face possible fines of hundreds of millions of rands following a competition commission finding that some business practices in the industry contravened the Competition Act.
Competition commissioner Menzi Simelane said yesterday that the commission had decided to refer BMW, Citroen, General Motors SA (GMSA), Nissan, Volkswagen SA (VWSA), Subaru and DaimlerChrysler SA (DCSA) to the competition tribunal for adjudication on contraventions relating to resale price maintenance, a euphemism for price-fixing and/or collusion.
He said the referral notices would be sent out within the next two weeks, adding that a final decision had not yet been made regarding the Ford Motor Company of Southern Africa.
Simelane said evidence gathered during its investigation indicated that most motor manufacturers and their franchised dealers had contravened the act by fixing prices, entering into agreements that imposed restrictions substantially preventing or lessening competition, and agreeing to or imposing minimum resale prices.
In regard to the collusion charges, Simelane said there was evidence that the franchised dealers of BMW, VWSA, DCSA, GMSA and Subaru had directly or indirectly fixed prices and/or trading conditions, or divided the market by allocating customers, suppliers, territories or specific types of goods or services.
This will lead to all 845 members of the dealer councils of these manufacturers and importers being referred to the competition tribunal.
Simelane said that if firms were found guilty, the tribunal could impose an administrative penalty of up to 10 percent of the annual turnover of these firms and exports from South Africa for the previous financial year.
However, he said some of the firms had "expressed a wish to negotiate consent agreements and we will evaluate each of those requests individually based on their merit".
Toyota SA last year reached a consent order agreement with the commission to pay an administrative penalty of R12 million and discontinue the practice of minimum resale price maintenance following a probe of a consumer complaint.
Simelane went on to say that the investigation had revealed that Honda SA, Renault SA, Hyundai SA, Volvo SA and Peugeot SA were not engaged in collusion or price-fixing, nor was evidence found suggesting that the National Association of Automobile Manufacturers of SA (Naamsa) had contravened the act.
A decision on the allegation of excessive pricing had not been finalised.
But Simelane did say the commission's analysis indicated that "new car prices in our country are much higher than in others countries.
"We will also liaise with the dti on the possible review of the MIDP , which, in our view, may be the main reason for the high car prices in our country," he said.
Nico Vermeulen, Naamsa's executive director, welcomed the fact that the organisation had been exonerated in the investigation.
Vermeulen said his overall conclusion was that the commission had certain views and had reached certain conclusions, which were disputed by some motor manufacturers and importers, and the ultimate test was in the tribunal adjudication process.
Many of the manufacturers and importers asked to comment were surprised by some of the findings.
Disappointment was also expressed that the commission had not informed them of the referrals to the tribunal for alleged contraventions of the Competition Act prior to the publication of its findings.
At a glance
Fact 1: There are more than 1 400 franchised vehicle dealers in South Africa.
Fact 2: The retail motor industry in South Africa employs more than 70 000 people.
Fact 3: New vehicle sales reported to the National Association of Automobile Manufacturers of SA last year totalled 301 154 units.
Fact 4: The motor assembly industry employed 32 548 people at the end of last year.
Fact 5: In 2004, a total of 1 185 new jobs were created in the motor assembly industry.