Motor Vehicle Finance Institutions FirstRand Bank Limited, Wesbank and Toyota Financial Services South Africa Limited (TFS) are in hot water for allegedly falling foul of competition rules and have been referred to the Competition Tribunal for prosecution.
The Competition Commission announced on Thursday that it had referred the firms to the Competition Tribunal and requested a fine of 10% of turnover if they are found guilty of allegations of dividing the market by allocating customers or suppliers.
The Competition Commission said that the decision to charge the firms had been taken after its investigation revealed that Wesbank and TFS had entered into an agreement to divide markets by allocating customers or suppliers in the market for the provision of vehicle finance in contravention of section 4(1)(b)(ii) of the Competition Act 89 of 1998, as amended (the Act).
The motor vehicle finance market includes the service of offering vehicle finance, leases, and dealerships financing to consumers and businesses.
"FirstRand Bank Limited (FirstRand), through its WesBank division, and TFS are involved in the provision of vehicle finance services.
They are therefore supposed to compete.
They, however, concluded a shareholder agreement which contains clauses that prevent them from competing,” the Competition Commission said in a statement on Thursday.
FirstRand, TSA Investment Holdings Limited, and Toyota Motor Finance (UK) PLC have a 33.3% share each in TSA.
“They concluded a shareholder agreement which includes clauses that prohibit WesBank from offering vehicle finance to customers seeking to purchase vehicles at authorised Toyota dealerships,” the Competition Commission said.
In addition, the commission found that the agreement identified the vehicles that Wesbank was prohibited from financing - the “new” Toyota, Lexus and Hino vehicles and any “used” vehicles sold through any authorised Toyota dealership, except McCarthy Group.
“This arrangement constitutes market division by allocating customers or suppliers in contravention of section 4(1)(b)(ii) of the Act. This type of collusive conduct is harmful to the consumers as it deprives them of the benefits which arise from competition,” the commission alleged. “Such agreements are inherently inimical to competition and the Commission has asked the Tribunal to fine the companies 10% of their turnover.”
