The Competition Commission has delivered a damning report on vehicle finance collusion.
The Competition Commission has implicated JSE-listed FirstRand Bank Limited, through its WesBank division, as well as Toyota Financial Services South Africa in a vehicle finance collusion scheme, recommending that the Competition Tribunal fine each of the companies 10% of their total turnover.
In a statement released on Thursday, the commission noted that it had referred both companies to the tribunal on allegations of dividing the market by allocating either customers or suppliers.
The investigation revealed that Toyota Financial Services and WesBank were in contravention of section 4(1)(b)(ii) of the Competition Act 89 of 1998 by entering into the aforementioned agreement to divide markets for the provision of vehicle finance.
The Competition Commission said, “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.”
A shareholder agreement was uncovered wherein clauses that constitute market division were stipulated. FirstRand, TSA Investment Holdings Limited and Toyota Motor Finance (UK) PLC each entered into the agreement. Part of this share agreement outlined that should a customer wish to buy a vehicle at an authorised Toyota dealership, WesBank would not be allowed to offer vehicle finance to that customer.
It further outlines the types of vehicles that WesBank are not able to finance, such as new Toyota, Lexus and Hino commercial vehicles. The same applies to pre-owned vehicles sold through Toyota dealerships with the exclusion of McCarthy Group.
The Competition Commission further notes, ““This type of collusive conduct is harmful to the consumers as it deprives them of the benefits which arise from competition,”
Such agreements are inherently inimical to competition.”
Keyword: Vehicle finance slap down