INTRODUCTION

INTRODUCTION

This article constitutes part 1 of a 3 part series of articles dealing with this matter.

The Competition Commission of South Africa released final guidelines for competition in South Africa’s automotive aftermarket in December 2020. These guidelines were a response to the allegations of unfair competition within the after-sale market – maintenance and repair services and related value-added products, mechanical repairs, structural and non-structural repairs to motor vehicles, the sale of spare parts, tools and components, and the sale and administration of motor vehicle insurance.

The automotive industry is the fifth largest exporting sector in South Africa with an employee base of more than 110 000 people, so it is vital to encourage healthy competitive behavior. The guidelines brough about recommendations to the existing barriers into this massive market and highlight the need to promote economic access, inclusion and greater spread of ownership for small, medium and micro-enterprises (SMMEs) as well as historically disadvantaged individuals (HDIs) to compete with established original equipment manufacturers (OEMs) in our local economy.

It is established that the largest portion of the after-sale market is the vehicle servicing, repairs and parts supply channels, comprising of approximately 80% of the entire automotive industry, both in terms of contribution to the economy as well as employment. In addition, the motor insurance contributes approximately 45% of the non-life insurance business in South Africa. The guidelines are thus a great contribution to consumer protection rights as the consumers is the most important stakeholder who purchases the vehicle as well as utilizes all the ancillary services available in the after-sale market.

The guidelines are in line with vision of the South African Automotive Masterplan which is stated as “a globally competitive and transformed industry that actively contributes to the sustainable development of South Africa’s productive economy, creating prosperity for industry stakeholders and broader society”.

In summary, the regulations address anti-competitive behavior and provide for more transparency and consumer choice by adopting a set of new principles.

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Chanique Rautenbach is a Senior Associate and Commercial Law Attorney at Barnard Incorporated Attorneys – a full service corporate and commercial law firm.

Legalex (Pty) Ltd, registration number 2003/003715/07, is an authorized Financial Services Provider (FSP 5277) and underwritten by Guardrisk Insurance Company Limited (FSP 26/10/75)

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