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Competition Commission concerned with monopolies in automotive industry

Competition Commission concerned with monopolies in automotive industry

The Namibian Competition Commission recently conducted a study into the local automotive industry and found that there is a prevalence of territorial restrictions that create monopolies in the sale of certain vehicle brands, exclusive distribution arrangements of vehicles that may foreclose new entrants and third parties from the market.

The Commission found that the allocation of territories had not only created monopolies in the sales of certain vehicle brands, but also stifle competition, limit consumer choices and competitive pricing. The Commission stressed that these practices eliminate intra-brand competition in the retailing of vehicles.

Similarly, of concern is the prevalence of various arrangements between aftermarket service providers across the value chain including panel beaters, service centres, fitment centres, original equipment manufacturers (OEMs) and insurance companies.

“These practices were found in the insurance industry where insurance companies may also require that their customers (insured vehicle owners) use approved service providers who are usually the same service providers as those approved by the OEMs. These agreements or arrangements during the different value chain of the aftermarket segment of the automotive industry have the potential to prevent competition and act as a huge barrier for the Small and Medium Enterprises to access repairs and services of vehicles and can ultimately lead to high cost to consumers,” Bridget Dundee, Director of Economics and Sector Research Division at the Commission said.

In this regard, the Commission announced that they have initiated a formal screening into the automotive industry to ascertain whether there are grounds upon which the Competition Commission could initiate investigations.

“Additionally, the Competition Commission will embark upon extensive advocacy work and engagement with various stakeholders in the industry following concerns raised during its consultations. Fair competition is imperative for the development of the automotive industry in Namibia as it has the potential to create employment and entrepreneurial opportunities for Namibians,” Dundee said.


 

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