Japanese parts maker settles over collusion

Japanese automotive component company Sumitomo Electric Industries (SEI) has agreed to pay a R437 278 fine for fixing the price of automotive components and collusive tendering.

The Competition Tribunal confirmed a settlement agreement was made between SEI and the Competition Commission.

Commission spokesperson Siyabulela Makunga said that of the 69 automotive component manufacturers being investigated, SEI was the first firm to settle. The firms are being investigated for allegedly colluding on 301 tenders.

Details of collusive and anticompetitive practices in the automotive component manufacturing and supply industry could potentially undermine a planned National Association of Automobile Manufacturers of South Africa (Naamsa) initiative to convince the government to reduce the tax on new vehicles to stimulate demand.

Naamsa chief executive Mike Mabasa said the benefit of any reduction in tax on new vehicles approved by the government would accrue to consumers in the form of cheaper vehicles.

National Association of Automotive Component and Allied Manufacturers executive Renai Moothilal did not believe the findings of the commission’s investigation would impact Naamsa’s planned request regarding the tax on new vehicles.

“It shows there are regulations that are working. That should give the authorities confidence that any measures put in place to grow the industry can be implemented responsibly.”

Moothilal added that the automotive industry’s view was that the economic conditions brought about by Covid-19 necessitated a relook at the tax regime to stimulate the local vehicle market.

The Competition Commission launched its investigation when it initiated two complaints between December 2014 and February 2015 against SEI and Denso Corporation for allegedly fixing prices, dividing the market and collusive tendering.

This investigation revealed that in 2003, SEI and Denso Corporation met and/or held telephone conversations to agree to set the prices in terms of which they would respond to the tender or request for quotations issued by Toyota. This was regarding standard body electrical control units for the 2009 Toyota Prius, 2010 Toyota Verso, 2010 Toyota Auris and 2011 Toyota Yaris.

These anticompetitive practices involved the Toyota Prado 2010 to 2013, Prius from 2010 to 2013, Yaris from 2011 to 2014, Verso from 2010 to 2014 and Auris in 2010. Between August 2014 to March 2017, the commission initiated 310 complaints against 69 companies for alleged collusion on 92 components.

Econometrix chief economist Azar Jammine said the SEI fine was not huge, but it could encourage other companies to settle without inflicting undue damage on an industry under severe strain. –

It shows there are regulations that are working