Wesbank, Toyota charged for dividing market

The Competition Commission is charging Wesbank and Toyota Financial Services for collusion after an investigation that revealed they allegedly agreed to divide markets by allocating customers and suppliers – which is illegal in terms of the Competition Act.

According to the commission, it has referred motor vehicle finance institutions FirstRand Bank Limited, Wesbank and Toyota Financial Services South Africa Limited to the Competition Tribunal for prosecution on allegations of dividing the market.

The motor vehicle finance market includes vehicle finance, leases and dealership financing.

The commission says its investigation showed Wesbank and Toyota Financial Services entered into an agreement to divide markets by allocating customers or suppliers in the market to provide vehicle finance in contravention of section 4(1)(b)(ii) of the Act.

FirstRand is involved through its division WesBank and is supposed to compete with Toyota Financial Services to provide vehicle finance services. However, they allegedly concluded a shareholder agreement containing clauses that prevent them from competing.

The commission says FirstRand, Toyota SA (TSA) Investment Holdings Limited and Toyota Motor Finance (UK) PLC each have a 33.3% share in TSA. Together they concluded a shareholder agreement which includes clauses that prohibit WesBank from offering finance to customers who want to buy vehicles at Toyota dealerships. The agreement also identifies the vehicles that Wesbank is prohibited from financing, the “new” Toyota, Lexus and Hino vehicles, as well as any used vehicles sold through any authorised Toyota dealership, except the McCarthy Group.

According to the commission, this arrangement is in contravention of section 4(1)(b)(ii) of the Act.

“This collusive conduct deprives consumers of the benefits of competition. Such agreements are inherently unfavourable to competition and the commission has asked the tribunal to fine the companies 10% of their turnover.”