Collusion probe referred
CAR FINANCE: COMMISSION SAYS ‘AGREEMENT PREVENTED COMPETITION’
Vehicle and asset finance division of FirstRand says the basis of the restraint clause is justified.
WesBank, the vehicle and asset finance division of JSE-listed FirstRand, believes its joint venture with Toyota Financial Services (TFS) is “quite legitimate”.
The Competition Commission reported this week it has referred motor vehicle finance institutions FirstRand Bank, Wesbank and TFS to the Competition Tribunal for prosecution on allegations of dividing the market by allocating customers or suppliers.
WesBank Motor chief executive Ghana Msibi said the company has engaged and cooperated with the commission and given them everything requested.
Only when the commission has referred the matter to the tribunal will WesBank get access to the contents of the facts on which it is basing its decision to refer the matter to the tribunal.
Competition concerns ‘being studied’
“We are still of the view that the joint venture is quite legitimate and there is no market division in any shape or form.
“From our perspective, the basis of the restraint clause in question is justified for the contract or within the context of a joint venture,” said Msibi.
Based on what the commission is now putting forward, WesBank is of the view the joint venture is legitimate, and “the best solution for servicing our customers”.
Agreement
The commission said its investigation revealed that Wesbank and TFS entered into an agreement to divide markets by allocating customers or suppliers in the market for the provision of vehicle finance in contravention of a section of the Competition Act.
The motor vehicle finance market includes offering finance, leases and dealership financing – and FirstRand Bank Limited, through its WesBank division, and TFS are involved in the provision of vehicle finance services.
“They are therefore supposed to compete,” it said.
“They, however, concluded a shareholder agreement which contains clauses that prevent them from competing.”
The commission added FirstRand, TSA Investment Holdings Limited and Toyota Motor Finance (UK) Plc each have a 33.3% shareholding in TFS.
Clauses
“They concluded a shareholder agreement which includes clauses that prohibit WesBank from offering vehicle finance to customers seeking to purchase vehicles at authorised Toyota dealerships.
“Further, the agreement identifies the vehicle[s] that Wesbank is prohibited from financing, and these are the ‘new’ Toyota, Lexus and Hino vehicles and any ‘used’ vehicles sold through any authorised Toyota dealership, except McCarthy Group.
“This arrangement constitutes market division by allocating customers or suppliers in contravention of section 4(1)(b)(ii) of the [Competition] Act,” it said.
The commission said this type of collusive conduct is harmful to consumers because it deprives them of the benefits that arise from competition.
Competition Commission spokesperson Siyabulela Makunga said the investigation into the agreement between WesBank and TFS was launched following a complaint from a customer and took almost a year to complete.