A consideration of the guidelines for competition in the South African automotive aftermarket: how do they impact supply chain liability?

Abstract

The South African automotive aftermarket consists of various role players: Original Equipment Manufacturers, original equipment suppliers, approved dealers, Original Equipment Manufacturer approved motor-body repairers, insurers, insurer approved motor-body repairers and Independent Service Providers. Due to the use of franchise agreements and exclusive arrangements between Original Equipment Manufacturers and approved motor-body repairers, participation in the automotive aftermarket has generally excluded Independent Service Providers. This has led to Independent Service Providers, particularly those who are Historically Disadvantaged Persons, and consumers to make complaints to the Competition Commission over the last ten years. These complaints have centred on the exclusion of Independent Service Providers from participation in the automotive aftermarket and their lack of access to original spare parts. The effect of these restrictive practices has been to limit consumer choice and expose them to the high prices of original spare parts in the automotive aftermarket, in breach of the provisions of the Competition Act 89 of 1998. This Act regulates competition in South Africa and aims, amongst other goals, to provide consumers with choice as to service provider, ensure competitive pricing, and expand the spread of ownership in markets. The Competition Commission, as an administrative body created to ensure compliance with the Act, is empowered by s 79(1) thereof to indicate its policy stance on any matter falling within the ambit of the Act. In line with s 79(1), the Competition Commission has published the Guidelines for Competition in the South African Automotive Aftermarket. The publication of the guidelines led to two questions which are the focus of this study: firstly, what impact will these guidelines have on supply chain liability in the automotive aftermarket during the in-warranty period and secondly, whether this impact will be to the benefit of consumers. In order to answer these questions, this study considers automotive supply chain liability before the publication of the Guidelines for Competition in the South African Automotive Aftermarket, the role of the Competition Commission and its authority to publish these guidelines, the provisions of these guidelines and their impact on supply chain liability during the in-warranty period.