South African finance institutions FirstRand Bank Limited, Wesbank, and Toyota Financial Services SA Limited (TFS) have been accused of dividing the market by allocating customers or suppliers by the Competition Commission.
The companies have been referred to the Competition Tribunal for prosecution on the allegations. The commission has asked the tribunal to fine the companies 10 percent of their turnover.
In an investigation launched by the organisation, Wesbank and TFS reportedly entered into an agreement to divide markets by allocating customers or suppliers in the market for the provision of vehicle finance.
According to the statutory body, this is in contravention of section 4(1)(b)(ii) of the Competition Act 89 of 1998, as amended (the Act). The motor vehicle finance market includes offering vehicle finance, leases, and dealership financing.
The commission said because FirstRand Bank Limited (FirstRand), through its WesBank, division and TFS is involved in the provision of vehicle finance services, they are supposed to compete but instead concluded a shareholder agreement which contains clauses that prevent them from competing.
“FirstRand, TSA Investment Holdings Limited and Toyota Motor Finance (UK) PLC have 33.3 percent shares each in TSA. They concluded a shareholder agreement which included clauses that prohibited WesBank from offering vehicle finance to customers seeking to purchase vehicles at authorised Toyota dealerships.
“Further, the agreement identifies the vehicles 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 the McCarthy Group. This arrangement constitutes market division by allocating customers or suppliers in contravention of section 4(1)(b)(ii) of the Act,” said the Competition Commission.
The association described this as collusive conduct which is harmful to consumers as it deprives them of the benefits which arise from competition.
BUSINESS REPORT ONLINE