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Commission probes anticompetitive conduct in auto-parts sector

24th October 2014

By: Irma Venter

Creamer Media Senior Deputy Editor

  

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The Competition Commission has launched an investigation into what it says are “price fixing, market divi- sion and collusive tendering in the market for the manufacture and supply of automo-tive components to original equipment manufacturers” (OEMs, or vehicle manu-facturers) such as Toyota, Daihatsu, Nissan, Isuzu, Fuji Heavy Industries (Subaru), Honda, Suzuki, General Motors, Hyundai, Yamaha, Volvo (cars), Mazda, Mitsubishi and Ford.

The investigation has been launched into the operations of a number of automotive component manufacturers, which the commis-sion reports include “Denso Corporation, Maruyasu Industrial Company Limited, Hitachi Company Limited, Mitsubishi Electric Corporation, Tokai Rika Company Limited, NGK Spark Plug Company Limited, Mikuni Corporation, Aisin Industries Company Limited, Panasonic Corporation, Futuba Corporation and Fijistu-Ten Limited”.

The investigation arose from information received by the commission that automotive component manufacturers colluded when bidding for tenders to supply automotive components to the listed OEMs.

Commission spokesperson Mava Scott says five companies have come forward, providing detail on collusive behaviour to the commission.

“It is difficult to say how long it will take to complete the investigation. We are busy examining the evidence and contacting the relevant people. It is going to take a lot of time.”

Scott notes that the commission is hope- ful it will not have to prosecute all of the perpetrators, but that the parties involved could rather “sit down and agree on a settlement”, as was the case with the investigation into the construction industry.

According to the statement released by the commission, information in its possession suggests that from 2000 to date, 82 automotive component manufacturers have colluded in respect of 121 automotive components.

“The 121 automotive components affected by the collusion include, but are not limited to, inverters, electric power steering engine control units, electric power steering and motors, glow plugs, electric power steering systems, rear sunshades, pressure regulators, pulsation dampers, purge control valves, accelerator pedal modules, power management controllers, evaporative fuel canister systems, knock sensors, spark plugs and clearance sonar systems.”

“The commission will prioritise the investi-gation of cases that involve automotive com-ponents that are in vehicles assembled in and supplied to the South African market,” says competition commissioner Tembinkosi Bonakele.

Market Structure
Broadly speaking, there are three types of OEMs in South Africa.

A number of OEMs manufacture vehicles in South Africa for the local and export markets, such as Toyota, with the Durban plant owned by Toyota in Japan.

These plants are supplied by a number of local, as well as internationally owned global component manufacturers, many with subsidiaries in South Africa.

Some local operations also export components into global component and OEM networks.

Many of the names listed in the Competition Commission’s statement are international component conglomerates.

Another type of OEM will have a local operation owned by the parent company, such as Suzuki, but will not assemble any vehicles in South Africa.

The third type of OEM is a privately owned importer and distributor of a vehicle brand, such as the Imperial group importing Hyundai vehicles from South Korea, with Hyundai holding no shares in Hyundai Automotive South Africa.

Vehicle importers will typically fit some components locally, such as tyres or batteries.

Scott says there “is nothing, in theory, stopping the commission from pursuing firms beyond South Africa’s borders, if their behaviour impacts on our market, and contravenes our Act”.

The commission can, therefore, decide to pursue the global component manufacturer, or the local subsidiary.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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