Photo by: Duane Daws
The Competition Tribunal has approved a joint venture by Hollard Insurance and FirstRand (WesBank), called Newco, to provide vehicle financing, as well as insurance and noninsurance motor value-added products (VAP).
While the matter was heard on Wednesday, judgment was held over to Thursday to allow for the drafting of conditions under which the deal was approved.
As WesBank was the largest vehicle financier in the country, competitors raised concerns that WesBank would be in a position to refuse to include competitors’ motor VAP products in its vehicle financing arrangements, as it would have its own VAP products to offer.
Another concern was that WesBank had its own finance and insurance representatives at some dealerships who would be incentivised to sell Newco’s products.
For this reason, the tribunal approved the deal with a number of conditions, including that WesBank not incentivise any finance and insurance representatives at dealerships to promote Newco products and that the buying of Newco products, over competitors’ products, not be made a condition for approval of financing.
There were grounds, however, where WesBank could reject a product – if there were concerns about the providers’ financial ability to provide the service required and where the inclusion of the product exceeds the credit limits or credit approval requirements applicable to the particular customer.