The Competition Commission has referred FirstRand Bank (FirstRand), as well as motor-vehicle finance institutions WesBank (a division of FirstRand) and Toyota Financial Services South Africa (TFS), to the Competition Tribunal for prosecution on collusion charges.
The commission alleges that WesBank and TFS entered into an agreement to divide markets by allocating customers or suppliers for the provision of vehicle finance, in contravention of the amended Section 4(1)(b)(ii) of the Competition Act 89 of 1998.
The motor-vehicle finance market includes vehicle finance, leases and dealership financing.
WesBank and TFS are supposed to compete, states the Competition Commission.
“They have, however, concluded a shareholder agreement which contains clauses that prevent them from competing.”
FirstRand, TSA Investment Holdings and Toyota Motor Finance (UK) have a 33.3% share each in TSA. According to the Competition Commission, these parties concluded a shareholder agreement with clauses that prohibit WesBank from offering vehicle finance to customers seeking to buy vehicles at authorised Toyota dealerships.
“Furthermore, the agreement identifies the vehicles that WesBank is prohibited from financing, and these are new Toyota, Lexus and Hino vehicles and any used vehicles sold through any authorised Toyota dealership, except the McCarthy Group.”
The Competition Commission says “this type of collusive conduct is harmful to consumers, as it deprives them of the benefits which arise from competition. Such agreements are inherently inimical to competition, and the commission has asked the tribunal to fine the companies 10% of their turnover”.