The competition commission is to launch an official investigation following from complaints about high car prices and allegations of "price fixing".

The competition commission is to launch an official investigation following from complaints about high car prices and "price fixing".

The commission on Wednesday said its decision to launch a probe into the new vehicle industry resulted from evidence of reported breaches of competition laws, as well as a public outcry at unaffordably high vehicle prices.

The commission's investigation is also related to public complaints that while the rand had strengthened dramatically against the dollar, this had not been reflected in domestic vehicle prices.

It plans to investigate prices and sale practices, including minimum resale price maintenance which, if found to be taking place, would indicate that manufacturers are in contravention of the Competition Act.

Zodwa Ntuli, the commission's compliance division manager, on Wednesday said the investigation was prompted by a complaint lodged against Toyota SA.

Ntuli said this happened after an individual had gone to a number of Toyota dealers who all quoted the same price and discount for one product.

Toyota South Africa has agreed to pay an administrative penalty of R12 million and halt the practice of minimum resale price maintenance after an agreement was reached with the competition commission.

Competition commissioner Menzi Simelane said the commission believed the penalty against Toyota SA sent a clear message that it would aggressively pursue such violations.

Johan van Zyl, Toyota SA's president and group chief executive, said the alleged transgression took place for a limited period in late 2002 during the launch period of the new Corolla. He said the new Corolla offered substantially increased customer value, which was partially achieved by the reduction of the dealer gross margin from 17,25 per cent to 10 per cent.

The commission said more major vehicle manufacturers and importers of new motor vehicles would be investigated.

Its primary focus would be the practice of minimum resale price maintenance by specific manufacturers and dealers. Initial information gathered by the commission over the past few weeks suggested that this was almost standard practice among manufacturers and importers.

Menzi Simelane, the competition commissioner, said it would be "really concerning" if this practice existed because it was "anti-competitive and detrimental to consumers".

"We plan to conduct a thorough investigation for the benefit of consumers," Simelane said.

Ray Nethercott, chairman of the National Automobile Dealers' Association, said the majority of new vehicles came into South Africa from Europe. In recent times, the rand had appreciated 20 per cent against the euro and car prices had declined in real terms.

"Prices have stayed static and inflation has been at 12 per cent for this period. The continual outcry on prices not coming down is not true," he said.

Nethercott believed the public had been well treated in terms of car prices because they had received added features, such as maintenance plans, subsidised interest rates and certain accessories at no extra cost.

Naamsa director Nico Vermeulen said vehicle manufacturers and local importers took independent decisions on sales, marketing, contractual terms and conditions with dealers and suppliers. Vehicle manufacturers priced independently and companies decided individually on their pricing policies.

However, Naamsa has added that the matter under investigation does not fall within its scope. The association has agreed to assist the competition commission in its investigations in the interests of transparency. All Naamsa's records, including minutes of its meetings, will be open to the commission for scrutiny.

Original article from Car