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Competition Commission charges Wesbank and Toyota Financial Services with collusion
Wesbank and Toyota Financial Services can face a fine of 10% of their turnover for collusion according to the Competition Commission.
The Competition Commission has charged Toyota and Wesbank with collusion. (Photo for illustration by Behrouz MEHRI / AFP)
The Competition Commission is charging Wesbank and Toyota Financial Services for collusion after an investigation revealed they allegedly agreed to divide markets by allocating customers and suppliers.
This is illegal in terms of the Competition Act.
The commission has referred motor vehicle finance institutions FirstRand Bank Limited, Wesbank and Toyota Financial Services South Africa Limited to the Competition Tribunal for prosecution on allegations of dividing the market.
The motor vehicle finance market includes vehicle finance, leases and dealership financing.
The commission says its investigation showed that Wesbank and Toyota Financial Services entered into an agreement to divide markets by allocating customers or suppliers in the market to provide vehicle finance, in contravention of section 4(1)(b)(ii) of the Act.
FirstRand is involved through its division WesBank, and is supposed to compete with Toyota Financial Services to provide vehicle finance services.
However, they allegedly concluded a shareholder agreement containing clauses that prevent them from competing.
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The commission says FirstRand, Toyota SA Investment Holdings Limited and Toyota Motor Finance (UK) PLC each have a 33.3% share in TSA.
Together they concluded a shareholder agreement which includes clauses that prohibit WesBank from offering vehicle finance to customers who want to buy vehicles at authorised Toyota dealerships.
The agreement also identifies the vehicles that Wesbank is prohibited from financing, the “new” Toyota, Lexus and Hino vehicles, as well as any used vehicles sold through any authorised Toyota dealership, except the McCarthy Group.
According to the commission, this arrangement constitutes market division by allocating customers or suppliers in contravention of section 4(1)(b)(ii) of the Act.
“This type of collusive conduct is harmful to consumers, as it deprives them of the benefits of competition. Such agreements are inherently unfavourable to competition and the commission has asked the Tribunal to fine the companies 10% of their turnover.”
