The agreement gave customers less choice of where to get vehicle financing, which is classified as uncompetitive behaviour.
The Competition Tribunal has confirmed settlement agreements between the Competition Commission and WesBank, as well as various subsidiaries of Toyota, which include an administrative penalty of R30 million.
The Toyota subsidiaries include Toyota Financial Services South Africa, Toyota Motor Corporation, Toyota Financial Services UK PLC and Toyota South Africa Motors. WesBank’s parent company, FirstRand, was also involved as a holding company.
WesBank, FirstRand and Toyota will pay an administrative penalty of R30 million without admission of liability, according to the Competition Tribunal.
The Competition Commission charged WesBank and Toyota Financial Services for collusion after an investigation revealed they allegedly agreed to divide markets by allocating customers and suppliers. This practice is prohibited under the Competition Act.
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FirstRand and WesBank were supposed to compete, not work together – Competition Tribunal
FirstRand and WesBank are supposed to compete with Toyota Financial Services to provide vehicle finance services, but they allegedly concluded a shareholder agreement containing clauses that prevent them from competing.
The commission stated that FirstRand, Toyota SA Investment Holdings Limited, and Toyota Motor Finance (UK) PLC each hold a 33.3% stake in Toyota SA and have concluded a shareholder agreement that contains clauses prohibiting WesBank from offering vehicle finance to customers who wish to purchase vehicles at authorised Toyota dealerships.
In addition, the agreement identified the vehicles WesBank is prohibited from financing, 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 Competition Act.
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Toyota and Wesbank to remove restrictions preventing WesBank from financing vehicles
The Competition Commission welcomed the settlement agreement and subsequent prosecution of a complaint against WesBank and Toyota for the joint venture agreement that restrained WesBank from offering motor vehicle finance to customers who wanted to buy vehicles at authorised Toyota dealerships.
All vehicle finance applications made directly to WesBank by customers who wanted to buy from authorised Toyota dealerships were referred to the joint venture, TFSSA, for financing, the commission explained.
The vehicles involved were new Toyota, Lexus and Hino vehicles, and any used vehicles sold through the authorised Toyota dealerships.
As part of the settlement agreement, WesBank and Toyota will remove restrictions that prevented WesBank from financing vehicles bought from authorised Toyota dealerships.
“The removal of the restrictions that prevented WesBank from financing vehicles will give customers a wider choice when selecting vehicle financiers to finance vehicles bought from authorised Toyota dealerships,” Doris Tshepe, Competition Commissioner, says.
