Tracetec vs Netstar, Matrix Vehicle Tracking, Tracker, Global Telematics SA and Bandit

The hearing which begins on 11 November 2008, deals with a complaint lodged with the Competition Commission on 17 February 2004 by Tracetec, a company specialising in corporate asset tracking. Tracetec alleges that its competitors in the vehicle recovery industry, Netstar, Matrix Vehicle Tracking, Tracker, Global Telematics SA and Bandit (collectively “the respondents”) through the Stolen Vehicle Recovery Committee (“SVR Committee”), set standards for new entrants into the market which effectively raised barriers to entry and prevented new entrants from entering or expanding into the market. The SVR Committee is a sub-committee of the Vehicle Security Association of South Africa (“VESA’) - the industry body which accredits new companies in the vehicle recovery industry.

After its investigations the Commission concluded that the agreement between or concerted practice or decisions by the respondents impeded or prevented Tracetec and other competitors such as Mobile Tracker Manufacturing, Cartrack and Cellstop from entering or expanding within the relevant market. The Commission found that the respondents had engaged in a restricted horizontal practice as well as a prohibited exclusionary act in contravention of section 4(1)(a) and section 8(c) of the Competition Act.

On 16 March 2005, the Commission referred the complaint to the Competition Tribunal. On 5 September 2007, Tracetec was allowed to intervene in the proceedings before the Tribunal. Subsequently, Tracetec lodged a separate complaint which, in essence, bolstered the referral brought to the Tribunal by the Commission and joined VESA as a respondent in the proceedings before the Tribunal. Tractec has argued that contrary to what the respondents would have the Tribunal believe, the SVR Committee operated independently of, and with little regard for, the board of directors of VESA and that the documentary record reflects no pretence by committee members at having their decisions adopted or ratified by VESA’s board of directors.

The respondents have denied the allegations, contending that:

VESA, a section 21 company, set the standards and applied them, not the respondents. VESA’s board did not consist of representatives of the respondents and therefore cannot be said to be in competition to the respondents. There is therefore no horizontal relationship between VESA and Tracetec and its competitors as required under section 4 of the Act.

VESA is an independent body that is run by a separate board of directors, which the respondents were not part of. The SVR Committee made recommendations to VESA’s board with regard to ethical and physical standards as well as VESA accreditation criteria. The respondents were not represented on VESA’s board and their recommendations were not binding to the board.

The SVR Committee was not formed at the instance of the respondents and also constituted other players who had an interest in the recovery of stolen vehicles. These included representatives from the insurance industry

At all material times, Tracetec and the other applicants dealt with VESA directly and not with any of the other respondents. Thus it was VESA and not the respondents which refused to accredit Tracetec.

Tracetec is not a competitor of the respondents with regard to vehicle tracking as it focuses its business on corporate asset tracking and not motor vehicles.

VESA accreditation is not a prerequisite for success in the market. Success depends on a number of factors which include the following:

- The quality of the product;

- The quality of the service offered by the company eg response times;

- Pricing;

- Efficiency of the roll-out of the tracking network;

- Relationships with motor dealerships, distributors, brokers, fitment centres and insurers; and

- Access to funding

Work that flows from VESA accreditation accounts for about 35% of the work and 65% depends on the above factors. In addition a party can approach an insurer directly without VESA accreditation. The respondents are still effective competitors even after resigning from VESA.