A question of enforceability

02 October 2024 Right to Repair South Africa

Kate Elliott

The enforceability of the Competition Commission’s Guidelines for Competition in the South African Automotive Aftermarket has created some ongoing confusion.

Many in the industry mistakenly view the Guidelines as non-binding suggestions. However, while the Guidelines are not enforceable in their own right, they play a critical role in interpreting the Competition Act and ensuring compliance.

Kate Elliott, CEO of Right to Repair South Africa, clarifies, "The word 'Guidelines' is actually a misnomer. While the courts may not follow them rigidly, the Competition Commission takes all complaints regarding the Guidelines very seriously. They help explain how the Competition Act applies to the aftermarket, and any violations of the Guidelines are likely to result in breaches of the Act."

Elliott says the practical process of enforcing the Guidelines is actually straightforward. "If someone believes a company or person is not complying with the Guidelines, they can file a complaint with the Competition Commission. The Commission investigates, and the company, known as the Respondent, must either take steps to comply or present reasons why they should be exempt. If an agreement cannot be reached, the matter may be referred to the Competition Tribunal," she says.

Elliott emphasises that although no cases have reached the Tribunal so far, companies that violate the Act face significant penalties. "Fines for non-compliance can reach up to 10% of a firm’s annual turnover, with even higher penalties for repeat offenders," she warns.

A key example of potential violations relates to Original Equipment Manufacturers (OEMs) voiding warranties when customers use independent service providers. "Section 8(1)(d)(i) of the Competition Act prohibits dominant firms from restricting customers from using competitors, such as independent workshops. OEMs that void warranties for this reason are clearly violating the Act, as addressed in both the Guidelines and the Act itself."

Elliott concludes, "We would welcome a case being tested in the Tribunal. But to those who think the Guidelines are optional, you may want to question if you really want to be the firm that ends up defending itself in front of the Tribunal, only to find out you should have followed the Guidelines all along?"