The Competition Commission of South Africa, a statutory body in South Africa empowered to investigate, control and evaluate restrictive business practices, issued a statement on May 31, 2005 that seven motor vehicle manufacturers (including DaimlerChrysler, BMW, Volkswagen and General Motors) are to be referred to the Commission's Tribunal for adjudication, after a probe by the Commission revealed possible price fixing and anti-competitive practices by the manufacturers and their franchised dealers. According to a South African news source, if found guilty, the manufacturers could face a substantial administrative and punitive penalty. According to the Commission, the manner in which the manufacturers arrange franchise agreements with their dealers caused dealers to comply with innately anti-competitive practices. For example, the franchise agreements are never longer than a year, which, according to the Commission, can result in dealers being forced to comply with anti-competitive terms in order to retain their franchise. The Commission also found that the manufacturers provided their dealers with recommended retail prices, profit margins and discount percentages. The Commission will also investigate whether these alleged anti-competitive practices resulted in higher vehicle prices for consumers.
Posted by franchiselawblog at June 2, 2005 04:52 PM