The Competition Tribunal on Monday found three vehicle-tracking companies and the industry body guilty of anti-competitive behaviour.
The tribunal found that Netstar, Matrix Vehicle Tracking, and Tracker Network — representing over 90% of the industry –and the Vehicle Security Association of SA (Vesa) contravened the Competition Act by setting standards which created barriers to entry.
This prevented competitors from entering or expanding in the market and denied consumers the benefit of lower prices, greater choice, and technological development.
The tribunal found the standards had an exclusionary effect and were self-serving and irrational.
This case was brought by both the Competition Commission and the complainant and intervenor in the matter, a firm called Tracetec.
Tracetec wanted to enter the stolen vehicle recovery (SVR) market because it believed that a radio transmitter technology could be successfully applied in the SVR market.
However, based on the standards, Tracetec was prevented from being admitted to the SVR category.
Vesa was an industry association for firms engaged in the vehicle security industry that at the relevant time had a sub-committee that set standards for admission to membership of its SVR category.
The tribunal concluded, based on evidence, that it was not possible for a firm to expand in the SVR market at the time without having its product approved by Vesa in the SVR category.
This was because all the major short-term insurance companies, represented through their industry association, would not approve a customer installing a system that did not have Vesa approval.
The tribunal also noted, in its reasons, that the South African Insurance Industry Association (SAIA) — representing all the large insurers and a large part of the rest of the industry — who had organised Vesa to set standards for the industry, did so not because of concerns for the consumer but for its own business interests.
The relief being sought by both the commission and Tracetec was limited to a declaration that the conduct constituted a prohibited practice –that the conduct was anti-competitive.
This declaration would enable a rival firm to institute civil action for damages against the respondents.
However, no administrative penalty was competent because the case was brought under a section of the act for which a fine could not be imposed for a first time contravention.
As the behaviour was historical no interdict was sought either.
All four defendants were liable for the costs of Tracetec. –Sapa