Dina //Gowases of the Namibian Competition Commission on vehicle industry investigation

26 July 2024

The Namibian Competition Commission (the commission) finalised its investigation into the automotive industry against various original equipment manufacturers (OEMs) (herein referred to as ‘respondents’), vehicle dealerships and panel beaters, which commenced in September 2018, in terms of section 33 of the Competition Act No. 2 of 2003 (the act), for alleged anti-competitive behaviour.

The findings of the commission’s investigation are as follows:

Firstly, the commission’s investigation found that restrictive vertical distribution agreements/concerted practices and or territorial restrictions between OEMs and vehicle dealerships in the distribution of vehicles in Namibia exist.

Secondly, the commission’s investigation found restrictive practices by OEMs in the appointment of approved panel beaters and service agents/centres for vehicles on warranty.

Thirdly, the commission’s investigation found restrictive practices by OEMs in the appointment of vehicle dealerships and other retailers who can sell OEM-approved vehicle parts.

Even though the investigation found the above restrictions, the commission is of the view that these are more structural in nature and warrant an industry structural redress. 

The proposed redress is due to the following: Vehicle dealers in Namibia have no authority in the appointment or approval of panel beaters to repair vehicles on warranty. Such responsibilities lie solely with the OEMs. Panel beaters are required to apply for factory approvals directly with the OEMs and not through the OEMs’ respective dealers. 

Once an application is received, representatives of OEMs travel to Namibia to conduct an audit and assessment of the panel beaters concerned and thereafter decide on whether to approve or deny the application.

Furthermore, vehicle dealers are responsible for the selling and servicing of the brands of vehicles they sell in Namibia. 

Dealers are responsible for opening branches and service centres in other parts of Namibia, depending on economic viability. However, OEMs still have the main responsibility of approving more dealers and improving intra-brand competition.

Stringent approval requirements and a lack of transparency with regards to the selection criteria of approving dealerships and service providers by OEMs results in detrimental effects in the relevant market in as far as competition across various levels of the supply chain and consumers are concerned.

Given that the issues of concern appear to be structural and need to be addressed at an industry-wide level, the commission finds it rather prudent that guidelines be developed to address the identified issues on the state of the competition in the automotive industry. 

Therefore, the commission is looking at establishing guidelines in the automotive Industry in the future to improve market conditions. Relevant stakeholders will be consulted once draft guidelines are in place.