New car service guidelines take effect next week – what every driver in South Africa should know

The guidelines for competition in the South African automotive aftermarket come into effect on 1 July 2021.

In anticipation, the Competition Commission recently hosted a workshop to discuss what the guidelines mean for consumers and other industry participants.

The guidelines are the outcome of more than a decade of complaints received by the commission from independent service providers (ISPs) and other industry players about exclusionary conduct at all levels of the automotive aftermarket supply chain, said legal firm Bowmans.

They aim to provide guidance for the automotive aftermarket industry and are intended to promote inclusion and to encourage competition through greater participation of small-and-medium-sized businesses (SMEs) as well historically disadvantaged persons (HDPs). The guidelines do not, though, have the force of law.

Below Bowmans provided an overview of the commission’s workshop and what the changes will mean for drivers.

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What the guidelines mean for consumers

The guidelines aim to increase consumer choice. Once in effect, they will permit consumers to repair their motor vehicles at service providers of their choice.

Moreover, consumers will be able to choose whether to fit original or non-original spare parts to their vehicles and will be able to source these spare parts from ISPs of their choice, regardless of whether their vehicles are under warranty or not.

“Whilst consumers are afforded increased choice, the commission cautioned that consumers ought to still be aware of the potential risks involved with maintenance and repair work by a third-party ISP, and in particular, the risk that certain provisions of the warranty on the motor vehicle may become invalid or void in circumstances where the selected ISP is found to be at fault,” Bowmans said.

“The commission reminded consumers that where disputes arise with their service providers, dealers or insurers, they should approach the relevant complaints department at the dealer or OEM and follow the internal complaints procedures.”

If no resolution is found, recourse may be had to the Motor Industry Ombudsman of South Africa (MIOSA).

Where conduct is potentially in contravention of the Competition Act, consumers may also approach the commission directly. Where appropriate, relief may also be sought from the National Consumer Commission.

Participation and lower barriers to entry for SMEs and HDPs

One of the key objectives of the guidelines is the need to promote the entry and participation of SMEs and HDPs in the automotive aftermarket.

The guidelines seek to achieve these objectives by encouraging stakeholders in the industry to adopt measures to facilitate the:

• Increased entry, promotion and support of SMEs and HDPs as approved dealers;
• Dispensing of the practice of OEMs entering into exclusive agreements with motor-body repairers;
• Ensuring that ISPs can undertake in-warranty service, maintenance and repair work; and
• Ensuring the fair allocation of work by insurers to service providers on insurance panels, with no service provider serving for more than five years on a panel.

Going forward

Although the guidelines do not constitute binding law, the commission was clear that they reflect the policy position of the commission regarding what would be considered anti-competitive in the industry going forward, said Bowmans.

“The commission also noted that it is interested to see how the industry will implement the guidelines in everyday practice and that it will be conducting periodic assessments to monitor compliance with the guidelines.

“Practically, this means that the commission will meet with, and obtain information from, relevant stakeholders in the industry to determine how the industry is applying the guidelines.”

How the application of the Guidelines will unfold is – of course – not certain.

Industry players may need to adopt purposive interpretations in certain instances where compliance is commercially impractical, Bowmans said.

“To this end, it is not implausible that the guidelines may evolve over time based on experience and application.

“The key message though is that transformation should be fostered in the value chain, with the various key players spearheading initiatives to do so.”

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Commentary by  Judd Lurie, Nazeera Mia, Sian Fagan and Aneesa Ravat of law firm Bowmans.

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