A methodical approach to fair and equitable playing fields in allowing for procurement distribution in a free enterprise market or to show how it should be implemented has always been a challenge. In the last four years in terms of our industry, the advocacy and escalation of this matter has now reached a new level.
The Competition Commissioner – as recent as mid-December 2020 – issued guidelines for adoption by the latest July 2021 in the automotive aftermarket, in a final version and the content related to only the body, panel and paint sector thereof, which is summarily discussed for understanding as we deem important.
Certainly a mixed bag of regulations was presented and this article, with respect, does not in any manner issue response to markets other than our own industry – although many sectors were covered in detail. The comment highlights only what we believe is best practice but does not apply accreditation for safety through qualification and standards as a directive base in this niche market.
In essence the guidelines summarise most of the problems fairly accurately, but then also includes some questionable principles. Sadly, the significant influence of towing operators in our industry is absent from the document.
In general, insurers will be forced to use approved repairers but how should “as allocated by an insurer to the consumer” be viewed in terms of consumer choice, or is it all going to be left up to us forcing insurers to follow through on the fair allocation of work? (Derived from the Consumer Protection Act and section 15 which applies to the repair sector).
This does not make any sense in terms of what competition in the industry will look like and should result in it being properly policed with fixed reporting requirements and discussed with industry in transparent forums.
Independent or non-approved service providers are allowed to repair any vehicle even if the outcome may be compromised with fall back on commercial insurance policy for resolve. How this is the premise of treating customers fairly or assuring safety and the return of a vehicle to pre-accident levels is still a mystery. This is also highly questionable. The lowering of standards and rework will drive repair costs to new highs and it is then even more important that procurement is only driven to qualified service provision from the start.
Suggesting a maximum of approval duration and a panel rotation system or any other measure that limits continuation makes a mockery of investment and sustainable business and growth in the country. What does “unreasonable exclusion” even mean? All parties that are excluded will see it as unreasonable and the other side will argue its justification …
The government has committed to address monopolies and the structure of the economy in order to boost growth and economic inclusion. “(We) commit… to ensure competition authorities have the legal power to address the problems of monopolies, the excessive economic concentration and abuse of dominance by large players that keep SMMEs and co-operatives out of the mainstream economy. This excludes the primary premise of support of transformation which we recognise and are confident strides made for equality have met targets as experienced entrepreneurs from these communities are not readily available and further growth can only be assured through mentorship and extensive training in all pillars of business acumen – and not only on the repair.”
The guidelines directly respond to the call for a more inclusive economy in which young people, small businesses, new entrants and young innovators can enter markets and larger incumbents are not allowed to create closed-shop markets. “It responds to the big imbalance in power between small and large business enterprise. Our industry is under threat of skills shortages. Investment in training and new technology to repair safely and correctly requires long term commitment and return on investment,” says Steve Kessel, director of CRA.
“The regulation implies opportunity, about enterprise, about inclusion and supports innovation and investment. Big players who dominate markets have left millions of our people as ‘hewers of wood and drawers of water’. This law is a step to change that. It is about giving effect to the Freedom Charter’s call for the wealth to be shared by all… a signal for our focus not to be on grandstanding but instead on action and implementation”.
The guidelines promote that the competition authorities need to address economic concentration in a balanced manner and to promote economic transformation for which we are in full support. Further it provides greater clarity to firms and investors on prohibited practises and what constitutes abuse of dominance.
Whilst we understand the argument to create access to the market, thinking that business is a game where everybody gets a chance and then you must sit down and allow someone else to play, is as ridiculous as suggesting that it is sustainable to eat every second or third month, or whenever it is your turn. Business cannot operate this way and it will not draw investment into this critical business sector.
A more cognisant proposal would be to limit the volume of work that can flow to any one or group of MBR’s as that will at least give the businesses the clarity to structure their operations accordingly.
In summary not all stakeholders will agree to the new rules and debate should be created between relevant industry bodies to apply best practice on how to support the implementation.