South African Insurance Association

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The Draft Code of Conduct for Competition in the Automotive Aftermarket

The Competition Commission commenced with advocacy work in the automotive aftermarket in 2016 to address complaints received by them regarding of the practices perceived as unfair. This resulted in the publication of a draft “code of conduct for competition in the automotive industry” in 2017.

The intended outcomes of the Commission’s advocacy are:

  • For small and historically disadvantaged independent service providers to undertake service and maintenance work whilst a vehicle is in-warranty; 
  • For more small, Historically Disadvantaged Individuals (HDI) independents to undertake in-warranty auto-body repairs; 
  • For more historically disadvantaged individuals to own OEM dealerships; 
  • The use of equal matching spare parts, in addition to OEM and identical parts, in the repair of motor vehicles. 
  • The removal of OEM restrictions in the sale and distribution of parts, by retailers whether OEM-approved or independent. 
  • More price and product options for consumers in the sale of parts. 
  • Consumer education & awareness of costs entailed in the purchase of a motor vehicle.”

The draft code however included some responsibilities on non-life insurers to unlock more repair work to motor body repairers.

In our first submission we indicated our support to the objectives of the draft code but also raised some concerns including the right of the insurer to choose the repairer in the event of an insurance claim. In December 2017 SAIA met with representatives of the Commission to deliberate on the SAIA comments and the way forward regards the introduction of the code.

SAIA subsequently met with the Commission again in July 2018 to discuss their revised draft code before it was issued in August 2018. For this round of comments, SAIA engaged the services of Genesis Analytics to provide SAIA and the Commission with expert opinion on the proposals made in the Code. Our final comments submitted to the Commission were guided by input received from SAIA members and the paper from Genesis Analytics.

SAIA remains supportive of the objectives of the revised draft Code. However, we require clearer wording to avert unintended consequences.

SAIA also supports the use of alternative parts. However, we are of the opinion and guided by the paper from Genesis Analytics, that the wording in the revised draft Code will not lead to the intended outcome. We have therefore provided proposed wording, for the Commission to consider.

The code however remains voluntary, but the Commission has encouraged SAIA and members to sign to the code once it has been finalised.

For more information contact:
Nico Esterhuizen, SAIA General Manager Insurance Risks