TRIBUNAL DISMISSES PANEL BEATER’S BID TO REMOVE ITS ADMISSION OF CARTEL CONDUCT
The Tribunal has dismissed an application by Life Wise (Pty) Ltd t/a Eldan Auto Body (“Eldan”) to excise its admission of cartel conduct, as contained in a consent agreement which was confirmed as an order of the Tribunal in August 2020.
In the consent agreement, concluded between Eldan and the Competition Commission (“the Commission”), Eldan admitted that it contravened sections 4(1)(b)(i), (ii) and (iii) of the Competition Act (“the Act”) i.e. price fixing, dividing markets and collusive tendering. Eldan also agreed to pay an administrative penalty of R750 000.
Eldan was one of only three certified Mercedes Benz auto body repairers located in Pretoria, at the time of the Commission’s referral of the main matter to the Tribunal.
THE BASIS FOR ELDAN’S VARIATION APPLICATION
Eldan sought the removal of its admission on the following grounds:
- Eldan alleges it is facing economic hardship which constitutes “exceptional circumstances” to vary the order. This is because, following the Tribunal’s order confirming the consent agreement, Mercedes Benz terminated its accreditation to Eldan to repair Mercedes Benz vehicles;
- Eldan entered into settlement negotiations and concluded the consent agreement with the Commission without legal representation; and
- Eldan, a small business (“SMME”) owned by historically disadvantaged individuals (“HDIs”), would be removed from the auto repair services market and this would not advance the objectives of the Act or the Commission’s Automotive Aftermarket Guidelines seeking to promote SMMEs and HDI’s.
TRIBUNAL ANALYSIS
Economic hardship and exceptional circumstances
On the facts of this case the Tribunal found that the alleged hardship does not constitute exceptional circumstances which outweigh the broader interests of justice and public policy:
“The alleged exceptional circumstances pertain to consequences of the consent order on the private interests of Eldan rather than exogenous factors caused by changes to a market where a behavioural remedy may be affected.”
Eldan and legal representation
Eldan submitted that it did not have legal representation when it concluded the consent agreement. However, the Tribunal noted that Eldan had been legally represented throughout the matter up until the settlement stage.
Furthermore, before it had confirmed the consent order, the Tribunal specifically questioned the Commission and Eldan regarding the scope of the admission (which only admitted a contravention of section 4(1)(b)(ii), and not sections 4(1)(b)(i) and 4(1)(b)(iii) which were implicated). Both the Commission and Eldan responded and confirmed that the admission includes the latter sections and signed an addendum to that effect.
Eldan as a SMME owned by HDIs
The Tribunal was mindful that Eldan belongs to a designated group that the Act seeks to promote. It held that:
“Cartel conduct, as the relevant section of the Act in this case, is one of the most egregious forms of anti-competitive conduct. Consumers are harmed when they are deprived of competitive prices and product choice by a firm engaging in anticompetitive conduct, whether the firm is big or small. In our view, competition could equally be served by another HDI or SMME in line with the objectives of the Automotive Aftermarket Guidelines in the sector.”
BACKGROUND
In May 2015, the Commission referred a complaint to the Tribunal against Precision & Sons (Pty) Ltd (“Precision”) and Eldan for alleged price fixing, market division and collusive tendering in the provision of auto body repair services. The complaint was filed with the Commission by a former Eldan employee. Eldan and Precision, at the time of the Commission’s referral, were both certified Mercedes Benz auto body repairers in Pretoria.
Issued by:
Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Tel: +27 (0) 12 394 1383
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib
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