New Era Newspaper

New Era Epaper
Icon Collap
Home / Regulator smashes exclusive windscreen deals

Regulator smashes exclusive windscreen deals

2022-06-20  Edgar Brandt

Regulator smashes exclusive windscreen deals

Preliminary investigations by the Namibian Competition Commission (NaCC) have found that some local insurance companies have contravened the law by entering into exclusive agreements with various windscreen retailers. 

The insurance companies singled out by the commission are Santam Namibia Ltd, Hollard Insurance Company Ltd, Old Mutual Short-Term Insurance Company Ltd, and Momentum Short-Term Insurance Ltd (previously known as Quanta Insurance Ltd). 

A statement from the NaCC’s Enforcement, Exemptions & Cartels Division noted that the exclusive agreements were entered into with retailers such as PG Glass (Pty) Ltd, Perfect Glass CC and Greg’s Motor Spares. Exclusive agreements entail entities promising to deal exclusively with each other, and not with their competitors. 

“The commission’s investigation, therefore, concluded that the above-named insurance accompanies and the windscreen retailers have contravened the Competition Act by limiting market access and applying dissimilar conditions to equivalent transactions as envisaged in terms of section 23(1), read with section 23(2)(b) and 23(3)(e) and section 23(3)(f) of the Competition Act,” the commission stated. 

 The commission stressed that its findings are preliminary, and that no final decision has been made. In this regard, all affected parties, including the specific insurance companies and windscreen retailers, have been notified of the commission’s findings. An oral conference is thus scheduled for 31 October. 

At the conference, the affected parties are expected to make submissions before a final determination is made regarding whether or not the commission will refer the matter to the High Court for remedial action, as prescribed in the Competition Act. 

As part of their business activities, windscreen retailers provide glass-repairing services for vehicles, including those insured by insurance companies. Insurance companies are responsible for defraying the funds for the repairs of windscreens on behalf of insured clients. Now, the commission’s investigation has revealed that insurance companies and windscreen retailers are engaged in a practice of exclusive dealing. 

“These parties have done so by concluding agreements in terms of which the above-named windscreen retailers receive preference in supplying and fitting windscreens to vehicles insured by the above-mentioned insurance companies. 

These agreements, therefore, favour the above-named windscreen retailers over other windscreen retailers, even in instances whereby the other windscreen retailers supply windscreens that are of similar quality as those provided by the preferred windscreen retailers,” the NaCC statement reads. The commission noted that some of the agreements concerned designate the specific windscreen retailers as preferred suppliers, while others give these retailers first option to supply windscreens to insured vehicles. 

“Some of these agreements furthermore contain rebate provisions which require insurance companies to be paid rebates for referring clients to the windscreen retailers. In addition, some of the agreements also provide for the waiving of excess payments for insured clients in the event that they select to have their vehicle windscreens repaired by the above-named windscreen retailers. 

The no-excess requirement creates an incentive for insured clients to only have their vehicles’ windscreen repaired by the above-named windscreen retailers,” the NaCC pointed out. 

The exclusive agreements result in a situation whereby the windscreen retailers contracted by the insurance companies are given an unfair market position and potentially excludes other windscreen retailers from the marketplace, or materially handicaps the ability of the excluded windscreen retailers to compete. 

The agreements are of concern to the NaCC since they deter consumer choice by hampering the ability of consumers to choose windscreens offered by excluded windscreen retailers. Consumers, as a result of reduced competition, are prejudiced due to limited price competition and product choice. 

2022-06-20  Edgar Brandt

Share on social media