A very important judgement was delivered earlier this week in the Competition Appeal Court. The Competition Appeal Court overturned a decision by the Competition Tribunal that found three tracking companies guilty of breaking competition rules.
Last April, the tribunal found Altech Netstar, Matrix Vehicle Tracking (now MixX Telematics) and Tracker Network set standards that prevented new companies entering the sector. The three companies together control over 90% of the market.
The nature of the complaint of unfair competition
This case related to a complaint by a new entrant in the vehicle tracking market that the standards were set unreasonable and that it was nearly impossible for new entrants to enter the market and compete with the bigger players.
The Competition Commission commission referred a case against the three companies to the tribunal, after rival stolen vehicle recovery company Tracetec lodged the complaint in 2005.
Tracetec alleged the three companies and the Vehicle Security Association of SA (VESA) contravened the Competition Act by setting standards that created barriers to entry. Tracetec argued that it had not been able to become VESA accredited, which meant it could not grow its business.
The tribunal ruled that the three companies were preventing competition in the sector, and denying consumers lower prices. No penalty was imposed, but the ruling paved the way for a civil case to be brought against the respondents.
The three companies and the Vehicle Security Association of SA (VESA) maintained that they are innocent and that they never broke the rules of fair competition.
Decision by the Appeal Court
On Tuesday, the appeal court overturned the tribunal’s April 2010 decision. Acting appeal judge Malcolm Wallis found the tribunal had erred in its interpretation of the evidence and that the “evidence before the tribunal did not sustain the factual basis for the [Competition] Commission’s complaint”.
“In my view, there was not sufficient basis in the evidence for the tribunal to conclude that there was a substantial prevention or lessening of competition in the market,” said Wallis.
Response from Netstar
Altech CEO Craig Venter says the judgment vindicates Netstar, an Altech subsidiary. “We did not contravene the Competition Act, or engage in any behaviour to lessen competition in the vehicle tracking industry.”
Venter adds “businesses are publicly tarnished” when the competition authority finds them guilty of anti-competitive behaviour.
Altech Netstar MD Harry Louw says the decision is welcome. “It has always been our view that we were not operating in transgression of the law.” He says the decision “allows us to move forward and focus on growing our business, without being side-tracked by issues that should not have occurred in the first place”.
The appeal court set aside the tribunal’s findings, dismissing it with costs.
Conclusion and Importance
This decision is important for vehicle owners as it relates to vehicle security and the ability to acquire vehicle tracking that is both effective and affordable. The standards set by the Vehicle Security Association of SA (VESA) are intended to ensure that all vehicle tracking companies comply with strict requirements of quality.
The insurance industry and car insurance companies require that the vehicle tracking devices that are fitted to vehicles comply with these standards set by VESA. It is important for insurers to know that tracking devices are not merely a “nice to have” -but are indeed effective in reducing the risks of vehicle theft and can assist in the speedy recovery of vehicles!!
[Credit to ITWeb for some of the information in this story]