Constitutional court decision protects against ‘fly-by-night’ operators in the vehicle tracking and recovery industry.

The South African Constitutional Court has dismissed an application for leave to appeal from the Competition Commission and Tracetec against three tracking companies.

Tracetec lodged a complaint in 2005 with the Competition Commission against Altech Netstar, Matrix Vehicle Tracking (now MixX Telematics) and Tracker Network, arguing they were cutting competitors out of the market. The three companies together controlled over 90% of the market.
Last February, the Competition Appeal Court overturned an April 2010 decision by the Competition Tribunal that found the three tracking companies guilty of breaking competition rules.

The issue was then unsuccessfully appealed in the Supreme Court of Appeals and, recently, the Constitutional Court was approached. However, the commission’s bid was denied in an order handed down by eight judges, because “there are no prospects of success”.

The appeal was dismissed with costs.

Long haul

“This has been a long and protracted battle, despite rulings by the Competition Appeal Court of SA and the Supreme Court of Appeal of SA in favour of Altech Netstar and others,” says Altech CEO Craig Venter. “We are delighted that this matter has finally been put to rest.”

Tracetec alleged the three companies, through the Vehicle Security Association of SA (VESA), contravened the Competition Act by setting standards for VESA membership and accreditation that created barriers to entry as newcomers to the industry could not satisfy the conditions.

Tracetec argued it had not been able to become VESA accredited, so it could not grow its business, because of the fundamental importance insurers attached to accreditation.

In April 2010, the Competition Tribunal found the three companies were preventing competition in the industry and denying consumers lower prices. Altech Netstar disagreed with the finding and approached the Competition Appeal Court, which found, in February 2011, that the grounds of the complaint were unfounded and overturned the tribunal’s decision.

The Competition Commission and Tracetec then applied for leave to appeal to the Competition Appeal Court in March 2011, which both parties withdrew in December 2011, shortly before the scheduled hearing date, based on the argument that the Competition Appeal Court did not have jurisdiction over the matter.

A fresh application for leave to appeal by both parties was lodged in the Supreme Court of Appeal last December, which was dismissed in March. The Competition Commission then approached the Constitutional Court of SA in a last ditch attempt to have the Supreme Court of Appeal’s finding overturned.
“The performance standards adopted by VESA and applied by insurance companies ensured that consumers were protected against ‘fly-by-night’ operators in the vehicle tracking and recovery industry. The favourable ruling by the Constitutional Court of SA is a victory for both Altech Netstar and consumers,” adds Venter.

[Story by Nicola Mawson appeared on ITWeb.co.za]

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