Tyre makers fingered over price-fixing

2010-09-06 10:34

Johannesburg - The Competition Commission has referred a complaint of collusive tendering, price-fixing, information exchange and market allocation against four tyre manufactures and suppliers, including Apollo Tyres, Goodyear, Continental and Bridgestone as well as industry body the SA Tyre Manufacturers Conference (SATMC).

The commission's investigation was prompted by a complaint alleging that the tyre manufacturers simultaneously adjusted their prices around the same time and within the same parameters.

As a result of the complaint, on April 4 2008 the commission conducted a search and seizure operation at the premises of Bridgestone, Apollo and SATMC. 
Pursuant to the commission's investigation and interrogations, one of the cartel members, Bridgestone, applied for and was granted conditional immunity from prosecution in terms of the commission's corporate leniency policy.
In its application for leniency, Bridgestone admitted that it held telephonic discussions and met with its competitors during the period 1999 to 2007 to agree in principle that they should cooperate to ensure stability in the market. 

The meetings, which were attended by the tyre manufacturers' sales and marketing representatives, coordinated the timing and the average percentage price increase of tyres, agreed on the discount structure to be given to tyre dealers and messages to be given to the market explaining the increases.
The cartel concerned the manufacture and supply of passenger tyres, light truck or commercial tyres, trucks and bus tyres, off the road tyres, agricultural tyres and earthmover tyres. 

The main customers of the participants to the cartel are tyre dealers who purchase tyres for resale to consumers, vehicle manufacturers who purchase tyres for new vehicle models and the government which procures tyres for state owned vehicles and fleets through a tender process managed by the State Tender Board.

The commission's investigation found that SATMC was used as a platform for what has been termed "coffee table discussions" to determine price increases and general coordination in the market among the tyre manufacturers.

The investigation also found that importers Yokohama and Michelin were not involved in the cartel conduct.

The commission has requested the tribunal to impose an administrative penalty amounting to 10% of the total turnover of each of SATMC, Apollo, Goodyear and Continental.

  • Shakeel - 2010-09-06 11:02

    I have always had that feeling that these tyre comapnies were ripping us off. But how will the consumer benefit when they get exposed?

  • mikeR - 2010-09-06 11:18

    its about time they get nailed, I hope that they start dropping prices to what they should be.

  • Kevin - 2010-09-06 11:22

    This is not fair. The most insidious price fixing is in the oil Copnaines where the price of a litre of petrol, a mere commodity, is fixed in collusion with the Government. We cannot have one set of rules for rubber companies and another set of ruels for oil companies. Price fixing is a scourge in every industry

  • Johan - 2010-09-06 11:31

    Precisely , we buy a new tyre every 50 000 Kilomteres , but have to buy a litre of petrol every 10 or so Kilometres. The cozy arrangement with the Multinational Oil Companies is the most expensive Apartheid legacy burden that we have to bear to this day. Its wrong and immoral. A litre of Petrol is a commodity like a loaf of bread or a bag of maizemeal , why are Oil companies allowed to fix the price between them? There is currently an oversupply of crude oil on world markets

  • Benzo - 2010-09-06 11:31

    lucky me, riding on Dunlops :-))

  • Steven - 2010-09-06 11:32

    Whats the point? If they get found guilty all they'll get is a huge fine that will end up in someones back pocket & the consumer will have to pay more to cover the fine. They should be put out of business if they are found guilty and sent to jail. Thats the only way it will have any benefit for the consumer

  • Karl - 2010-09-06 11:40

    About time. Ever been tyre shopping? Rather like the motor dealers - also seem to have Retail Price Maintenance. Also investigate the spares industry RPM all over the show.

  • Freddie - 2010-09-06 11:54

    Just for the record Apollo owns Dunlop, I would have thought any respectable journalist would have mentioned that simple fact as not all consumers may be aware of it.

  • JD - 2010-09-06 12:04

    I think the Competition Commission should take the yellow pages and start at A and work their way through to Z, it seems that almost every single company in South Africa is busy with some sort of price fixing.

  • John - 2010-09-06 12:05

    Being fingered? Never been better being a tyre manufacturer :-)

  • Tito - 2010-09-06 12:15

    For everybodies information, the price of petrol is determined by the Government and not the oil companies. Oil cpompanies do want the price to be free market based in order to stimulate competition and cosumers freedomof choice

  • Mike - 2010-09-06 12:18

    Not even 4 years ago we paid R 460 for 2 tyres ... Today, after shopping around 7 Tyre Retailers, the best deal we got was the same two (similar) tyres for R 1000. The most pricey was the same two for R 1 380! Riping off the consummer - a national pastime in SA!

  • Sats - 2010-09-06 12:35

    Let's assume that there is guilty verdict against the tyre manufacturers involved and they get fined the 10% of turnover. Lets say they pay. What happens to all this money? Where does it go? Who gets to spend it? Will the government now subsidise tyres out of these funds for a period of time? Or what? Where does it go?

  • Pieter - 2010-09-06 12:44

    Just another day in every other country in the world, the citizens gets the bennefit of industry. Saudi Arabia charges less than 1 rand a litre for fuel. Sasol, charges us the same as imported fuel. The bennefit of having SASOL is not for South Africans. Cars manufactored in SA are cheaper in Botswana and other African countries than in SA. The bennefit of manufactoring cars, tyres and even fuel, is not for South Africans!!!!

  • Ross - 2010-09-06 12:58

    About bl00dy time. We re paying far too much for tyres in SA. They're half the price overseas.

  • DA - 2010-09-06 13:07

    @ Benzo Dunlops are made by Apollo Tyres. So not so lucky??

  • Gareth - 2010-09-06 13:17

    Mense skrik wakker, man - Can any of you please tell me what's the use of this. For years now a lot of companies - from bread to cellphone charges-had been investigated and nothing actually changed. They will be found guilty, and would probably have to pay a fine, but the public won't benefit. Is the Competition Commission there to generate revenue for government or . . . .

  • Jack - 2010-09-06 13:22

    there goes the TYRE manufactures, i am sure 4 of the factories will leave this country sooner or later, but for sure

  • Hennie - 2010-09-06 13:40

    I have just bought 4 imported tyres (Italian) for 70% of the local manufacturer's price. Did some internet research first and found out that these "funny" sounding tyre brands are actually big overseas and some of their tyres are fitted by OEM auto manufacturers. The local tyre manufacturers have for years tried to discourage local consumers from buying imports, quoting "grey imports" and SABS approval - Bulls*&t!

  • Stephan - 2010-09-06 13:55

    Hennie, please can you give me more details regarding the imported tyres and where I can have a look please.

  • Rick - 2010-09-06 14:25

    The problem is with the manufacturer as well as the retailer that tels us that he only makes like 4% (food chain style) We can now see why car prices are inflated by the component manufacturers.Need an investigation into new car prices as well. Local assembled cars are far cheaper abroad than in SA.

  • Bob - 2010-09-06 14:25

    The money from the fines goes back to the competition commision, to fund itself. Pay those fat salaries of their external consultants. It is self fulfilling. Yes the fuel price breaks all the principals of the competiion commision but that is SA government, diffrent rules for them.

  • aardo - 2010-09-06 14:35

    What is the issue? Many Chinese made and other imported "no name" Tyre companies are flooding into the SA market. The choice is there for those that are price sensitive.

  • Ismail - 2010-09-06 14:45

    Putting these companies out of business will reduce the number of players in the market and will push up prices further due to less competition

  • profundo - 2010-09-06 15:20

    As previously mentioned, exit more overseas investors...

  • Mel d - 2010-09-06 16:07

    Go and check out Lowest prices and excellent service!

  • Lulu - 2010-09-07 09:04

    What is shocking is 3 or 4 months ago the same 4 companies brought a court case against ITAC and about 19 small businesses. In short they wanted anti -dumping duties imposed on almost all tyre brands of tyres that are being imported into SA by small local businesses from China. So it seems these 4, Continental et al had a hidden agenda: 1) they fixed the tyre prices in SA 2) they made sure that huge anti -dumpoing duties are imposed on all tyres being imported from China 3) they made sure that small local tyre businesses could not import Chinese tyres cheaper for the consumer to SA and go out of business to ensure that the 4 of them have the tyre monopoly in SA AND the poor SA consumer only could choose between their four brands when he/she wants to buy tyres for his/her car! Now that is unfair...

  • Diane Godfrey - 2011-02-23 09:14

    Comp Comm investigation tyre industry - update

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