TWO of the biggest short-term insurers in Namibia, Santam and Hollard, have admitted colluding by fixing prices for panel beaters, disadvantaging consumers and lessening business competition in the country.
The Namibian Competition Commission (NaCC) revealed this yesterday after slapping the two firms with a N$20,5 million fine for their anti-competitive behaviour.
Santam Namibia is 28% owned by the Capricorn Group and Santam South Africa, while Hollard is the Namibian subsidiary of Hollard Holdings, a subsidiary of one of South Africa’s privately owned insurance groups with turnover of over N$15 billion.
NaCC director of the enforcement, exemptions and cartels division, Nangosora Tjipitua said Santam was slapped with a N$15 million fine, while Hollard was fined N$5,5 million. Tjipitua did not explain why Hollard received lesser punishment.
She stated that the two insurance companies admitted engaging in restrictive practices which disadvantaged those consumers who had taken out vehicle insurance with them, and panel beaters who were not complying with their orders.
“Both Santam and Hollard have admitted to an unintended contravention of section 23 of the Competition Act,” she said.
Tjipitua added that the two insurance companies engaged in price-fixing, coming together and setting maximum markups and rates that panel beaters should charge for repairs to insured vehicles.
“The NaCC confirms that it has concluded settlement agreements with Santam Namibia Ltd and Hollard Insurance Company of Namibia Ltd in respect of an investigation relating to alleged price-fixing in contravention of the Competition Act, Act 2 of 2003 (Competition Act),” she explained.
Section 23 of the Competition Act prohibits any decision by service providers/suppliers in the same industry which reduces competition among firms.
Tjipitua said the two firms directly or indirectly colluded and fixed the mark-up on the costs of panel beating vehicles involved in accidents.
This conduct prevented panel beaters from participating in the market if they could not adhere to the mark-up price set up by the colluding firms, eventually lessening competition.
The colluding insurance companies also chose where the vehicles would be fixed, depending on the panel beaters agreeing to the recommended mark-up.
This was contrary to letting a vehicle owner choose the service provider, depending on the affordability of the available panel beater, as the competition law stipulates.
She furthermore explained that the settlement agreements are the result of an investigation against more than six companies, including Santam, Hollard as well as Old Mutual Short-Term Insurance Company (Namibia) Ltd, Outsurance Insurance Company of Namibia Ltd, Phoenix Namibia Assurance Company Ltd, Alexander Forbes Insurance and Momentum Short-Term Insurance Ltd.
The commission’s preliminary investigation found that the targeted insurance companies engaged in price-fixing in contravention of the Competition Act by coming together and setting maximum mark-ups and rates that panel beaters could charge for repairs to insured vehicles.
Tjipitua indicated that as a result of the preliminary findings, Hollard and Santam have reported themselves to the commission, and confirmed that they engaged in actions which favoured their own interests at the expense of vehicle owners and panel beaters.
“The commission will continue to monitor the behaviour of these companies through regular compliance reports to be submitted to the commission,” she added.
Tjipitua said the commission is at the verge of finalising its investigation against the remaining insurance companies which have not accepted their wrongdoing, and will in due course make a decision whether or not it will refer the other insurance companies to court for having contravened the Competition Act.
She said, however, that the window is still open for all the lawbreakers in the insurance sector to get on their knees and admit their wrongdoing and anti-competitive actions.
“The commission wishes to emphasise that the window remains open for other insurance companies to approach the commission for a settlement on this matter,” Tjipitua assured.
