Q&A and explanation of the R2R guidelines.
Please note, that the following is only an explanation of the R2R guidelines and is not legal advice. If an OEM or the distribution network of an OEM does not follow the guidelines published by the Competitions Commission, we advise that this is reported to the competition commission in the form of a complaint. A complaint form can be found on the Commission website www.compcom.co.za.
The final decision on the implementation of the guidelines lies solely with the Competitions Commission.
The first point to note is that the guidelines are exactly that, guidelines as to how the Commission will approach any matter in terms of the Competitions Act. The underlying legal basis is the Competition Act, and it is the principles of this Act that will form the basis of enforcing the guidelines.
Another important aspect to keep in mind is that other existing laws, acts, and regulations remain relevant and do not change e.g., the Consumer Protection Act which specifically addresses consumer rights against parts failure and/or faulty workmanship.
Q) – Date of Implementation?
A) – The date of implementation is the 1st, July 2021. From this date onwards, the Commission may act against market players not following the guidelines.
Q) – Who can service cars under warranty?
A) – Independent workshops are already allowed to service cars under warranty. Car owners are, however, NOW empowered to choose where they service their vehicles without risk of voiding the warranty. Previously, motor manufacturers would void the warranty if a vehicle was not serviced at the dealership. The Commission has now declared this practice as incompatible with the Competitions Act. Independent service providers can now service cars under warranty and the practice of voiding warranties are now themselves void!
Q) – Do I have to be registered or use specific parts for servicing vehicles under warranty?
A) – No! But, if manufacturers finds that a warranty related failure is due to inferior quality parts or incorrect service procedures or faulty workmanship, they are within their rights to decline the warranty. As stipulated in the Consumer Protection Act, the liability now lies with the independent service provider and/or the parts supplier/importer. It is therefore important to procure parts from reputable suppliers and to use only recognized, branded parts when servicing a vehicle.
Q) – In a case like this, can the whole warranty of the vehicle be voided?
A) – No! The guidelines maintain that provisions of the warranty remain severable and enforceable.
Q) – What is your recommendation for independent service providers to avoid liability?
A) – To avoid risk surrounding the loss of warranty, all services should be carried out in accordance with the manufacturer’s specifications. Fluids used should conform to OEM specification. Parts manufacturers and suppliers (especially for filters) should confirm that their parts perform at the same or a higher standard than the original parts. It is recommended that ISPs purchase parts from manufacturers that manufacture on behalf of the OEM as well as the independent aftermarket. Good examples of these types of brands include, TRW, Mahle, Bosch, NGK, GUD, Hella, Temot, Fram, Safeline, Monroe, Mann and Hummel, amongst others. Independent service providers should not use parts from suppliers that do not provide guarantees against consequential damage if their parts are found to be at fault.
Q) – How is a consumer covered if the independent service provider uses inferior parts?
A) – There is no risk to the consumer if she has made use of an independent service provider that is a registered business and possesses adequate insurance cover. According to the CPA, the liability for faulty or inferior components and/or faulty workmanship and consequential damage resulting from this, is carried by the independent service provider. Therefore, the consumer is protected under the provisions of the Consumer Protection Act. If there is a warranty dispute, the consumer can refer back to his service provider and the service provider’s insurance will provide the necessary cover. The guidelines in fact, specifies that ISP’s must disclose to consumers whether they have adequate commercial insurance cover. We strongly recommend that consumers use only those independent service providers who can provide proof of adequate commercial insurance.
Q) – Are there any other requirements for independent service providers?
A) – Independent Service Providers are required to record the service history in the service book or in the electronic service record of the vehicle. A caveat to this is that the ISP must be given access to previous service history.
Q) – Can independent service providers carry out warranty work?
A) – No!
Q) – What about extended warranties, motor plans, service plans or insurance work?
A) – In very simple terms, whoever pays, decides where the work can be carried out.
Q) – What are some of the other important changes put forward by these new guidelines?
A) – First and foremost, the consumer when purchasing a new vehicle, is now armed with the choice of whether she wants to include the service plan. Put another way, service plans can no longer be embedded into the metal. This means that other independent providers can also price service plans, making for a more competitive market. Secondly, the commission has given guidance around the appointment of motor-body repairers by insurance companies and OEMs, with the objective of “lowering barriers to entry and ensuring that a greater number of firms, especially firms owned and operated by HDIs and SMEs have the opportunity to undertake service, maintenance and repair work of motor vehicles within the period covered by a motor vehicle’s warranty.” For insurance companies, this revolves around a fair appointment process and a fair allocation of work. Similar principles will be applied to the appointment of dealerships which criteria must be reasonable.
Q) – What technical information will be made available to independent service providers?
A) – Similar to the EU and US, technical information must be made available to independent service providers. The exact methodology needs to be established, but will likely take guidance from current practices in both the EU and the US.