Toyota facing competition malpractice charge

CCP initiated inquiry on complaints of vague purchase contracts.

Our Correspondent August 16, 2012

ISLAMABAD: The anti-trust watchdog has launched an inquiry against Indus Motor Company on charges of unfair trading, which is tantamount to fleecing the consumers as the booking orders are arbitrarily changed in favour of the company.

Speaking to media on Wednesday at an iftar-dinner held for journalists, Competition Commission of Pakistan (CCP) Chairperson Rahat Kaunain Hassan said that the CCP has received complaints against Wi-Tribe (Qatar Telecom Group), Wateen Telecom, Qubee wireless broadband and Indus Motor Company (Toyota) for deceptive market practices.

The inquiry has been initiated against the Indus Motor Company on complaints of ‘excessively vague nature of purchase contracts’, sources told The Express Tribune.

The disclosure comes at a time when the company’s margins are already squeezed due to influx of imported reconditioned vehicles, hurting businesses of the dominant player of the market. On the other side, the investigation is a sigh of relief to consumers complaining about unrealistic prices of the locally assembled cars.

The source said that Indus Motor was abusing its dominant position in the market and was treating its clients ‘unfairly’. They added that the booking orders are arbitrarily changed, forcing the consumers to pay high prices.

Booking orders are too vague that the buyer is not sure about the exact price and delivery date. Moreover, the company also recovers the cancellation charges.

Contrary to the indistinct nature of the orders in Pakistan, in Japan such terms are statutory in nature and take clients interest as priority, the sources added. “The consumers appear as subjects of the dominant player of the sector,” said the sources.

The Indus Motor Company is a joint venture between the House of Habib, Toyota Motor Corporation Japan (TMC) and Toyota Tsusho Corporation Japan (TTC) for assembling and marketing Toyota vehicles in Pakistan.

The CCP spokesperson confirmed that an inquiry was in progress against Indus Motor for unfair trading but he refused to divulge further details. Under the Competition Act, 2010, if violation is proven the anti-trust watchdog can impose penalties of up to Rs75 million or 10% of the turnover, whichever is higher.

However, the commission has struggled to recover penalties it has imposed previously. In various cases, the CCP has imposed roughly Rs8 billion penalties on cartels and individual firms. The violators have obtained stay order against the CCP’s judgement from the provincial high courts and the Supreme Court of Pakistan.

The Express Tribune approached Passage Public Relations Head of Media Relations Naveed Baig – the firm that provides PR services to Indus Motor – who did not get back to comment. Moreover, the Indus Motors’ response was awaited till the filing of the story.

The commission is also conducting an inquiry against three banks for colluding with five insurance companies. Allegedly, these banks forced their borrowers to get insured the vehicles financed by the banks from only these five insurance companies. The sources said the inquiry has reached at the advanced stage and will be concluded by end of this month.

Published in The Express Tribune, August 17th, 2012.