Competition Authority raids insurance companies
Innocent Selatlhwa | Monday April 25, 2022 06:00
On March 12, 2019, a group of local panel beaters lodged a complaint with the CCA in which it alleged that Bryte Insurance Company Botswana, Hollard Insurance Botswana, Old Mutual Financial Services Botswana, and Botswana Insurance Company were abusing their dominance.
“The respondents’ conduct signals coordinated behaviour through the respondents’ common terms of trade that impose a cap on labour costs and predetermined markup. The respondents in union also force auto repair specialists (panel beaters) to disclose the costs of parts bought for the authorised repairs. The circumstances of the case further imply possible market allocation and constructive refusal to deal through stringent terms of trade,” reads a letter from CCA to one panel beating company seeking consent to an extension of an investigation into this matter.
The CCA at the time stated that the statutory period for an investigation to be completed in 12 months and the period of investigation in this particular matter lapsed on March 12, 2020.
CCA stated that it anticipated that the investigation process will not be completed by then and there was a need for an extended period for the authority to be able to have additional time to collect and assess more information.
In a related matter, one of the panel beating companies said for the longest time the insurance companies have not been caring about increasing the labour rates to fix the customer’s vehicles as they always adjust and cut down their quoted prices for repairs.
“Whenever we query or complain of such reductions they will threaten to move the vehicle from your garage and repair elsewhere where such garage will not complain. Majority of the time we have accepted such jobs simply because we want to maintain the relationship although we struggle to meet our target,” said the panel beater in a recent letter to CCA.
Secondly, the company stated that some of the insurance companies after issuing a repair order to the garage, upon completion of the repairs, demand a repair invoice attached with the parts invoices to show what the garage has spent on procuring the parts and paying according to that (sic).
“It was upon this background that the insurance companies were raided two weeks ago,” said the source.
CCA spokesperson, Gideon Nkala confirmed the raids.
“We can confirm that there is an ongoing investigation following an anti-competitive conduct complaint in the insurance sector. The investigation involved a raid of some insurance companies. A complaint of anti-competitive conduct has been lodged with the CCA in the panel beating insurance sector and this is what we are seized with at the moment. Suffice to add it is an engaging investigation,” he said.
Though he would not specifically mention them, Nkala confirmed that several insurance houses in Gaborone and Francistown are part of the investigation.
Quizzed on what was found during the raids and remedial action, Nkala said the investigation is ongoing and that nothing has been concluded. As such, he said no action has been taken against anyone.