By: Nghiinomenwa-vali Erastus
The Namibia Competition Commission has fined Old Mutual Short Term Insurance for engaging in activities that were weakening the competition.
The short-term insurance company is being punished for playing dirty (anti-competitive agreements) within the car windscreen and the car panel-beating industries.
The Commission announced the N$6 million fine on Wednesday this week after the outcome of their investigation.
The competition watchdog has also revealed that Old Mutual Short-term Insurance has admitted that its conduct constituted unintended contraventions of Section 23 of the Competition Act.
According to the senior economist in the division of enforcement and cartels, Paulus Hangula, the fine came as a result of two investigations from 2017 and 2016 that were initiated on Old Mutual Short insurance and others.
The first investigation was on the conduct of Old Mutual Short Insurance and certain players in the car windscreen industry.
The Commission found that the parties entered into exclusive agreements with certain windscreen retailers.
“The issue there is that the insurance companies had some agreements with some of the windscreen retailers, whereby, for example, if an insured client needs a windscreen replaced, they are then, under normal circumstances, required to get quotations from windscreen suppliers, and then either get the cheapest or any of their choice. However, because of the agreements, the contracted windscreen suppliers were given some terms that are more favourable than the non-contracted,” Hangula told The Villager.
The exclusive agreement affords preferential rights, sole distribution rights, and waiving of excess fees and rebates to just a few players despite a number of players with commercial capability.
This, however, according to Commission, is in contravention of Section 23(1) read with Sections 23(2)(b), 23(3)(e) and 23(3)(f) of the Competition Act, according to Hangula, stating that it created an unfair advantage.
For this, exclusive agreements that benefited few players or player and, as a result, lessening competition by limiting market access or outlets and applying dissimilar conditions to equivalent transactions, the company was given a penalty of N$1,6 million.
While an additional amount of N$600 000 was added for purposes of covering part of the Commission’s costs arising from its investigation.
The matter is currently before Court after the Commission instituted Court proceedings against the Respondents on 11 August 2021.
Additionally, the Commission also launched an investigation, running from November 2016 to August 2019, against OMSIC, Outsurance companies and almost 70 panel beaters.
This was for setting maximum mark-ups and labour rates that panel beaters could charge to repair insured vehicles.
Hangula explained that the insurance companies were found to have engaged in conduct which contravened Section 23(1), read with Section 23(2)(a) and Section 23(3)(a), of the Competition Act.
This matter was referred to Court on 4 February 2022.
For their involvement Old Mutual Short Term Insurance was given a fine of N$3,8 million, apportioned as a pecuniary penalty of N$2,8 million and an additional amount of N$1 million for purposes of covering part of the Commission’s costs arising from its investigation.
Old Mutual Short-Term Insurance has agreed to pay a total sum of N$ 6 million as part of two Settlement Agreements.
Section 23 of the Competition Act prohibits agreements or concerted practices between undertakings and decisions by economic participants which have an effect or substantially lessen competition in trade in any goods or services in Namibia unless they are exempt in accordance with the provisions. Email: firstname.lastname@example.org