INDUSTRY CONCERNS AS 10 YEAR CONDITIONAL WARRANTY APPROVED

MITSUBISHI’S “EXCLUSIVE DEALING NOTIFICATION” TO PROCEED

Mitsubishi is offering a 10 year or 200,000 km extended warranty. The warranty is conditional on the vehicle being serviced only by authorised Mitsubishi dealers and service centres.

The Australian Competition and Consumer Commission (ACCC) noted that Mitsubishi’s standard five-year warranty will still apply and does not limit consumers to any particular service provider.

“The ACCC carefully considered a variety of factors in its decision, including a large number of submissions from independent mechanics, aftermarket parts suppliers, members of the public and associations,” ACCC Commissioner Stephen Ridgeway said.

“While a number of consumers will no doubt value a longer warranty, we recognise the concerns that the requirement to use Mitsubishi dealers and service centres may have an impact on independent mechanics’ ability to provide competition.”

“The ACCC has allowed this notification to stand based on current information. There is no basis at present to conclude that the notified conduct has the purpose, effect or likely effect of substantially lessening competition.”

However, importantly the ACCC is able to revoke the notification at a later date if the relevant circumstances and available information change.

“We recognise the importance of competition provided by independent mechanics. If, as this warranty arrangement is implemented, the evidence shows that it is materially harming competition, and we consider at that point that the public benefit does not outweigh the public detriment, we are able to move to revoke the notification,” Mr Ridgeway said.

INDUSTRY CONCERNS

The MTAA submitted industry concerns on behalf of all State and Territory Motor Trades Associations and Chambers of Commerce.

The MTAA submission said the industry “generally supports” Mitsubishi’s extension of warranty coverage but does not support the inclusion of exclusive dealing conditions.

It said this was likely to substantially lessen competition and would not result in a public benefit that would outweigh the likely public detriment.

MTAA raised concerns about:

• a lack of transparency on the terms and conditions of the 10 year offer

• restriction of consumer choice

• substantial lessening of competition over time

The MTAA stated concern of “a lack of transparency and clarity on the terms and conditions for Mitsubishi Dealers on the processes and requirements to ensure fair, reasonable, and equitable reimbursement and/or compensation for warranty service repairs undertaken on behalf of the manufacturer over a longer period.”

“MTAA remains concerned about a long-standing issue that forms part of the recognised power imbalance between car manufacturers and their distributors/importers and their dealer networks.

“This issue is the failure of some car manufacturers and their distributors/importers to provide fair, reasonable and equitable warranty claim reimbursement or compensation to their dealers in the performance of warranty repairs.”