Car Dealers Required to Amend Warranty Terms
On 11 December 2017, the Singapore Competition Commission (CCS) published its conclusions following a long-running market inquiry into the supply of spare parts for servicing, repair and customisation of cars by major dealerships in Singapore. In particular, the CCS focused on the warranty terms and conditions (T&Cs) imposed by car dealers on customers.
The CCS identified concerns regarding warranty restrictions. It said that a general requirement that customers must service their cars at an authorised dealer in order to ensure that the warranty remains valid is anticompetitive because it deters customers from switching to independent workshops during the warranty lifetime. However, in a welcome nod to manufacturers’ safety concerns, the CCS said that it has no concerns regarding requirements on customers to perform warranty-funded repairs at authorised workshops. The CCS requested the authorised dealers to remove the offending restriction from their current and future warranty T&Cs. No financial penalties were imposed.
What this means for you?
- In tandem with the CCS’ ongoing investigation into alleged abuse of dominance regarding the supply of lift spare parts, this market inquiry underscores the CCS’ continued scrutiny of aftermarkets segments and its apparent view that smaller, independent players need increased access to the market on terms determined by the competition regulator to compete;
- While vertical resale restraints benefit from more pragmatic treatment in Singapore as they are generally exempt from the Section 34 prohibition on anticompetitive agreements, this does not mean that suppliers can act with impunity. The CCS can review vertical restraints if imposed by a dominant undertaking if they foreclose or exclude rival suppliers from accessing the relevant market;
- Car manufacturers and dealers – and aftermarkets’ players more generally - should keep their commercial T&Cs under review to ensure ongoing antirust compliance, including exclusivity clauses or other restraints that may deter customer switching or impede market access for smaller, independent rivals.