Watchdog intensifies probe on Toyota over ‘fixing of car prices’

Watchdog intensifies probe on Toyota over ‘fixing of car prices’

Watchdog intensifies probe on Toyota over ‘fixing of car prices’
Motor vehicles await to be driven to bonded warehouses after being offloaded from MV Grand Venus, January 4, 2019. [Gideon Maundu, Standard]

A regional competition watchdog has stepped up its probe on a Kenyan-based unit of Japanese multinational Toyota Group for allegedly engaging in anti-competitive conduct causing high vehicle and spare part prices in its African market including locally. 

The Common Market for Eastern and Southern Africa (Comesa) Competition Commission said raised concerns that Toyota Tsusho Corporation “may be prohibiting out-of-territory passive sales to the detriment of consumers and may also be maintaining high prices of brand-new vehicles and spare parts in the Comesa Region.”

“The investigations are ongoing and Toyota Tsusho Corporation has thus far cooperated very well with the CCC,” said the CCC chief executive Willard Mwemba in a statement last week. 

“The CCC would like to encourage interested stakeholders and members of the general public, who may still want to submit any information related to the investigation to do so to inform the ongoing investigations.”

The watchdog said the subject of the investigation is the distribution agreements that Toyota Tsusho Corporation has entered into with distributors for the sale of brand-new vehicles and spare parts.

It said the agreements are alleged to contain territorial restrictions and price guidelines contrary to Article 16 of the Comesa Competition Regulations.

“This matter first came to the attention of the CCC in November 2021 and the CCC issued a Notice of Investigation to Toyota Tsusho Corporation on June 13, 2022,” said the agency.

 Global perspective

Toyota Tsusho is a member of the Toyota Group which comprises 17 companies and is the group’s sole general trading company that “gathers information and promotes the development of new business from a global perspective.”

Toyota’s business in Kenya includes the distribution of Toyota and Mercedes-Benz cars in Kenya. Toyota Tsusho announced in 2019 it will start knock-down production (vehicle assembly) of the Toyota Hilux pickup truck in Kenya. 

The expansion of local manufacturing was based on Toyota Tsusho’s memorandum of understanding signed with Kenya at the 7th Tokyo International Conference on African Development (TICAD7).

Toyota Tsusho has produced the Land Cruiser and Hino trucks in Kenya through the local assembly plant, Associated Vehicle Assemblers Ltd (AVA) and has sold the vehicles through its distributor. 

The production lines at AVA were expanded to add Hilux to the lineup, with the plan of producing about 1,200 units a year.

In January 2019, Toyota Motor Corporation transferred all sales and marketing operations for Africa to Toyota Tsusho as part of the effort to strengthen the automotive business in Africa. 

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