Saudi Gazette report

Riyadh There are six indicators of monopolistic practices in the sectors of car sales, after-sales services and car spare parts in the Kingdom, according to a recent study, carried out by the General Authority for Competition

The report showed that exclusive distribution agreements between original equipment manufacturers (OEMs) and local distributors have contributed to creating barriers to entry for new players due to abuse of dominant position or preventing competition from reaching the market.

The authority pointed out that distributors hold several competing brands, which creates the possibility of increasing market power on retail prices or the selling prices of car fleets to obtain higher market power for the distributor.

According to the authority, the third reason is that the falsification of fleet offers may have a negative impact on competitive conditions, since most fleet sales lack transparency when a large number of sales are agreed before the official launch. of the bidding process.

The authority acknowledged that there are indications that the dominant position can be abused by OEMs or distributors by voiding the warranty of cars when they are repaired in independent repair shops, where after-sales services generate higher profit margins than car sales, making OEMs or dealer distributors an incentive to tie maintenance services to customers with their authorized centers only during the warranty period.

The report indicates that the fifth reason is represented by the restriction of the supply of spare parts to competitors of authorized distributors of original equipment manufacturers, or their supply at high prices, in addition to the withholding of information on the repair. , which represents an abuse of a dominant position and influence on the conditions of competition in the markets.

The report showed the existence of certain regulations that create barriers to competition in the market, such as the procedures containing certain restrictions on the supply of manufacturer-branded auto parts, so that suppliers can only import original equipment manufacturers or their distributors only, which reduces the number of potential suppliers. Furthermore, suppliers cannot combine the activity of supplying original spare parts with the supply of alternative spare parts.