Mitsubishi’s 10-year conditional warranty allowed to stand

The ACCC does not object to an exclusive dealing notification lodged by Mitsubishi Motors Australia Limited (Mitsubishi) relating to its new 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.

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,” Mr Ridgeway said.

However, 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.

Further information, including the exclusive dealing notification, the ACCC’s statement of reasons, and public submissions from interested parties, is available on the ACCC’s public register at Mitsubishi Motors Australia Limited.

Background

Mitsubishi is an importer and distributor of Mitsubishi-manufactured vehicles. Mitsubishi distributes Mitsubishi vehicles to a network of franchisee dealers that then sell the vehicles to consumers and offer servicing and repair services. Mitsubishi also licenses standalone service centres to repair and service Mitsubishi vehicles, but not to sell vehicles to consumers.

Exclusive dealing notifications

Exclusive dealing occurs when one person trading with another restricts the other’s freedom to choose with whom, in what or where it deals. Exclusive dealing can take a number of forms, including the supply of goods or services, or the supply at a particular price or discount, on condition that the buyer will not acquire, or will limit the acquisition of, goods or services from a competitor of the supplier.

Exclusive dealing can breach the Competition and Consumer Act (2010), but only if the restriction is likely to have the purpose, effect or likely effect of substantially lessening competition.

Once an exclusive dealing notification is lodged with the ACCC, protection for the notified conduct begins automatically.

The decision to allow a notification to stand does not mean that it can never be revoked; the ACCC can revoke an exclusive dealing notification at any time, but only where it is satisfied that the notified conduct:

  • has the purpose, effect or likely effect of substantially lessening competition, and
  • in all the circumstances, will not result in likely public benefit which would outweigh the likely public detriment.

New car retailing market study

On 14 December 2017, the ACCC released its final report for the new car retailing industry market study. The market study presents the ACCC’s findings from almost 18 months of investigation, consultation and research, and is based on a wide range of evidence.

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