Top five car distributors accused of illegal price-fixing

FIVE of the country’s biggest motor distributors have been named as being involved in alleged price-fixing on sales of new cars.

RTÉ’s Prime Time Investigates programme last night identified the Irish dealership networks of Ford, Mitsubishi, Hyundai, Citroën and Volvo as operating cartels in order to restrict competition within the trade.

The five brands account for almost 20% of all cars sold in the Republic. Consumer groups claim the illegal practice could be adding up to 30% to the price of new cars.

It is understood that the Director of Public Prosecutions will shortly decide on whether to prosecute a number of car dealers for operating illegal price-fixing operations.

Files on the case were prepared by the Competition Authority as a result of a long-running investigation into alleged price-fixing within the motor industry.

The offices and homes of around 50 individuals involved in the trade were raided by officials of the Competition Authority two years ago.

Under competition legislation, convicted offenders face a maximum of five years in prison as well as a fine of €4 million or 10% of turnover.

Documents obtained by RTÉ revealed the minutes of meetings among dealers which showed agreements on the price of new cars as well as delivery charges, trade-in prices and accessories.

RTÉ claimed that such cartel operations could add €2,314 to the price of small vehicles and over €3,500 to medium-sized family cars.

It was alleged that both Citroën and Volvo operated their own system of penalties for dealers who broke the agreement.

Last night, the chief executive of the Society of the Irish Motor Industry, Cyril McHugh, said he would be surprised if price-fixing was operating among car dealers.

He agreed that the allegations would prove “very damaging, if true.”

Mr McHugh expressed doubt that any SIMI members would engage in such a practice due to the highly competitive nature of the industry.

He pointed out that the organisation never recommended any price margin to its members.

“Dealers are only earning a couple of hundred euro margin on the sale of a car worth €20,000,” said Mr McHugh.

However, he stressed that the SIMI would not condone anyone involved in the car trade who brought the industry into disrepute.

Mr McHugh said the SIMI had made “huge efforts” to ensure its members understood the implication of all legislation, including competition law.

Meanwhile, a second-hand car dealer also claimed that up to 30% of used cars sold had their odometers illegally altered.

The RTÉ programme claimed one Dublin-based dealer was set to make a €6,750 profit on a “clocked” Mercedes.

It claims the car’s mileage had been reduced from 132,000 miles to 80,000 miles.