In February this year, we were pleased to report that as a result of a number of submissions provided by the AAAA that the Australian Competition and Consumer Commission (ACCC) announced that they had taken enforcement action against Kia Motors Australia relating to their capped price servicing offer to consumers. The ACCC considered that Kia’s advertising of its offer was likely to amount to a misleading representation to consumers that the price of having their vehicle serviced was capped at the maximum amount specified, when the costs of the program had actually been varied 4 times since 2012, which was in contravention of the Australian Consumer Law (ACL).

Given that many other “capped price” programs offered by car companies were structured in a similar way, the ACCC action against Kia gave us a great deal of optimism that this would send a strong signal to the car industry to ensure that all programs fully comply with the ACL.

We were therefore dismayed to see that four days after the Kia ruling, GM Holden launched a service program that was purportedly “capped” for the “lifetime” of the vehicle and offered on “all Holden vehicles sold in Australia since 1948”. Based on our extensive research into this offer we were of the view that there was no reasonable basis for the representations being made and as a result we successfully called on Federal Small Business Minister Bruce Billson to instruct the ACCC to conduct an urgent regulatory assessment of all “capped price” offers in the market.

Last week we were invited to meet with senior executives from the compliance and enforcement branch of the ACCC to update us on the extensive action that has taken place as a result of their investigations and subsequent follow up actions. Without going into the specifics, it is fair to say that the ACCC identified a range of concerns with these offers and have recommended sweeping changes to the programs to ensure compliance with the ACL. A moratorium on prosecution was issued to the companies concerned to allow them sufficient time to voluntarily comply however we have been assured that this moratorium has now ended and any future breaches of the ACL will be prosecuted.

As part of this process we have been monitoring the capped price offers of a range of car companies and while some are still offering “lifetime capped price servicing”, they have amended their offer to remove the ability in their terms of conditions to “change the published prices from time to time” and have amended their pricing and included vehicles.

In promising developments we have also seen a number of car companies’ exit their lifetime capped price servicing claims and replaced them with an online quote system, while some have exited capped price servicing all together. All manufacturers appear to now have much less fanfare and prominence of their diluted claims on their respective websites.

While I’m confident that this most recent ACCC action will be warmly welcomed by many thousands of family owned independent mechanical repairers around Australia, we remain concerned at many of the anti-competitive practices present in our market and we will continue to remain vigilant and will raise any concerns we identify with the appropriate authorities in our ongoing fight for a level playing field in the automotive repair and service industry