Glazing repairs shut-out irks MPs

Parliament's commerce select committee has taken the Commerce Commission to task over its "inadequate" handling of complaints about the automotive glazing industry.

It is calling for the next Parliament to undertake a wide-ranging inquiry into the crash repair sector along the lines of one already under way in Australia.

Independent operators in the windscreen repair or replacement business are being bulldozed aside by Smith & Smith Autoglass, part of a South African-based multinational Belron International NV, whose preferred supplier arrangements with all the major vehicle insurers give it the lion's share of the market.

Significant sums are at stake. Motor vehicle insurers paid out $675 million in all crash claims last year.

Paula Rebstock, who chairs the Commerce Commission, has told the MPs it has carried out two thorough investigations into the claims of anticompetitive behaviour in the auto-glazing industry and found none.

The independent operators' complaints to the Commerce Commission have achieved little.

"We find the situation where every major insurance company in the country has a preferred supplier agreement with the same company, although it may not be illegal, very disturbing," the committee said in a report on the matter.

That arrangement diminished consumers' ability to discipline insurance companies for poor service by taking their business elsewhere.

"We accept the Commerce Commission's finding that a company's acquisition of substantial market share through preferred supplier agreements is permissible under the court's interpretation of the Commerce Act. We question, however, the commission's finding that the insurance companies exert a sufficient countervailing influence to this company's market power."

In addition to claiming that the arrangements breach competition law (a view the commission rejects), the independent operators allege the insurers' practice of steering claimants to the preferred supplier is at odds with their promotional material and breaches the Fair Trading Act.

Mark Peck, who chairs the select committee, said: "If you are stroppy and determined to use someone other than Smith & Smith, you probably can, but you have to make yourself unpleasant to the people you are dealing with. A lot of people can't be bothered."

The MPs considered the way the commission had investigated this question was "inadequate".

Insurance Council chief executive Chris Ryan said the insurers wanted the national coverage, centralised billing, quick turnaround and consistent quality control that only Smith & Smith could offer.

 

Sue Kuiti, of Supreme Screens, speaking for the independents, said some of them - Novus and a group called Windscreens Nationwide - did offer national coverage. And if keeping premiums down was the imperative, it did not make sense to use a firm that was much more likely to replace a windscreen than repair it.

Asked if the recommendation of a broader inquiry implied that the committee had similar concerns about panelbeaters and other parts of the automotive repair sector, Peck said: "We have been alerted there might be other issues as well.

"How deep they go I don't know and we didn't want to guess."

Crash course

* A select committee is calling for an inquiry into the crash repair sector.
* That follows complaints by independent windscreen repair companies that they are being locked out of the market. .
* The committee's MPs said the Commerce Commission did not handle the complaints adequately.