AADA BACKS MITSUBISHI’S 10-YEAR WARRANTY PLAN

In October, the AADA lodged a submission with the Australian Competition and Consumer Commission (ACCC) supporting Mitsubishi’s proposal to introduce a warranty of five years with an additional five years for customers who service their vehicle with a Mitsubishi Dealer. The AADA did so in consultation with the Mitsubishi Dealer Council and believes that this kind of program provides a substantial benefit to Mitsubishi customers with no negative impact on consumers or on competition.

Meanwhile, the independent repair sector represented by the AAAA, MTAA and VACC has opposed the proposed Mitsubishi warranty, arguing that it breaches the Competition Act and disadvantages Mitsubishi customers and independent repairers.

On 11 September 2020, Mitsubishi Motors Australia Limited (MMAL) lodged an exclusive dealing notification with the ACCC. The notification involves MMAL offering a 10-year or 200,000km (whichever occurs first) warranty to purchasers of new Mitsubishi vehicles on condition that the purchaser exclusively acquires aftermarket servicing from an MMAL dealer or service centre. Under the terms of MMAL’s existing 5-year warranty, purchasers of new Mitsubishi vehicles can choose to use independent service centres without affecting their warranty (provided the vehicle is serviced in accordance with Manufacturer’s specifications). The 5-year warranty, with non-exclusivity as to choice of service provider, remains an option for Mitsubishi customers.

Having received over 200 submissions from independent servicing and repair businesses, aftermarket suppliers, industry associations, consumer groups, government entities, members of the public and other private businesses, the ACCC intended to make a decision regarding the notification by the end of November. That would either be to issue a draft notice to revoke the notification, or to take no further action and allow the notification to stand.

The majority of submissions to the ACCC opposed the proposal. A significant proportion of submissions raise concerns about the impact of the Notified Conduct on competition, including by affecting the viability of independent service and repair businesses and their ability to remain a competitive constraint on MMAL.

Submissions raised concerns that the 10-year extended warranty was on condition that consumers must service their vehicle exclusively with Mitsubishi and that this would effectively lock out independent mechanics for the full 10-year period.

Other concerns expressed were that the 10-year warranty could result in less repair work as well as servicing work for independent mechanics, increase the possibility of a consumer unintentionally voiding the extended warranty, and negatively affect consumer choice.

In deciding whether to issue a notice to revoke the protection afforded by a notification, the ACCC first assesses whether the notified conduct has the purpose or is likely to have the effect of substantially lessening competition. If so, the ACCC then assesses whether the notified conduct would result, or be likely to result, in a public benefit that would outweigh the public detriment of the notified conduct. The ACCC’s assessment of public benefits largely focuses on how the conduct may provide value to the community generally.

MMAL submitted that its proposal would have significant public benefits, including:

  • cost savings to purchasers of new Mitsubishi vehicles who might otherwise purchase costly extended warranties from third parties;
  • enable MMAL to ensure Mitsubishi vehicles that benefit from the Notified Conduct are serviced with a high degree of care and skill; and
  • improve the resale value of Mitsubishi vehicles and rights available to second-hand purchasers because the extended warranty is transferable to subsequent owners.

MMAL submits there are no public detriments associated with the Notified Conduct.

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