Complaint made to OFT following Dispatches investigation
Two firms have made a joint complaint to the Office of Fair Trading (OFT) alleging price fixing by Direct Line Group (DLG).
Retail Motor Law (RML) and the Vehicle Builders & Repairers Association (VBRA) have formally complained to the OFT about DLG (previously known as Royal Bank of Scotland Insurance) along with paint manufacturer Akzo Nobel and paint distributor ACIS.
The two organisations released a joint statement alleging that the insurer completed a deal with Akzo Nobel mandating that DLG’s nominated repairers use the manufacturer’s most expensive paint brand, Sikkens, rather than its cheaper alternative, Lesonal.
RML and the VBRA also claim that DLG requires repairers to purchase a minimum amount of paint per vehicle, and that the paint is bought through ACIS.
Research conducted by Retail Motor Law managing director Andrew Moody prompted the Channel 4 Dispatches investigation into links between insurers and the motor repair industry that aired earlier this month.
Following his appearance on the Channel 4 programme, Moody the addressed the All-party Parliamentary Group (APPG) on Insurance and Financial Services on 29 January. Moody revealed at the event that RML and VBRA had issued a formal complaint to the OFT about DLG, Akzo Nobel and ACIS in July 2012.
Moody said: “In March 2011, I completed a report on paint supply and I believe that certain agreements, and/or concerted practices, seemed to have as their object the prevention, restriction or distortion of competition.”
Malcolm Tagg, director general at the VBRA, said: “In my 30+ years in the body repair and insurance sectors I have witnessed the development of ever more draconian control over the repair industry, to the point where many workshops exist only at the behest of their insurance masters.”
The statement said complaint has also been passed to the Competition Commission as part of its investigation into the private motor insurance market.
Both ACIS and Akzo Nobel have rejected the price fixing allegations.
ACIS chief executive Graham O’Neill said in a statement: “Our trading arrangements comply with United Kingdom and European Union competition law.
“ACIS is proud to be a national distributor of Sikkens paints, one of a number of brands of automotive paints that the company distributes. Our national coverage and expertise in the supply of products and services to the automotive refinishing market ensures that our customers are provided with the best products and services at the most competitive prices.”
An Akzo Nobel statement said: “The UK market is, in our experience, extremely competitive with many local and global paint companies providing a wide range of choice to the individual bodyshops, distributors, networks and work providers. The focus on driving down all costs is very strong. The cost of paint is typically no more than 10% of total repair costs.
“We do have a paint supply contract with RBS which was won in the face of strong competition from the other paint suppliers, and we are satisfied that the contract is fully compliant with UK and European competition rules.”
DLG declined to comment.
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