BodyShop News (February 01, 2000)

Preferred Shop Practice Does Not Lessen Competition, Competition Bureau finds

The insurance company practice of directing business to preferred bodyshops does not substantially lessen competition, according to a Competition Bureau ruling.

The Competition Bureau carried out an examination of the issue between September 1997 and June 1999. It included a review of information provided by numerous complainants, bureau historical information and publicly available data. As well, investigators conducted extensive interviews with industry participants.

The complainants claimed that the practice by auto insurance companies of directing insured vehicle owners to preferred bodyshops resulted in reduced business for non-preferred or independent shops and lessened competition in repair services.

Although the practice has lead to increased pressure on certain bodyshops, these factors alone were not sufficient to lead the bureau to conclude that there has been a substantial lessening of competition. It also concluded that the practice was unlikely to do so in the future for the following reasons:

The insurance market is characterized by vigorous competition which ensures that any cost control or saving, in part by reliance on preferred shops, benefits consumers in terms of premium calculations;

Prices for autobody repair in recent years have been fairly stable with any price increase being marginal;

Demand for autobody repair, as measured by the number of claims made by insured vehicle owners for autobody repair services in the market, have been declining over the past four years;

Even if a number of autobody shops were to exit as a direct result of the directing of insured vehicle owners by insurance companies, there would be sufficient competition remaining in the marketplace to prevent price increases;

Individual insurance companies hold sufficient buying power to prevent suppliers from increasing prices above competitive levels;

Barriers to entry are sufficiently low in the autobody repair market that there is no likelihood of a sustained price increase in repair costs above competitive price levels.

Import Car Manufacturers Seek Integrated Paint Recovery in Quebec

The Association of International Automobile Manufacturers of Canada, which represents European and Asian automakers, has proposed that the collection of discarded paints in Quebec be integrated with the collection of other hazardous wastes such as used oil.

The association says that its proposal to the Quebec environment ministry would require firms providing paints into Quebec to recover discarded paint containers and paints. Also, vehicle manufacturers that provide touch-up and aerosol paints as well as rustproofing materials to consumers under their own brand name would also be subject to these requirements.

The core of the proposal is to eliminate the need for separate paint stewardship and waste oil stewardship organizations, and any other hazardous waste categories, such as batteries. This, says the association, would allow a single assessment of members that ship these products, in relatively small quantities, into Quebec.

In concert with the Canadian Vehicle Manufacturers Association, it also proposed that waste oil requirements be harmonized among the provinces with mandatory programs, namely Manitoba and Saskatchewan.

ADP to Launch Interactive Web Services

ADP Claims Solutions Group, citing what it says is a need for bodyshop owners to have round-the-clock access to service and training support, has announced that a full-service website will debut this Spring.

The site is to be built around the company’s Total Client Care Initiative and will be available through the Internet and supported by e-mail, fax and other automated response systems. The company says it will also enhance its Shoplink for Windows and Stellix Computer Based Training programs to include web-based training.

Features planned for the site include technical support, a chat room open forum, and a training program providing online classroom training. The existing website for the company is at www.csg.adp.com.