What is fair competition?

Jan. 1, 2020
True market competition produces potential gains for the whole economy, not one entity.

When I was growing up, although I am not sure what radio station it was that my parents were always listening to, I recall one segment that I have never forgotten – Paul Harvey's "The Rest of the Story." It always seemed to make a statement of something that was happening or had happened, but the occurrence was either misunderstood or not completely explained publicly for all to understand. Whether it was the media, the history books or just public consensus, there was always more to the story, or another side to consider.

A statement made by George Avery at the Collision Industry Conference meeting in July fell into the "more-to-this-story" category. The statement was, "One thing the tool does is [introduce] a level of competition to the parts suppliers. I am puzzled when you say you don't want [parts list prices] to come down. Are you suggesting that you don't want competition?"

Tony Passwater

Is this the next attack our industry and the parts industry would have to endure? When did parts list price become a basis of repairers being competitive? If we do not support PartsTrader in our industry as a repairer, does it mean we as an industry don't want competition? If we don't believe it is the right of any third party to influence the marketplace for their benefit alone, does it mean we are un-American?

Competition infers that the game has legitimate rules, and that the rules are transparent and designed according to a standard practice the players uphold, not just for the control and profitability of any third party. In marketplace economics, many of the competitive practices have been established from laws, regulations and rulings, but also as much from a history of penalties, fines and even sentences against those who do not follow the rules.

Market practices such as exclusive dealings, limit pricing, resale price maintenance, tying and price fixing all fall into recognized anti-competitive practices. In addition, practices of coercion, intimidation and fear mongering are also considered violations. The key for a free market economy is not only to prevent anti-competitive practices, but also to prevent outside influences of third parties within the marketplace from changing normal market conditions for their sole benefit. True market competition is often defined as a state that produces gains for the whole economy, not one entity.

It is remarkable that we are coming up to the 50-year anniversary of the 1963 Consent Decree next year that still accurately reflects the same issues our industry encounters daily. It is unfortunate that we have had little reprieve from the same anti-competitive practices that were identified then, and agreed to stop by 265 insurers and their association representatives. It is also clear from the most recent survey about the PartsTrader program and the intimidation the industry feels and experiences from insurers that it still needs to be enforced by the U.S. Attorney General. The survey can be reviewed at www.insurersurveys.com. It clearly shows that the insurer-repairer relationship is not as good as has been expressed in several statements made over the last few months. This may also explain why repairers have just gone along with all the concessions in the past — because of the fear of reprisal, loss and intimidation.

What is fair competition? Is it a system that pits one shop against another without any transparency of how the score or prevailing practices are calculated? Does it place one shop against another with metrics that should not be used without consideration of common standard deviations for severity, repair vs. replace percentages, alternative parts usage, or what about quality of pictures?

Is it where we are at now, or should it be to compete for business on a fair and level playing field to the consumer without influences of third parties? The key to this system is often forgotten — the vehicle damage. It is the repairer's obligation to ensure vehicle damage is repaired for the owner using the proper equipment, parts, materials and processes. If you think otherwise, you may find out the hard way that an insurer only pays for the damages, and does not determine what is required. Repairers determine these standards, and the consumer expects us to protect them.

Tony Passwater, president of AEII, has been in the collision industry since 1972.