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Hong Kong regulator investigates private cars repair restrictive warranties

Out-Law News | 23 Mar 2022 | 1:42 am | 1 min. read

The Competition Commission of the Hong Kong Special Administrative Region (SAR) of China has opened an investigation into restrictive warranty terms which limit car owners’ ability to have their cars repaired to authorised repair centres only.

According to a statement from the Commission, it is conducting an investigation on agreements between certain car manufactures and their importers, distributors and dealers under the Competition Ordinance. The regulator aims to investigate whether these agreements resulted in the imposition of restrictive warranty terms on car owners, requiring them to repair or maintain their cars exclusively at authorised centres during the warranty period.    

Under such terms, the car’s warranty might be voided if the owner visits an independent car repair workshop during the warranty period.

The Commission is concerned that these restrictive terms may impact and restrict the ability of independent car repair workshops to compete with the authorised repair centres. This might continuously narrow down car owners’ choice of service and finally result in higher prices for repair and maintenance service.   

Mohammed Talib of Pinsent Masons said: “The increasing range of sectors and businesses targeted by the Commission represents a continued focus on safeguarding consumers. Businesses need to be mindful of the increasing scrutiny on any business that deals with the public.”

Commission chief executive officer Rasul Butt said the regulator aims to “tackle any warranty terms and conditions that may restrict effective competition, which may in turn lead to higher prices and reduced choices for car repair and maintenance services in Hong Kong”.

The regulator is now seeking comments from any interested parties who have concerns or information on the restrictive car warranty terms. It stressed that the existence of the investigation does not affect its outcome.