The Competition Authority is deeply concerned that the 10-year contract granted for the operation of the national car testing service is "profoundly anti-competitive".
In a letter to the Department of Transport earlier this year - seen by Motors - the Authority said the exclusive 10-year contract eliminated "any prospect of competition in any form - price, quality, speed of service - for a ten year period."
The Competition Authority says insulating one firm carrying out car tests for 10 years "is almost a recipe for poor service quality."
This, coupled with Ministerial control of the NCT price "eliminates the prospect of competition in any form."
The letter was written after a mid-term review of the national car test service by PricewaterhouseCoopers last October.
The unpublished review examined customer satisfaction and possible changes to the test, including altering the minimum tyre tread depth and the level of tinting allowed in windscreens.
The concerns were first highlighted by the Authority in 1998 when the tendering criteria for testing private cars over four-years-old were drawn up by the Department of Environment and Local Government.
This responsibility later transferred to the Department of Transport.
The contract was subsequently awarded to the National Car Testing Service Ltd (NCTS), a subsidiary of the Swiss SGS Group.
A competitor for the contract, Dekra Éireann Teoranta, unsuccessfully challenged this contract award in the High Court.
The Competition Authority was critical of the tender guidelines, claiming a high-quality service could have been assured without restricting competition. Several firms could have been appointed and allowed to compete on price and service, the Authority said.
In a response to these concerns, the Department of Transport said it would include these issues when drawing up the tendering process for the next car testing contract.
The NCTS contract expires at the end of 2009.
Complaints over the length of the contract and the high failure rate were raised by a motorists' group at a sitting of the Oireachtas Committee on Transport last month.
Last year the NCT tested 624,619 cars, with 51 per cent failing. A spokeswoman for NCTS Ltd said only 19 per cent of the 308,701 cars retested failed a second time. NCTS said its complaints ratio is 0.09 per cent, or roughly one per thousand motorists.
A faulty number plate is the most common reason for a car to fail the NCT, followed by faults with a car's lights.
According to the NCTS there is no charge for a retest for faults which can be rechecked visually.
The use by some motorists of the NCT as 'a diagnostic' for a car's faults contributed to the high failure rate, the spokeswoman said.
"We don't set the criteria. We have to fail a vehicle if the number plate is wrong."
Fine Gael's transport spokeswoman Olivia Mitchell said a 10-year contract is far too long. "There is no other public service that you would give a 10-year contract to and have no monitoring of it other than a mid-term review."
She added that international evidence suggested no difference in crash rates in Australian states operating a test similar to the NCT and those states without such a system.
"I hope this matter is investigated by the Road Safety Authority to ascertain whether, having invested a substantial amount of public money in establishing it, the system is contributing to road safety."
However, Conor Faughnan of AA Ireland said the concept of competing agencies providing car tests was flawed.
"In the UK the MoT system is run by the same garages that repair the cars, so there is an obvious potential conflict of interest."
AA Ireland monitors the testing equipment used by the NCT, and also sends up to 1,000 cars unannounced for testing to examine standards. It also acts as an external arbitrator for complainants.
