The Competition Commission of India (CCI) has levied a combined fine of Rs. 2545 crores on 14 mainstream carmakers for violating trade norms in the spare parts market. CCI, the regulator of fair practices came to the decision of penalising auto companies after a petition was filed by a complainant in 2011 alleging the companies of following anti-competitive practices. As per the decision taken earlier this month, CCI concluded that the auto companies did not make genuine spare parts freely available in the open market and hence have been charged a fine of 2 percent of their average turnover.
The penalty has been levied on nearly every major automaker in the country and includes Maruti Suzuki, Tata Motors, Volkswagen, Honda, Fiat, BMW, Ford, Hindustan Motors, Mahindra, Mercedes-Benz, Nissan, Skoda, Toyota and General Motors. As per CCI’s investigation, the auto companies had violated the competition norms by controlling the operations of the authorised service station and workshops that sell automobile parts, apart from after sales and maintenance services.
The complainant had stated that workshops did not have genuine spare parts readily available. Moreover, the workshops were not equipped with the correct diagnostic tools to check the vehicle. The complainant had also found that auto companies restricted workshops and service centres from retailing parts in the open market at lower prices. The Competition Commission concluded this as anti-competitive behaviour that has affected over 2 crore customers across the country from different manufacturers.
A major outcome that has come out of the investigation is the Competition Commission directing manufacturers to not impose a blanket condition that warranties would be cancelled if the customer avails the services of independent repairers. Also the CCI pointed out that there is no appropriate framework of safety and standards of spare parts and after sales services and it needs to be put in the radar of the government.
Out of the total fine amount, Tata Motors has been penalised with the largest amount of Rs. 1346.46 crores (due to their turnover being calculated with the inclusion of JLR), followed by Maruti Suzuki with Rs. 471.14 crores, Mahindra with Rs. 292.25 crores and Toyota with Rs. 93.38 crores. CCI has stated that the individual fines will have to be deposited within 60 days of the receipt of the order. However, most auto companies will be challenging this order. Hyundai too was part of the penalised companies but sought a stay order from the Madras High Court against this case early on.
Source – Economic Times