CCI imposed a penalty of 420 crore rupees on Hyundai

Jul 29, 2015 09:14 IST

The Competition Commission of India (CCI) on 27 July 2015 imposed a penalty of 420.26 crore rupees on Hyundai Motors India Ltd (Hyundai). The penalty was calculated at the rate of 2 percent of Hyundai’s average turnover and it has to be deposited within 60 days of receipt of the order.

Hyundai is one the three car companies which were found to be guilty of involving in anti-competitive practices in contravention of the Competition Act, 2002. The other two companies are Mahindra Reva Electric Car Company (P) Ltd and Premier Ltd.

However, considering the mitigating factors that worked in favour of Reva and Premier, the Commission absolved the monetary penalties on the two car companies.

The sections under which these three car companies were found to be in contravention of the Act are:

  • Under the Section 4 of the Act, these companies were found to be dominant in the aftermarkets for their respective brands and abused their dominant position.
  • Under Section 3(4) of the Act wherein these companies’ conduct was in violation with respect to their agreements with local Original Equipment Suppliers (OESs) and agreements with authorized dealers.

Suggested Corrective Measures by the CCI

  • The companies were ordered to cease and desist from indulging in conduct which has been found to be in contravention of the provisions of the Act.
  • The car companies were also directed to adopt appropriate policies which shall allow them to put in place an effective system to make the spare parts and diagnostic tools easily available in the open market to customers and independent repairers.
  • The Commission also directed the car companies to not to put any restrictions or impediments on the operation of independent repairers/garages.

The instant order and the suggested corrective measures is in continuation of Commission’s main order in the same case on 25 August 2014 vide which the Commission had inter-alia imposed penalties on fourteen out of the seventeen car companies under Section 27 of the Act.

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