The Competition Commission of India (CCI) on 25 August 2014 imposed a combined penalty of more than 2500 crore rupees on 14 car companies. The penalty was imposed for unfair business practices in the spare parts market by these companies. The unfair business practices included taking undue advantage of their position and not allowing the market for spare parts and after sales to grow.
As per CCI, the penalty is to be deposited within 60 days of receipt of the order. The highest penalty of around 1346 crore rupees has been imposed on Tata Motors. Other companies on whom penalty was imposed are
• Maruti Suzuki - 471.14 crore rupees
• Mahindra and Mahindra - 292.25 crore rupees
• Toyota Kirloskar Motors - 93.38 crore rupees
• General Motors - 84.58 crore rupees
• Honda Cars India - 78.47 crore rupees
• Skoda Auto India - 46.39 crore rupees
• Ford India - 39.78 crore rupees
• Fiat India Automobiles - 29.98 crore rupees
• BMW India - 20.41 crore rupees
• Mercedes-Benz India - 23.08 crore rupees
• Hindustan Motors - 13.85 crore rupees
• Volkswagen India - 3.25 crore rupees
• Nissan Motors - 1.63 crore rupees
The major companies on which the penalty has been imposed include Tata Motors, Maruti Suzuki, Mahindra and Mahindra, Toyota, General Motors and Honda.
Reason behind the Penalty
CCI’s imposed penalty is the impact of Commission’s investigation in relation to the complaint related to anti-competitive conduct of the car companies. Complaint was that these companies doesn’t allow the spare parts and after sale services market to grow to the detriment of consumers and independent repairers.
CCI in its investigation found that the conduct of the car companies was in violation of the provisions of Competition Act.
Further direction of CCI
CCI in its direction asked the companies to cease and desist from indulging in conduct which has been found to be in contravention of the provisions of the Act. Apart from this, CCI also directed these companies to adopt appropriate policies that allow them to put in place an effective system to make the spare parts and diagnostic tools and easily available in the open market to customers and independent repairers.
The commission also has directed the car companies not to put any restrictions or impediments on the operation of independent repairers.
Till date, the car companies were selling the spare parts through their dealer network, which resulted in high and arbitrary prices.
When: 25 August 2014