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Competition regulator fines 14 carmakers

autos Updated: Aug 28, 2014 13:11 IST


The Competition Commission of India (CCI) has imposed fines totalling Rs. 2,545 crore on 14 carmakers for violating trade norms in the spare parts and after services market, Press Trust of India (PTI) has reported. The regulator of fair play practices had concluded investigations earlier in the month, but were yet to give a verdict.

The penalty has also been levied on Volkswagen India, Honda Cars India, Fiat India Automobiles, BMW India, Ford India, GM India, Hindustan Motors, Mahindra & Mahindra, Mercedes-Benz India, Nissan Motor India, Skoda Auto India and Toyota Kirloskar, which means nearly all OEMs have been found guilty of indulging in anti-competitive practices. The issue came to light when the owner of three car brands visited an independent workshop for repairs and found that genuine parts were not freely available. These workshops did not have the required diagnostic tools as well. It was also found that OESs were also restrained by OEMs from selling parts in the open market at lower prices.
The individual fines imposed amount to two percent of each company's average turnover, and have to be deposited within 60 days of receipt of the order. The investigation revealed that these companies had violated competition norms with respect to its agreements with local Original Equipment Suppliers (OESs) and authorised dealers. Through these agreements, CCI said the carmakers "imposed absolute restrictive covenants and completely foreclosed the aftermarket for supply of spare parts and other diagnostic tools". The Commission said the this anti-competitive behaviour has affected around two crore car consumers so far.
Tata Motors was imposed with the maximum fine of Rs. 1,346.46 crore, followed by Maruti Suzuki India (Rs. 471.14 crore), Mahindra & Mahindra (Rs. 292.25 crore) and Toyota Kirloskar Motors (Rs. 93.38 crore). In July last year, the CCI has given 17 OEMs a two-month breather to comply with the norms concerning the distribution of spare parts.