CCI imposes Rs 2,545 crore penalty on Maruti, Tata, BMW, Mahindra, other car makers

Aug 26 2014, 00:15 IST
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The Competition Commission of India (CCI) has imposed a penalty totalling Rs 2,544.64 crore on the 14 car companies. The Competition Commission of India (CCI) has imposed a penalty totalling Rs 2,544.64 crore on the 14 car companies.
SummaryThe Competition Commission of India (CCI) has imposed a penalty totalling Rs 2,544.64 crore on the 14 car companies.

In the first major order against the auto sector, the Competition Commission today slapped a penalty of Rs 2,545 crore on 14 car makers, including Maruti Suzuki and Tata Motors, for violating trade norms in the spare parts and after services market.

Honda Siel Cars India, Volkswagen India, Fiat India Automobiles, BMW India, Ford India, General Motors India, Hindustan Motors, Mahindra & Mahindra, Mercedes-Benz India, Nissan Motor India, Skoda Auto India and Toyota Kirloskar Motor have also been penalised.

In a 215-page order, the Competition Commission of India (CCI) has imposed a penalty totalling Rs 2,544.64 crore on the 14 car companies. For each entity, the individual fine amounts to two per cent of their average turnover.

The penalty is to be deposited within 60 days of receipt of the order.

Nissan Motor India spokesperson declined to comment on the order. Comments from 13 other companies could not be immediately obtained.

A detailed investigation revealed that these car companies violated competition norms with respect to its agreements with local Original Equipment Suppliers (OESs) as well as in terms of pacts with authorised dealers.

Through these agreements, the car makers "imposed absolute restrictive covenants and completely foreclosed the after market for supply of spare parts and other diagnostic tools", the statement said.

The Commission also found that these companies, who were found to be dominant in the after markets for their respective brands, abused their dominant position affecting around two crore car consumers, it added.

"The 14 car companies were found to be indulging in practices resulting in denial of market access to independent repairers as the latter were not provided access to branded spare parts and diagnostic tools which hampered their ability to provide services in the aftermarket for repair and maintenance of cars," the statement said.

The fair trade watchdog has also directed the car makers to "cease and desist" from anti-competitive practices. PTI RAM RKL KSR 08252152

CCI 2 (REOPENS DEL90)

According to the Commission, having a monopolistic control over the spare parts and diagnostic tools of their respective brands, the car companies charged arbitrary and high prices for their spare parts.

"The car companies were also found to be using their dominant position in the market for spare parts and diagnostic tools to protect their market for repair services, thereby distorting fair competition," it said.

Among the 14 car makers, the maximum fine of Rs 1,346.46 crore has

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