14 Indian carmakers fined for anti-competitive practices

The Competition Commission of India (CI) has slapped penalties totaling Rs 2,545 crore on 14 carmakers, including Maruti Suzuki and Tata Motors, for violating trade norms in the spare parts and afterservices market, a PTI report has said.

The list includes Indian companies as well as the subsidiaries of multinational companies including 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 Motor. Apart from Mahindra Reva and Premier, all other companies have been found guilty of this anti-competitive practices.

Mahindra & Mahindra has said it will contest the Commission’s findings while some others will reportedly study the order.

The individual fines amounts to two per cent of their average turnover.  The penalty is to be deposited within 60 days of receipt of the order.

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

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

The Commission said the 14 firms' anti-competition behaviour has affected around two crore car consumers.

According to the PTI report, the maximum fine of Rs 1,346.46 crore has been slapped on Tata Motors, followed by Maruti Suzuki (Rs 471.14 crore), Mahindra & Mahindra (Rs 292.25 crore) and Toyota Kirloskar Motor (Rs 93.38 crore).

In July last year, the CCI has given 17 OEMs a two-month breather to comply with norms concerning the distribution of spare parts.

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.