CCI gives carmakers two months to sort out ongoing supply chain stand-off

May 10, 2013: The Competition Commission of India has allowed OEMs until July 10 to comply with laws concerning the distribution of spare parts for the automotive sector. This breather was granted on May 9 when the final hearing for the case related to the on-going standoff between carmakers and their supply chain was to be heard and a decision taken.

OEMs had sought an adjournment but this was rejected. Hence, the counsel for Mercedes-Benz suggested that to bring about greater compliancy with laws, OEMs be granted additional time to draw up proposals.

The CCI ensures a competitive environment in accordance with the provisions of the amended Competition Act of 2002 relating to anti-competitive agreements and abuse of dominant position and as notified on May 20, 2009. The issue between car manufacturers and their supply chain is not limited to the industry but goes beyond. From a consumer’s perspective, it involves shelling out twice the price of the spare parts and the CCI is trying to ensure that consumers are not taken for a ride.

“In terms of service charges for passenger cars, the Commission’s final verdict may not change the labour costs for service and repairs, but costs of spares may come down due to increasing competition. Hence, servicing at authorised dealerships may become that much more affordable,” says an industry expert. The issue in question relates to the investigation by the CCI into contracts of 17 OEMs with their component suppliers and dealers and which found that most were violative in spirit in varying degrees.

SHOBHA MATHUR