on 29, Jul 2015

Competition Commission of India (CCI), the fair trade regulator, imposed a penalty of Rs. 420.26 crore on Hyundai Motor India for restricting sale of spare parts in open market. CCI also asked Reva and Premier to cease and desist from anti-competitive practices. The latest order completes the action in the case of a long-running probe against a total of 17 carmakers.

Last year in August, CCI had imposed penalties totaling Rs. 2,544.64 crore on 14 other car makers in the same case. Those companies included Honda Siel, Fiat, Volkswagen, BMW, Ford, General Motors, Hindustan Motors, M&M, Maruti Suzuki, Mercedes-Benz, Nissan Motors, Skoda, Tata Motors and Toyota Kirloskar Motors.

CCI said that certain “mitigating factors” worked in favour of Premier and Reva, thus allowing the 2 companies to escape monetary penalty. However, other directions for all the 17 companies would be applicable to these two also.

CCI said the companies “had stringent warranty conditions which required their customers to only get their automobile repaired through their authorised service network of dealers, otherwise their warranty would be invalidated”.

Furthermore, these companies, either specifically through their agreements or otherwise through understanding with their dealers, have restricted or prohibited the over-the-counter sales of spare parts consequently resulting in prescribing exclusive distribution agreements and refusal to deal as per the fair competition norms.

Rejecting Hyundai’s plea for a reduced penalty, CCI ruled that “most of the factors cited by Hyundai are general in nature which do not qualify for a reduced penalty”. As a result, CCI imposed a penalty of 2 per cent of the average annual turnover for 3 financial years in India.

Source: NDTV


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