Competition Commission fines manufacturers Rs. 2,545 crore

The Competition Commission of India has imposed a fine amounting to Rs. 2,544.64 crore on fourteen car manufacturers for unfair practices in the spare parts market. The fine has been pegged at 2% of their average turnover and companies have been given 60 days to comply with the order.

Click here to read the order

Usually manufacturers sell their spare parts only through their dealer network at high prices. The companies do not make spares freely available in the open market which does not allow for the growth of the market for spares and after sales.

The companies hit by the order include Honda (Rs. 78.47 crore), Volkswagen (Rs. 3.25 crore), Fiat (Rs. 29.98 crore), BMW (Rs. 20.41 crore), Ford (Rs. 39.78 crore), General Motors (Rs. 84.58 crore), Hindustan Motors (Rs. 13.85 crore), Mahindra and Mahindra (Rs. 292.25 crore), Maruti Suzuki (Rs. 471.14 crore), Mercedes-Benz (Rs. 23.08 crore), Nissan (Rs. 1.63 crore), Skoda (Rs. 46.39 crore), Tata Motors (Rs. 1,346.46 crore) and Toyota (Rs. 93.38 crore).

Tata Motors, which faces the maximum penalty, believes that the commission has clubbed Jaguar Land Rover revenues with theirs while arriving at the amount of penalty. Hyundai has obtained a stay order from the Madras High Court against the order and other manufacturers are also likely it.

The commission has ordered companies to "sell spare parts in the open market without any restriction, including on prices" and asked them not to place any restrictions or impediments on the operation of independent repairers/garages. The commission also directed manufactures not to impose a blanket condition that warranties would be cancelled if the consumer avails of services of any independent repairer.

Consumers are likely to welcome the actions as it is likely reduce the money and time spent in maintaining their vehicles.

Source: The Hindu, Economic Times