The Competition Commission of India (CCI) has levied a penalty of Rs.420.26 crore on car manufacturer Hyundai Motor India Ltd for violating antitrust laws in the supply of genuine spare parts and diagnostic tools, according to an order dated 27 July and made available on its website on Tuesday.
CCI decided to impose a penalty of 2% of the average annual turnover for three financial years 2009-10, 2010-11 and 2011-12 in India on Hyundai .
Other two manufacturers Mahindra Reva Electric Vehicles Pvt. Ltd and Doshi Holding Pvt. Ltd who promote the Premier brand in India were also found to be violating the law, however were exempt from a fine and let off with a warning.
CCI had fined 14 other car manufacturers with fines to the tune of Rs.2,554 crore in an order dated 25 August 2014. At that time, CCI couldn’t proceed against these three companies on account of a Madras high court stay challenging the authority and jurisdiction of the regulator. However, the high court on 4 February confirmed CCI’s jurisdiction to look into practices of these three car manufacturers.
CCI found that Hyundai and Reva earned a high mark-up on spare parts sourced from original equipment suppliers and the price at which they were made available to consumers.
The car companies were found to be indulging in practices resulting in denial of market access to independent repairers as the latter were debilitated to provide services in the aftermarket for repair and maintenance of cars for want of genuine spare parts. Further, these 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.
The order directed the car companies to cease and desist from indulging in conduct which has been found to be in contravention of the provisions of the Act. The car companies were also directed to adopt appropriate policies which shall allow them to put in place an effective system to make the spare parts and diagnostic tools easily available in the open market to customers and independent repairers. Further, the Commission directed the car companies to not to put any restrictions on the operation of independent repairers/garages.
The Commission imposed a penalty calculated at the rate of 2% of its average turnover on Hyundai amounting to Rs. 420.2605 crores which is to be deposited within 60 days of receipt of the order.
2014 Hyundai Elite i20 exterior profile