The CCI penalised 14 carmakers, including Tata Motors, Maruti Suzuki, Honda and General Motors for abusing their dominant position by making available spare parts only through their authorised dealers, who in turn sell them at higher rates

The Competition Commission of India (CCI) has slapped a penalty of Rs2,545 crore on 14 carmakers for violating trade norms in the spare-part and after-sale service market.

As per the complaint filed by Samsher Katatia in 2011, Honda Siel Cars India Ltd, Volkswagen India Pvt Ltd and Fiat India Auomobiles Ltd were accused of abusing their dominant position by making available spare parts only through their authorised dealers, who in turn sell them on high rates.

The companies penalised by the Commission include Maruti Suzuki, Tata Motors, Honda Siel Cars India, Volkswagen India, Fiat India, BMW India, Ford India, General Motors India, Hindustan Motors, Mahindra & Mahindra, Mercedes-Benz India, Nissan Motor India, Skoda Auto India and Toyota Kirloskar Motor.

“...the Commission’s primary objective is to correct the distortions in the after market, to provide corrective measures to make the market more competitive, to eradicate practices having foreclosure effects and to put an end to the present anti-competitive conduct of the parties. The aim of the Commission is to provide more freedom to Original Equipment Suppliers (OESs) in sale of spare parts, and more choice to consumers and independent repairers. The Commission considers it

necessary to (i) enable the consumers to have access to spare parts and also be free to choose between independent repairers and authorized dealers and (ii) enable the independent repairers participate in the after market and provide services in a competitive manner and to have access to essential inputs such as spare parts and other technical information for this purpose, as part of a more competitive eco-system which is equally fair to the OPs and their authorized network also,” the CCI mentioned in its order.

The penalty - 2% of these companies' average turnover in the past three years - will have to be deposited within 60 days of receipt of the order, the CCI said.

Tata Motors is penalised the maximum of Rs1,346 crore followed by Maruti Suzuki at Rs471 crore. Mahindra & Mahindra is asked to pay Rs292 crore, General Motors Rs85 crore and Honda Car India Rs78 crore by the Competition Commission.

In its order, the Commission said, "...anti-competitive conduct of the opposite parties impacts a very large number of consumers in the country estimated to be around two crore. Further, the anti-competitive conduct of the opposite parties has restricted the expansion of spare parts and independent repairers segment of the economy to its full potential, at the cost of the consumers, service providers and dealers. It is also noted that despite the fact that most attractive markets for the automobile manufacturers and some OPs (carmakers) have made consumer-friendly commitments in other jurisdictions like Europe, they have failed to adopt similar practices in India which would have gone a long way in significantly diluting their present anti-competitive conduct. This makes their conduct even more deplorable."

Earlier, in 2012, the Director General of CCI submitted a report after its investigation into the matter. The Commission was pursuing the case under Section 4 of the Competition Act that relates to abuse of dominant position by enterprises.