The Competition Commission of India (CCI) has slapped fines amounting to 25.5 billion rupees ($420 million) on a dozen of global and domestic auto companies after an investigation found them guilty of uncompetitive behavior in the world’s sixth largest car market.
The penalty comes after intensified regulatory scrutiny of the car-making industry in China, the largest auto market in the world. A number of international car and spare parts makers have been punished or are being probed by China’s anti-trust authority, the National Development and Reform Commission.
The CCI stated it had penalized the 14 car manufacturers after investigations revealed they were limiting access to spare parts, which in ultimately hiked their prices.
According to Business Standard, detailed investigations by CCI found that the practices of the car firms violated provisions of India’s Competition Act, 2002, regarding contracts with domestic Original equipment Suppliers (OESs) and deals with authorized dealers, whereby the automakers constrained supply of spare parts and diagnostic tools. Further, the companies were found to be dominating aftermarkets for their respective products, abused their dominance and hurt consumers of car spare parts.
CCI prescribed remedies that would enhance competitively in the car market.
The fined car makers include Honda Motor Co., Toyota Motor Co., Volkswagen AG., BMW AG., General Motors Co., Nissan Motor Co. and Mercedes-Benz.
Domestic automaker Tata Motors Ltd suffered the highest fine of 13.46 billion rupees. Other fined Indian auto companies include Maruti Suzuki Ltd., Hindustan Motors Ltd., and Mahindra Ltd.
The fine, which matches a 2% of the automakers’ three-year average revenue in the domestic market, is payable in 60 days, the regulator announced.
“The anti-competitive conduct… 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,â€Reuters quote the regulator as stating.
To contact the reporter of the story: Yashu Gola at yashu@forexminute.com
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