Wednesday, August 27, 2014

CCI imposes Rs 2,500 crore penalty on Car Cos for indulging in unfair trade practices in spare part markets

Competition Commission of India imposed Rs 2,500 crore penalty on Car Companies for indulging in practices resulting in denial of market access to independent repairers.


a)The informant approached the Commission alleging anti-competitive conduct by Car manufactures (i.e., opposite parties). It was alleged that opposite parties abused their dominance by restricting the supply of genuine spare parts of automobiles.

b)The informant pleads before the commission to hold an enquiry against opposite parties. The Competition Commission of India held as under:

1)Each ‘original equipment manufacturer’ (OEM) was a 100 per cent dominant entity in aftermarket for its genuine spare parts and correspondingly for repair services for its brand of automobiles.

2)In most cases, the owners of various brands of automobiles are completely dependent on authorized dealer’s network of OEMs and they are not in a position to exercise option of availing services of independent repairers.

3)OEMs used their dominance in relevant market of supply of spare part to protect other relevant market namely after sales services and maintenance thereby violating section 4(2)(e) of Competition Act, 2002 (‘the Act’).

4)OEM’s have contravened provisions of sections 3 and 4 of the Act. They had to allow Original Equipment Suppliers to sell spare parts in open market without any restriction, including on prices.

5)The opposite parties may develop and operate appropriate systems for training of independent repairer/garages, and also facilitate easy availability of diagnostic tools.

6)Thus, penalty of around Rs 25,00 crore was imposed on opposite parties (computed as percentage of total turnover of respective opposite parties in India) – SHAMSHER KATARIA V. HONDA SIEL CARS INDIA LTD. [2014] 48 TAXMANN.COM 300 (CCI)