The Competition Commission on Wednesday imposed a Rs 87-crore penalty on Hyundai Motor India for unfair business ways with respect to discounts for passenger cars. The auto maker said it would challenge the ruling.
In a 44-page order, the regulator said Hyundai’s anti-competitive conduct
include putting in place arrangements that resulted in resale price maintenance by way of monitoring of maximum permissible discount level. “Such conduct pertains to and emanates out of sale of motor vehicles.
Hence, for the purposes of determining the relevant turnover for this infringement, revenue from sale of motor vehicles
alone has to be taken into account,” the CCI
noted. The CCI
has alleged that the company has a discount control mechanism whereby dealers are permitted only to provide a maximum permissible discount and not beyond the recommended range.
In a statement, the company said, “We are studying the order in detail and will take necessary course of action to challenge the order at appropriate level to protect the interest of our customers and channel partners by abiding (with) all the laws of land”.
The penalty amount translates to 0.3 per cent of the company’s average relevant turnover in the last three financial years from 2013-14.
Among others, the CCI
said the company contravened competition law through arrangements that resulted into resale price maintenance and by mandating its dealers to use “recommended lubricants/oils”.
According to the watchdog, the arrangements perpetuated by the company caused hindrance in the distribution of goods and provision of services in relation to new cars.
It also resulted in creation of "barriers" to the new entrants, the order said.
"The level of discount was determined by the OP (Hyundai Motor India) for each model and variant of the passenger cars and the OP had also appointed a mystery shopping agency to collect data from dealers for such monitoring and reporting to the OP," it added.
Further, the regulator noted the practice followed by the company to get the lubricants supplied by IOCL and Shell only and at pre-fixed price resulting in price discrimination is not accruing any benefit to the dealers as well as the consumers of the cars.
"The practice and arrangements followed by the OP also result into creation of barriers to the new entrants in the market with regard to the supply and marketing of lubricants for use in the cars manufactured by the OP," the CCI
As per the regulator, that Hyundai Motor India
mandates its dealers to use particular oil and lubricants and penalises its dealers where non-recommended oils are used, amounts to 'tie-in arrangement' in contravention of provisions of the Competition Act.
Following two separate complaints, the regulator had ordered a detailed by its investigation arm DG (Director General) in 2014.
The complaints were filed by Delhi-based Fx Enterprise Solutions India and Kerala-based St. Antony's Cars.