CCI fines Hyundai Rs 420 cr; Reva, Premier also face flak

Coming down hard on carmakers found to be restricting sale of spare parts in open market, fair trade regulator CCI today imposed a penalty of Rs 420.26 crore on Hyundai Motor India and asked two others -- Reva and Premier -- to 'cease and desist' from anti-competitive practices.

This follows penalties totaling Rs 2,544.64 crore imposed on 14 other car makers in August last year in the same case. Those companies included Honda Siel, Fiat, Volkswagen, BMW, Ford, General Motors, Hindustan Motors, M&M, Maruti Suzuki, Mercedes-Benz, Nissan Motors, Skoda, Tata Motors and Toyota Kirloskar Motors.

Passing the latest order, which completes the action in the case of a long-running probe against 17 carmakers, CCI said that there are certain "mitigating factors" which work in favour of Premier and Reva (a subsidiary of auto giant Mahindra and Mahindra) and therefore, the Commission has decided not to impose any monetary penalty against the two.

However, other directions for all the 17 companies would be applicable to these two also.

CCI said that all these companies "had stringent warranty conditions which required their customers to only get their automobile repaired through their authorised service network of dealers, otherwise their warranty would be invalidated".

Besides, these companies, either specifically through their agreements or otherwise through understanding with their dealers, have restricted or prohibited the sale of spare parts over the counter, thereby resulting in prescribing exclusive distribution agreements and refusal to deal as per the fair competition norms.

While Hyundai submitted before CCI that its case was different from the other companies and it deserved "a reduced penalty", CCI ruled that "most of the factors cited by Hyundai are general in nature which do not qualify for a reduced penalty".

Accordingly, CCI decided to impose a penalty of 2 per cent of the average annual turnover for three financial years in India, resulting in a fine of Rs 420.26 crore, as per the 58-page order issued today.