Companies

Competition panel finds carmakers guilty of monopolising spare parts business

Bindu D Menon New Delhi | Updated on February 01, 2013

Besides penalty, ‘cease and desist’ order may be passed

(See clarification below)

Consumers will soon have the choice to buy spare parts from any car dealer, if the Competition Commission of India (CII) has its way.

The fair trade regulator is understood to have found automobile manufacturers guilty of alleged anti-competitive practices on selling of spare parts at higher prices to consumers through authorised dealerships.

At present, a Maruti car dealer can stock only the company’s spare parts, not any competition’s products. However, CCI has found this to be a violation of the principles of free trade.

“The Director-General, during investigation, found automobile makers guilty of anti-competitive practices. A final order on the same is expected shortly, and the Commission is likely to issue a ‘cease and desist’ order,” sources told Business Line.

The case is being pursued under Section 4 of the Competition Act that relates to abuse of dominant market position by enterprises. In October last year, CCI had shot off show-cause notices to 17 automobile manufacturers following complaints from consumers that companies were taking undue advantage of their position and selling spare parts only through their network, which resulted in high prices for components.

Following this, CCI had directed the DG to investigate the matter.

Carmakers, in their argument, had said the move was aimed at providing genuine products. Players such as Maruti Suzuki India Ltd, Mahindra & Mahindra and Tata Motors currently supply their spares in the open market as well, compared with many foreign car brands. Official sources said this would be an advantage for customers as the warranty would not get void if a faulty part is replaced by a company-manufactured component purchased in the open market.

Service and spare parts industry is estimated at Rs 27,000 crore, according to the Automotive Component Manufacturers Associations 2011 data. The passenger car segment alone stands at Rs 6,700 crore.

“Most car manufacturers were selling their spares at nearly 30 per cent higher through its own dealers,” sources said.

(It is clarified that only the investigation by the Director-General Investigations has been completed. The Competition Commission of India is yet to pass any order on the complaint against the automobile companies. The error is regretted.)

bindu.menon@thehindu.co.in

Published on January 17, 2013

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like