CCI slaps Rs 420 cr fine on Hyundai

The Competition Commission of India (CCI) imposed a penalty of Rs 420.26 crore on Hyundai Motor India Limited (HMIL) on Tuesday for restricting the sale of spare parts of its vehicles in the open market. Two other auto companies Reva and Premier were also directed to 'cease and desist' from anti-competitive practices but no fine was imposed on them. The fine on HMIL follows penalties totalling Rs 2,544.64 crore imposed on 14 other carmakers last August in the same case. The companies penalised last year 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-drawn investigation against 17 carmakers, the CCI said that there are certain mitigating factors which work in favour of Premier and Reva (a subsidiary of 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 as well.

The fair trade regulator 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 in accordance with fair competition norms.

While Hyundai had argued that its case was different from the other companies and deserved a reduced penalty, the CCI ruled that most of the factors cited by HMIL are general in nature which do not qualify for a reduced penalty. Accordingly, the CCI decided to impose a penalty of two per cent of the average annual turnover for three financial years in India resulting in a fine of Rs 420.26 crore, according to order.