Compat eases CCI’s fine order against car makers

Giving partial relief to some car makers from a penalty order by CCI, the Competition Appellate Tribunal on Friday ruled they need to pay a 2 per cent fine on three-year average annual turnover of spare parts in the aftermarket, and not on the basis of their overall turnover.

The Competition Commission of India (CCI) had imposed a penalty of 2 per cent on overall average annual turnover of the concerned companies, including Toyota (Rs 93.38 crore), Nissan (Rs 1.63 crore) and Ford (Rs 39.78 crore).

The three foreign automakers had approached the Tribunal against the order by CCI, which had passed its directive after investigating complaints of alleged abuse of dominant position and anti-competitive agreement/practices adopted by the firms.

The automakers subsequently filed their appeals before Compat, which today passed an order after looking into whether the CCI “erred in holding appellants’ distributions/sales agreements and practices violative of” relevant section of the Competition Act.

In a detailed 190-page order, the Tribunal said the CCI had ordered an expanded probe against as many as 17 car makers in 2011.

Passing its order after looking into various aspects of the case and into submissions made by all the concerned parties, the Compat said, “... it is our opinion that this investigation has covered certain practices as they exist in the automobile after market and the repair and service sector.

“All companies have been found violating the relevant provisions of the act albeit in varying degrees, therefore even if specific company wise conclusions are not drawn violations need to be stated and checked.” 

The Tribunal ruled that the “appellants Toyota, Ford and Nissan are in dominant position in respect to their respective spare parts including diagnostic tools, technical information, fault codes, repair manuals etc, in the aftermarket.”