12213Fwd: [karmayog] Whither CSR? Only dishonest companies in India?
- Aug 26, 2014From: 'karmayog - tanya' info@... [karmayog] <email@example.com>
Date: Tue, Aug 26, 2014 at 1:26 PMhttp://economictimes.indiatimes.com/articleshow/40871116.cms
CCI imposes Rs 2,545-crore penalty on 14 car makers including Maruti Suzuki, Tata Motors
By ET Bureau | 26 Aug, 2014, 02.40AM IST
NEW DELHI/MUMBAI: The Competition Commission of India has imposed a combined penalty of over Rs 2,500 crore on 14 carmakers for indulging in unfair practices in the spare parts market, the latest in a series of tough enforcement actions by the newest among India's regulators
Tata Motors faces the maximum fine of Rs 1,346 crore, followed by Maruti Suzuki Rs 471 crore, Mahindra & Mahindra Rs 292 crore, General Motors Rs 85 crore, Honda Car India Rs 78 crore.
The decision, spelt out in a 215-page order, says that auto companies indulged in anti-competitive practices as they did not make genuine spare parts freely available in the open market, upholding the contentions of a petition filed by a complainant in 2011.
The fine has been calculated at 2% of average turnover.
"It's too early to comment. We are yet to study the order," said M&M and Honda spokespersons. The spokesperson for Tata Motors, the company that has received a sledgehammer blow with the maximum fine, said it will respond after studying the order. The CCI appears to have clubbed JLR revenues with Tata Motors while arriving at the penalty.
Given the way penalty has been calculated on Tata Motors, the method of computation looks flawed, said auto analyst Basudep Banerjee. Auto stock may see gap down opening on Tuesday due to negative sentiment.
Honda Siel, Volkswagen India, Fiat India, BMW India, Ford India, General Motors, Hindustan MotorsBSE -2.51 %, Mercedes - Benz, Nissan Motors, Skoda Auto India and Toyota Kirloskar are the other companies on whom fines have been slapped.
Hyundai Motor India, the wholly owned subsidiary of South Korean carmaker Hyundai, had obtained a stay order from the Madras High Court against proceeding by CCI in the case. Companies have been given 60 days to comply with the order.
It is likely that most companies will challenge the order.
It's a welcome order for the consumers, say analysts. "This is the first case in which CCI penalised companies for violating section 3(4) of the competition act dealing with vertical agreements/restraints," says Vaibhav Choukse, Senior Associate (Competition Law & Policy) at Vaish Associate in New Delhi.
CCI heavily relied on the international jurisprudence and the similar cases decided by the competition authorities of European Union, France, USA, he adds. "CCI also urged the need of an independent regulator and it may give its recommendation to the Government."
The petition filed in 2011 alleged that the car makers "operate/authorise/regulate or otherwise control the operations of various authorized workshops and service stations which are in the business of selling automobile spare parts, besides, rendering aftersale automobile maintenance services."
The Commission has upheld most of the allegations.
The commission ordered companies to "sell spare parts in the open market without any restriction, including on prices" and asked them not to place any restrictions or impediments on the operation of independent repairers/garages.
The commission also directed manufactures not to impose a blanket condition that warranties would be cancelled if the consumer avails of services of any independent repairer.
In deciding the penalty, the CCI considered the logic put forward by car makers that there are no "appropriate legislative and regulatory framework for safety and standards relating to spare parts and after sales services" and said this could be brought to the notice of the government.
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