This document summarizes a case brought before the Competition Commission of India regarding anti-competitive practices in the automobile spare parts market. The case was filed against Honda, Volkswagen, and Fiat for restricting the availability of genuine spare parts in the open market. The investigation found that Hyundai was overpricing spare parts and imposing restrictions on dealers and independent repair shops to leverage its dominance in the spare parts market to protect its repair services market. As a result, Hyundai was ordered to cease anti-competitive practices and pay a penalty of 2% of its average turnover over the past three years.

1. PUZZLE
• This is the place where you can go very far by just
sitting inside it.
• Beggar cannot buy it , bur richer cant live without
it
Who am I ????

2. AUTOMOBILE
answer

3. COMPETITION ACT : AUTOMOBILE
COMPANIES FINE
GROUP - 3

4. GROUP MEMBERS
• AKSHAY LIMAYE
• JAGRUTI GODAMBE
• ANGELA MONTERO
• CHINMAY MANKAR
• BHARAT TARACHNDANI
• SWATI JAIN

5. FLOW OF PRESENTATION
Introduction to automobile industry
Competition act
Types of agreements
Competition commission of India
Case study

6. Automotive Industry through the prism of
Competition Act

7. AUTOMOBILE SECTOR
• Core manufacturing sector
• The automobile sector is one that has never ceased to demand
• The phasing out of quantitative trade restrictions lead to the
growth of automobile industry

8. Components production and assembly sector grew fastest
between the period of 1990 and 1997
Unit sales and production of automobiles rose from being
3,57,000 and 3,64,000 in 1990 to 7, 61,000 and 7, 70,000 in
1997 respectively
These figures established India’s robust appetite and
encouraged further investment and subsequent growth in the
automobile industry

9. 0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1990 1997
Sales and Production
Production Sales

10.  Post 1999 saw the expansion of domestic market for passenger cars
Annual number of production rose from 609,000 in 2002-03 to
1,620,000 in 2008-2009
Domestic demand for motorcycle also increased constantly from
648,000 in 1994-95 to 6,802,000 in 2008-09
Annual production of auto components rose from 4,470 million US
dollars in 2001-02 to 18,000 million US dollars in 2007-08
The resultant upsurge in the last few years has seen more entrants and
local manufacturing in the automotive sector has therefore become a
success story

11. 0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
Production Demand
2002-2003 2008-2009

12. COMPETITION
ACT
FOR AUTOMOBILE SECTOR

13. WHY IT IS IMPOSED
• To engender fair play & ultimately promote
consumer welfare
• In 90s production units increased in large
numbers and demand for cars and bikes
increased more in 2000

14. • Drafted in competition Act 2003 and replaced the
MRTP Act 2009
• CCI. COMPAT. SUPREME COURT

15. OBJECTIVE
• To prevent practices having adverse effect on
competition, promoting & sustaining
competition in market
• Protecting interest of consumer & ensuring
freedom of trade.

16. 3 WAYS TO MAXIMIZE CONSUMER WELFARE
• Prohibiting anti competitive agreements and practices that
harmfree trade & competition
• Preventing abuse of dominant position and anti competition
practices that lead to such a dominant position
• Regulating MRA

17. SOLUTIONS
• Vertical Agreement and Horizontal agreement
• Vertical agreements in the car industry were treated more
restrictively by EU competition law, than agreements
falling under the general verticals block exemption

18. WHAT IS CCI…
• Competition Commission of India is a body of the
Government of India responsible for enforcing The
Competition Act, 2002 throughout India and to prevent
activities that have an adverse effect on competition in
India

19. COMPOSITION…
• The commission shall consist of a Chairperson which
should not be less than two and not more than six other
Members to be appointed by the Central Government
• The Chairperson and other Members shall be whole time
Members

20. DUTIES OF COMMISSION…
• Subject to the provisions of the Act, it shall be the duty of
the commission to eliminate practices having adverse
effect on completion
• Protect the interest of consumers and ensure freedom of
trade carried on by other participants, in market

21. POWERS OF COMMISSION…
• Impose penalty up to 10% of turnover
• Cease and desist order
• Recommend to government the division of dominant
enterprise

22. • For those who would want to know more about C.C.I. visit
http://www.competition –commission-india.nic.in

23. • M/S nanavati wheels vs Hyundai Motor dealer alleg

24. CASE STUDY
CASE NO :- 03/2011
DATE: 27/07/2015
ORDER UNDER SECTION 27 OF
THE COMPETITION ACT, 2002

25. BACKGROUND
Filed by Mr. Shamsher Kataria, On 18.01.2011
Under Section 19 (1)(a) of the Competition Act, 2002
Filled against
1. Honda Siel Cars India Ltd
2. Volkswagen India Pvt Ltd
3. Fiat India Automobiles Ltd
Because of anti-competitive practices
Non availability of genuine spare part in open market

26. MAIN DG REPORT FINDINGS1.
1. Regarding passenger vehicle sector market
Primary
Manufacturing
Sales
Secondary
Complementary
products
Secondary
Products
e.g. Spare parts

27. MAIN DG REPORT FINDINGS
2. Regarding aftermarket of passenger vehicle
Subsegment-1
Supply of spare
parts, diagnostic
tools etc.
Technical
manuals,
Catalogues
Subsegment-2
Aftersales Service
Maintenance and
Repaires

28. MAIN DG REPORT FINDINGS
3. Regarding Price of Spare Parts
OEM had escalated the price of spare parts
imposing unfair prices in the sale of spare parts in terms of section
4(2)(a)(ii) of the Act

29. FINDINGS RELATED TO HYUNDAI
Dealers are permitted to purchase spare parts from Hyundai or from vendors
Dealer are not allowed to purchase from OEMs who are suppliers
Restriction on dealers ability to deal in competing brand
Hyundai has leveraged its dominance in one relevant market (supply of spare
parts) to protect the other relevant market (market for repair services)
violation of section 4(2)(e) of the Act

30. HUNDAI’S REPLY
Hyundai has largest service and sales network
412 dealers and more than 1,087 service points located across
India
Hyundai has argued that the sector is unorganized and
characterized by a lack of skills and proper training
Hyundai claimed that DG has misconstrued Hyundai’s
relationship with its OESs

31. RULING
The parties are asked to cease and desist from indulging in conduct which has been
found to be in contravention of the provisions of the Act
Building efficient network to make spare parts and diagnostic tools easily available
OESs are allowed to sell spare parts in the open market without any restriction, on
prices, under their own brand name
All the restrictions or impediments on the operation of independent repairers/garages are
removed

32. RULING
Standardization of parts so that they can be used across different
brands (e.g. tyres, batteries etc.)so as to give choice to consumers and
repairers/service providers
OPs are directed not to impose a blanket condition that warranties
would be cancelled if the consumer avails the services of any
independent repairer
OPs may cancel the warranty only when the damage has been caused
because of faulty repair work outside their authorized network

33. • In view of foregoing, a penalty of 2% of the total turnover in India may be
imposed on Hyundai
As such, the penalty imposed on Hyundai is as follows:-
*last decimal point in the figures
has been rounded offName
Turnover for
2009-10 (in Rs.
crores)*
Turnover for
2010-11 (in Rs.
crores)*
Turnover for
2011-12 (in Rs.
crores)*
Total
Turnover for
3 years (in
Rs. crores)*
Average
turnover (in
Rs. crores)*
Penalty @ 2%
of the average
Turnover (in
Rs. crores)*
Hyundai 20269.37 20269.71 22499.99 63039.07 21013.02 420.2605

34. THANK YOU !!!