CCI Takes on Car Makers

Orders of Competition Commission of India (CCI) have been welcomed by the officials of non-life insurance companies by slapping a heavy fine on 14 car makers. This indulged car makers in restrictive practices that landed the insurers and vehicle owners in heavy penalties.

S.S.Gopalarathnam, MD of Cholamandalam MS General Insurance Company said that the entry of independent repairers into the market and the ability of component makers to sell them at better competitive prices would turn out good for general insurers and vehicle owners. One of the senior told IANS that if everything moves according to the order then surely it would cheer up the insurer as well as the vehicle owner.

CCI charged a penalty on 14 car manufacturers of Rs. 2,544.65 crore for violating competition law, on August 25. CCI found that the following car makers were preventing independent repairers from coming into the market with their restrictive practices.

Some of the big names in the list of 14 car manufacturers suffering the heavy penalty include- India’s TAT Motors LTD with highest penalty of Rs 1,346.46 crore, followed by Maruti Suzuki of Rs 471.14 crore, Mahindra & Mahindra Rs. 292.25 crore and General Motors suffered penalty of Rs. 84.58 crore. The list includes other big names like- Mercedes Benz, Hindustan Motors, Skoda Auto India, BMW India, Fiat India, Volkswagen India and Toyota Kirloskar India.

Apart from the penalty the companies have been asked to stop from getting in conduct that is contravention of the provision of the Competition Act. They are also directed to set up an effective system for easy availability of spare parts and diagnostic tools. Adding to the list of directions, they have also been asked to offer public domain information related to the spare parts, arrangement for availability, retail price, maintenance costs, details of matching quality alternatives etc. that guides the customer properly and facilitate fair competition. And, they are not allowed to impose blanket conditions which would be cancelled in case the consumer avails service from any independent repairer.

Insurance industry official informed that in India many companies do not follow the concept of child parts that is being followed overseas- this includes replacement of damaged or defective part and not the entire assembly. This view has been supported by non-life insurers as well that is willing to have an environment friendly measure offered by the car companies.

Written By: PolicyBazaar - Updated: 08 September 2014
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