Car Companies under Investigation for Unfair Means

Times of India has reported that Competition Commission of India is looking into the allegations of controlling the prices of spare parts unfairly.

New Delhi: A section of car makers has allegedly been found engaging in anti-competitive practices by withholding sales of spare parts in the free market, resulting in controlled and hefty prices at dealerships and service centres authorized by them. The findings are based on a probe by the investigative arm of fair-play watchdog Competition Commission of India (CCI).

In its report to the regulatory agency, the director general (investigation) has accused the auto players of controlling and restricting supplies only to their network, sources told TOI. The probe, spread over a year, studied the after-market supply chain and spoke to various players, including car companies, component manufacturers and open market players.

Companies, including Volkswagen, Honda, Ford and General Motors, said they would study the report before commenting on it, while Toyota stuck with the stand of exclusivity. “Clearly it is not anti-competitive. Only accredited people should be allowed to fix parts as it is in the interest of the customers,” said Toyota Kirloskar deputy MD Shekar Viswanathan. “It is inherently unsafe for non-trained people to fix parts.” A spokesperson for GM India said the company cannot comment until it saw the fine print, while Honda did not answer queries sent on Tuesday evening. A spokesperson for Ford India said, “We will need time to review the development and understand the report before we can comment.”

CCI had asked its investigative arm to probe the matter in March 2011 after a car buyer accused companies of abusing their dominant position by making spare parts available only through their authorized dealers, who in turn were allegedly sold them at high rates. The practice is more prevalent with several of the newer car entrants, while the established ones such as Maruti Suzuki, Mahindra & Mahindra and Tata Motors make spares available in the open market. CCI will now look into the findings of the DG’s probe before deciding if there is a case of anti-competitive behaviour. It will also hear car companies and other parties before an order is issued in a few months. A ruling against car companies will force several of them to sell components in the open market and restrict sales to exclusive dealerships.

It will be a boon for consumers as car majors will not be able to scrap a vehicle’s warranty if its owner gets a faulty part replaced in the open market. The problem has been plaguing car owners for a long time. They are forced to buy parts only from exclusive dealers of companies at the rates they ask for, many times waiting for several days if the component is out of stock. The problem is acute for those living in smaller cities where many of the international players do not have a dealership. The market size of service and spare parts industry is estimated at Rs 15,000 crore annually.