Competition Commission slaps Rs 87 crore fine on Hyundai for unfair business practices

The Rs 87 crore fine imposed on the company is 0.3 per cent of the company's average relevant turnover from the last three financial years. 

By: Express Web Desk | New Delhi | Updated: June 14, 2017 9:51:39 pm
Hyundai Motors, CCI, Unfair Business practices, Hyundai Hyundai was fined Rs 87 crore by the CCI on Wednesday. (File Photo)

The Competition Commission of India (CCI) issued orders against Hyundai Motor India Ltd on Wednesday, for anti-competitive conduct. It found the company to be in violation of the Competition Act, 2002, for unfair business practices by providing discounts for its cars. The commission imposed a penalty of Rs 87 crore on the company. Further, a cease and desist order has been passed against the company.

The regulator penalised Hyundai for making arrangements with its dealers which resulted into Resale Price Maintenance in the sale of passenger cars manufactured by it. The arrangements included monitoring of the maximum permissible discount levels through a Discount Control Mechanism.

“Such conduct pertains to and emanates out of sale of motor vehicles. Hence, for the purposes of determining the relevant turnover for this infringement, revenue from sale of motor vehicles alone has to be taken into account,” CCI noted in its 44-page order.

The Rs 87 crore fine imposed on the company is 0.3 per cent of the company’s average relevant turnover from the last three financial years.

The watchdog also said the company contravened the law by mandating its dealers use “recommended lubricants/ oils and penalising them for use of non-recommended lubricants and oils”. This reportedly resulted in the creation of ‘barriers’ for new entrants.

“The level of discount was determined by the OP (Hyundai Motor India) for each model and variant of the passenger cars and the OP had also appointed a mystery shopping agency to collect data from dealers for such monitoring and reporting to the OP,” the CCI added.

“The practice and arrangements followed by the OP also result into creation of barriers to the new entrants in the market with regard to the supply and marketing of lubricants for use in the cars manufactured by the OP,” it said. The commission was working on complaints filed by Fx Enterprise Solutions India, based in Delhi, and Kerala-based St Antony’s Cars.

Responding to the order, Hyundai said in a statement: “we are really surprised with this order. We are studying the order in detail and will take necessary course of action to challenge the order at appropriate level to protect the interest of our customers and channel partners by abiding (with) all the laws of land.”

(With inputs from PTI)

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