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August 26, 2014

INDIA: Regulator follows China with parts prices clampdown

Carmakers in India are coming under similar pressure from regulators as those in China with a total of US$420m in fines being handed out to 14 companies for stifling competition in the market for spare parts.

Carmakers in India are coming under similar pressure from regulators as those in China with a total of US$420m in fines being handed out to 14 companies for stifling competition in the market for spare parts.

The fines were equivalent to 2% of the carmakers’ three-year average revenue in India, according to the Competition Commission of India. The regulator also ordered the companies to provide spare parts and diagnostic tools to independent garages, and honour warranties on cars repaired by them after it said mark-ups reached as high as 4,817%.

The Commission said in a statement: “The car companies charged arbitrary and high prices for their spare parts” through monopolistic control. It added that companies were also found to be “distorting fair competition” by using their dominant position to protect their market for repair services.

Those fined are Maruti Suzuki, Tata, Honda, Hindustan, Mahindra & Mahindra, Volkswagen, BMW, Ford, General Motors, Mercedes-Benz, Nissan, Toyota, Skoda and Fiat after the commission found that carmakers were able to charge high prices by providing spare parts only to authorised repair shops.

It added that restrictions have limited the full potential of the independent repair shops “at the cost of the consumers, service providers and dealers”.

In China at least eight carmakers have lowered prices in response to a probe by the country’s National Development and Reform Commission.

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