India Fines 14 Carmakers(most Japanese firms)in Antitrust Cases

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  1. CCP

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    http://www.nytimes.com/2014/08/27/business/international/india-fines-14-carmakers-over-competition-violations.html
    MUMBAI, India — India’s antimonopoly regulator has fined 14 automobile companies about $422 million in all for failing to allow fair competition in the market for spare parts.

    The companies, including the local units of Honda and Ford, violated trade norms in the spare parts and after-sale services market, affecting about 20 million customers, according to the regulator, the Competition Commission of India. The fine of 25.54 billion rupees follows heightened regulatory scrutiny in India that is part of a wide-ranging anticorruption push.

    Last week, the authorities in China, the world’s biggest auto market, found 12 Japanese auto parts and bearings manufacturers guilty of fixing prices, and imposed fines totaling about $200 million. Several global auto manufacturers, including Daimler, the German manufacturer of Mercedes-Benz, and the American carmaker General Motors are also being investigated in China.

    In India, the conduct of the 14 companies resulted in “denial of market access to independent repairers as the latter were not provided access to branded spare parts and diagnostic tools,” the commission said in a statement released late Monday, “which hampered their ability to provide services in the aftermarket for repair and maintenance of cars.” The commission found that the restricted access to spare parts also allowed the car companies to charge consumers high and arbitrary prices for repair and maintenance.

    The regulator’s inquiry into the practices of auto manufacturers began in 2011 after Shamsher Kataria, a private citizen, filed a complaint against Honda Cars India, Volkswagen India and Fiat India Automobiles. The commission extended its investigation to other carmakers when it found that the practice was widespread.

    The local carmaker Tata Motors received the biggest fine, 13.46 billion rupees, or about $222 million. Other Indian carmakers that were penalized included Mahindra & Mahindra and Hindustan Motors. International brands named in the order included Toyota, the Volkswagen unit Skoda Auto, BMW, Mercedes-Benz, Fiat, General Motors and Nissan Motor.

    The fine for each carmaker, equivalent to 2 percent of the average annual turnover in India for a three-year period that ended in 2010, is to be deposited within 60 days, the commission said. The commission has also prescribed corrective measures to reduce monopoly behavior in the automobile repair and maintenance industry and to allow the operation of independent repair companies.

    Mahantesh Sabarad, the deputy head of research at SBICAP Securities who specializes in the Indian auto industry, said that the ruling would not affect the operations of the carmakers anytime soon. “Car companies will most likely appeal against this order for a period of time, so no immediate impact is likely,” he said.

    Mahindra & Mahindra told the Indian stock exchanges on Tuesday that it would challenge the 2.9-billion-rupee penalty it had received. “The company furnished all information and clarification requested by the authorities in the context of the investigation,” it said in a statement. “The company, aggrieved by this order, proposes to appeal against it before the appropriate forum.” Other carmakers were not immediately available for comment.

    The commission’s order also pointed out the poor safety regulations in India’s automobile industry, which has come under scrutiny after independent crash tests this year showed that domestic cars fell short of international standards.

    “The absence of appropriate legislative and regulatory framework for safety and standards relating to spare parts and after-sales services is a handicap,” the regulator said.

    India’s automobile industry, the sixth-largest in the world, has been recovering from a period of weak sales after the nation’s economic growth slowed to less than 5 percent.

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