The Competition Commission of India has found several automobile manufacturers selling spare parts at higher prices to consumers through authorized dealerships. Currently, a car dealer can only stock the company’s spare parts and not any competition’s product, this activity according to the Competition Commission of India is a violation of the principles of free trade. During investigation, the competition panel found automakers guilty of doing anti-competitive practices and the commission is expected to issue a ‘cease and desist’ order.
Last year, the Competition Commission of India received several complaints from customers that the automakers are taking unjust advantage of their market position and selling spare parts only through their own network resulting in higher prices for products. The case is being followed under Section 4 of the Competition Act that is related to abuse of dominant market position by enterprises. Last year in October, the Competition Commission of India sent show-cause notices to 17 automakers.
According to the vehicle companies, their aim was to provide genuine products to their customers. Maruti Suzuki, Mahindra and Tata Motors do supply their spare parts in the open market. According to sources, most of the automobile manufacturers are selling their spare parts at 30 percent higher rate through their own dealerships. The warranty is not expected to get void if a part is replaced by a company-manufactured spare part purchased in the open market. According to the Automotive Component Manufacturers Associations 2011 data, the service and spare parts industry is estimated at Rs. 27,000 crores and the passenger car segment alone stands at Rs. 6700 crores.
Source – The Hindu Business Line