Saturday, 6 April 2013

Maruti Suzuki faces a fine of INR 3,400 Crore

Maruti Suzuki could face a fine of INR 3,400 Crore as the India's investigation arm has found it guilty of misusing its dominance in the Indian market by restricting the supplies of spares and charging a steep mark up.

India's largest car manufacturer could face a maximum fine of up to Rs 3,400 crore if the Competition Commission upholds the findings of the director-general (investigations), who has held Maruti guilty of violating sections 3(4) and 4 of the competition law, an official aware of the developments told ET. The final hearing of the matter is on April 25.

A person from Maruti Suzuki declined to comment citing the market is sub-judice. In case the ruling comes into place and Maruti Suzuki is found guilty, the carmaker apart from the fine will have to change the way it deals with auto component players.

As many as 16 other carmakers have been found guilty of anti-competitive practice in the way they control their spare parts market. The report of DG (investigations) has said the exclusive contracts Maruti Suzuki
 had with the original equipment suppliers forbids them from supplying these spare parts to anyone else, clearly violating Section 3(4) of the Competition Act.

The Section says, "Any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including; tie-in arrangement, exclusive supply agreement, exclusive distribution agreement-...shall be an agreement in contravention of sub-section 1 if such agreement causes or is likely to cause an appreciable adverse effect on competition in India".

The CCI (Competition commission of India) will decide upon the final penalty and a final verdict is yet to come out.


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