Automakers to Appeal Fines in India Antitrust Case

MUMBAI – Some of the automakers facing a combined Rs25.5 billion ($420 million) in fines in an Indian antitrust case may ask that payment be delayed while they appeal the penalties.

The Competition Commission of India ruled last month that 14 automakers, from the largest –  Maruti Suzuki and Tata to BMW and Volkswagen, whose sales were the lowest – violated competition law in supplying spare parts and after-sale warranty services.

The companies placed strict restraints on the availability of parts, services and warranties, effectively increasing maintenance costs for consumers, the commission said. Many independent workshops were forced to close as a result of the restrictive practices, it said.

Some of the automakers argue repairs, service and maintenance is not their core business and they are not employing restrictive practices in their main business of making cars.

The manufacturers also may try to justify restraining supplies of parts and components, tools and manuals to the aftermarket by arguing today’s cars are sophisticated machines in which all parts and systems are integrated and use digital technologies, unlike cars of past generations that could be repaired or serviced by any roadside mechanic.

But the validity of those claims would have to be tested in an appeal to the Competition Appellate Tribunal.

The tribunal in 2011 stayed a Rs6.3 billion ($105 million) fine against real-estate developer DLF, but it also recently ruled in a separate case the affected parties should deposit the full amount of their fines before their appeal could be considered.

Each automaker has been fined an amount equal to 2% of its average profit for the 3-year period from 2007 to 2010. Of the Rs25.5 billion in penalties, the largest was levied against Tata, Rs13.5 billion ($222.9 million), and the lowest against Nissan India, Rs1.6 million ($27,000).