Hyundai India fined Rs 87cr by CCI for unfair business practices on discounts on cars

Photo Credit: Hyundia India

India CSR News Network

NEW DELHI: India’s Fair trade regulator Competition Commission of India (CCI) on Wednesday, June 14, 2017 imposed a penalty of Rs 87 crore on Hyundai Motor India Limited, a subsidiary of Korean Hyundai Motors for adopting unfair business practices with respect to providing discounts to the costumers on cars sells.

According to the Competition Commission of India (CCI), the carmaker imposed arrangements upon its dealers that resulted in resale price maintenance — a deal not to sell a product below a specified price — in sale of passenger cars manufactured by it.

“Further, HMIL (Hyundai Motor India) was found to have contravened the provisions of Section 3(4)(a) read with Section 3(1) of the Act for mandating its dealers to use recommended lubricants/oils and penalising them for use of non-recommended lubricants and oils,” a CCI statement said.

The final order was passed on Wednesday following information filed by the dealers of HMIL including Fx Enterprise Solutions India and St Antony’s Cars.

It was alleged that the company followed a discount control mechanism whereby dealers were permitted only to provide a maximum permissible discount and not go beyond the recommended range.

Besides, the company has been directed to cease and desist from following any anti-competitive practice. According to Times of India report, a spokesperson for Hyundai India said, “We are really surprised with this order. We are studying the order in detail and will take necessary course of action to challenge the order at an appropriate level to protect the interest of our customers and channel partners by abiding with all laws of the land.”

Among others, CCI said the company contravened competition law through arrangements which resulted into resale price maintenance and by mandating its dealers to use “recommended lubricants/ oils and penalising them for use of non-recommended lubricants and oils”.

Hyundai Motor India Ltd (HMIL) is India’s second largest car manufacturer and the largest passenger car exporter registered the domestic sales of 42,007 units for the month of May 2017.