The Commission observed that in deciding the remedies its primary objective is to correct the distortions in the aftermarket, to provide corrective measures to make the market more competitive, to eradicate practices having foreclosure effects and to put an end to the present anti-competitive conduct of the parties
The present information was filed alleging anti-competitive practices on the part of vehicle manufacturers and their authorized dealers (OPs) whereby the genuine spare parts of automobiles are not made freely available in the open market. It was also alleged, that even the technological information, diagnostic tools and software programs required to maintain, service and repair the technologically advanced automobiles manufactured by each of the OPs were not freely available to the independent repair workshops. The repair, maintenance and servicing of such automobiles could only be carried out at the workshops or service stations of the authorized dealers of vehicle manufacturers.
The OPs were held to be in violation of the provisions of both Sections 3 & 4 of the Act. It was further noted that cars are an intrinsic part of life and living in today’s world, and the owners have to take care of their maintenance over a long period of time with significant financial implication. As such, anti-competitive conduct of the opposite parties impacts a very large number of consumers in the country estimated to be around 2 crore. The anti-competitive conduct of the opposite parties have restricted the expansion of spare parts and independent repairers segment of the economy to its full potential, at the cost of the consumers, service providers and dealers. It was further observed that some OPs have made consumer-friendly commitments in other jurisdictions like Europe but have failed to adopt similar practices in India which would have gone a long way in significantly diluting their present anti-competitive conduct which makes their conduct even more deplorable.
The Commission observed that in deciding the remedies its primary objective is to correct the distortions in the aftermarket, to provide corrective measures to make the market more competitive, to eradicate practices having foreclosure effects and to put an end to the present anti-competitive conduct of the parties. The aim of the Commission is to provide more freedom to Original Equipment Suppliers (OESs) in sale of spare parts, and more choice to consumers and independent repairers. The Commission considers it necessary to:
(i) enable the consumers to have access to spare parts and also be free to choose between independent repairers and authorized dealers; and
(ii) enable the independent repairers participate in the aftermarket and provide services in a competitive manner and to have access to essential inputs such as spare parts and other technical information for this purpose, as part of a more competitive eco-system which is equally fair to the OPs and their authorized network also.
The Commission accordingly directed the parties as under:
• To immediately cease and desist from indulging in conduct found to be in contravention of the provisions of the Act and to put in place an effective system to make the spare parts and diagnostic tools easily available through an efficient network.
• OPs to allow OESs to sell spare parts in the open market without any restriction, including on prices accordingly allowing OESs to sell the spare parts under their own brand name, if they so wish.
• Where the OPs hold intellectual property rights on some parts, they may charge royalty/fees through contracts carefully drafted to ensure that they are not in violation of the Competition Act, 2002 and also they will put no restrictions or impediments on the operation of independent repairers/garages.
• OPs may develop and operate appropriate systems for training of independent repairer/garages, and also facilitate easy availability of diagnostic tools and appropriate arrangements may also be considered for providing technical support and training certificates on payment basis.
• OPs may also work for standardization of an increasing number of parts in such a manner that they can be used across different brands, like tyres, batteries etc. at present, which would result in reduction of prices and also give more choice to consumers as well as repairers/service providers.
• OPs not to impose a blanket condition that warranties would be cancelled if the consumer avails of services of any independent repairer. While necessary safeguards may be put in place from safety and liability point of view, OPs may cancel the warranty only to the extent that damage has been caused because of faulty repair work outside their authorized network and circumstances clearly justify such action.
• OPs to make available in public domain, and also host on their websites, information regarding the spare parts, their MRPs, arrangements for availability over the counter, and details of matching quality alternatives, maintenance costs, provisions regarding warranty including those mentioned above, and any such other information which may be relevant for full exercise of consumer choice and facilitate fair competition in the market.
[[Shamsher Kataria vs. Honda Siel Cars India Ltd. & Ors.]