Maruti Suzuki is among the four major carmakers who supply their spare parts in the open market via their own channels. As per a fresh update, the auto major has been found guilty of using anti- competitive methods by restricting supply of its spare parts which, consequently, is making them costlier.
Competition Commission, the Investigative arm of India’s competition watchdog has caught Maruti on making anti-competitive agreements with its suppliers. Sadly, the auto maker has misused its dominant position and has violated sections 3(4) and 4 of the competition law.
Consequently, it may face a penalty of up-to 3,400 crores. The company may also be charged with a fine up to 10% of its annual turnover. Reports further say that the auto giant will have to change the way of selling its spare parts all over the country. Final hearing of this case will take place on 25th April.
On the other hand, Maruti’s spokesperson denied on speaking on the matter and added “We would not comment as the matter is sub-judice“. Following the anti-competitive practice, Maruti was said to make some exclusive contracts with original equipment suppliers which prohibit them to supply their parts to anyone else.
The investigative branch has found 16 other carmakers guilty of breaching the competitive act by restricting supply of their spare parts. Maruti Suzuki has controlled the availability of ‘diagnostic tools‘ which are required to trace faults in its cars. These tools would only be available to their service stations which bounds the customer to get its four wheelers repaired only at authorized Maruti service stations, in turn making a customer pay more.
The final penalty will be decided by CCI and it is being speculated that Maruti would be charged with a lighter penalty in comparison to other car manufacturers. The contribution of spare parts to Maruti Suzuki’s revenue is 15-20 %.
Maruti is regarded for its widespread service, availability of spare parts and their relatively cheaper costs. However, of late, it has become apparent that maintaining a Maruti is becoming costlier by the day as it has also raised prices of its important parts.
Source: Economic Times