Hyundai India Fined ₹ 87 Crore; Why..?

It was alleged that Hyundai has a discount control mechanism whereby dealers are permitted only to provide a maximum permissible discount and not beyond the recommended range.

Hyundai India Fined ₹ 87 Crore; Why..?

Competition Commission today imposed a penalty of ₹ 87 crore on Hyundai Motor India for unfair business practices with respect to providing discounts for cars. Besides, the company has been directed to cease and desist from such anti-competitive practices.

  • The penalty amount translates to 0.3% of Hyundai’s average turnover
  • Hyundai penalised dealers for using “non-recommended” lubricants
  • Hyundai has been directed to cease and desist from such practices

In a 44-page order, the regulator said the company’s anti-competitive conduct include putting in place arrangements that resulted in resale price maintenance by way of monitoring of maximum permissible discount level. This was done through discount control and penalty mechanisms for non-compliance of the discount scheme, it added.

 “Such conduct pertains to and emanates out of sale of motor vehicles. Hence, for the purposes of determining the relevant turnover for this infringement, revenue from sale of motor vehicles alone has to be taken into account,” CCI noted.

It was alleged that the company has discount control mechanism whereby dealers are permitted only to provide a maximum permissible discount and not beyond the recommended range. The watchdog has slapped a fine of ₹ 87 crore on the car maker. The penalty amount translates to 0.3 per cent of the company’s average relevant turnover in the last three financial years from 2013-14.

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.”