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Driving Home Need to Break After-Sales Noose

Published: 01st September 2014 06:00 AM  |   Last Updated: 31st August 2014 10:53 PM   |  A+A-

There has been a major development which would bring cheers to car owners in the country. The Competition Commission of India has not only pulled up car manufacturers for their restrictive and monopolistic trade practices that have been inflicting enormous repair and service costs on consumers but also imposed a heavy fine of `2,545 crore on them. As many has 14 companies including Tata Motors, Maruti Suzuki India Limited, Mahindra and Mahindra along with foreign car makers BMW, Mercedes, Honda, Toyota, etc., have invited the penalty for denying access of spare parts and diagnostic tools to independent repairers or mechanics in the open market.

The verdict is a landmark as it will redefine the way the business of cars is being run in India. Car users for long have been completely at the mercy of manufacturers for even minor repairs. Authorised dealers are prohibited from selling the spares and tools over the counter. Some have gone to the extent of terminating warranties if their car is handled by an independent repairer. Resultantly, car owners have no option but to approach authorised service centres. Customers are forced to pay 30 to 50 per cent higher repair and service charges at the authorised centres as compared to local garages while commonly used spares are charged double to 50 times more.

While the ruling will benefit the car owners—estimated to be over two crore—it is also set to bring focus on such practices adopted by companies across other sectors like white goods. The commission has opined that both in mature and developing competition law regimes, refusal of access to spare parts and tools to repair sophisticated consumer durable goods is frowned upon as it restricts consumer choice. The after-sales service monopolisation by companies for raking high profits is anti-competitive conduct and violates the Competition Act, 2002. The order should lay the course to rein in other sectors, too.

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