CCI issues 100 notices to auto parts firms to investigate global cartels

The Competition Commission of India (CCI) has issued more than 100 notices to auto parts companies to investigate global cartels. The notices have been issued over a period of two years and a probe into these companies is on, according to sources. 

However, the investigations could take time because of the number of companies involved, said lawyers involved in some of these cases. 

Some of the companies have also filed leniency applications in various jurisdictions, including Japan. In India as well, the companies have filed leniency applications with the competition watchdog. 

The US Department of Justice, Japanese Fair Trade Commission, Canadian Competition Bureau and European Union Directorate General for Competition are some of the jurisdictions where auto parts makers are being investigated for anti-competitive practices.

Leniency applications are voluntarily filed by parties seeking a lower penalty. The Competition Act of 2002 confers on the CCI powers to impose a lesser penalty if a member of a cartel makes a full disclosure about violations and cooperates with subsequent investigations. 

In line with the Act, the Competition Commission of India (Lesser Penalty) Regulations were framed and enforced in 2009. The ‘lesser penalty regulations’ offer penalty reduction of up to 100 per cent, with a staggered reduction of up to 75 per cent, 50 per cent and so forth, depending on the timing of submission of the leniency application.

The CCI is suo motu taking cognisance of cartels in sectors that affect consumers directly. After a nationwide investigation of cement companies, the watchdog is now probing regional cartels. At least six cement makers are currently under investigation in the north-east.

This is not the first time that auto parts companies are under the scanner. In 2014, the watchdog imposed a penalty of Rs25.54 billion ($420 million) on 14 car manufacturers or original equipment manufacturers (OEMs) for creating an anti-competitive environment through agreements for spare parts and after-sales services. 

The CCI had said OEMs were creating entry barriers in the secondary market for spare parts and diagnostic tools through restrictive agreements and trade practices. High margins (up to 4,817 per cent mark-up) were exploitative and a manifestation of the anti-competitive structure of the market, the watchdog had said. 

In 2013, 17 carmakers were found guilty of selling spare parts at exorbitant prices and indulging in restrictive practices.