Six auto stocks fell by 0.19% to 2.51% at 13:11 IST on BSE after the Competition Commission of India imposed penalty on 14 car companies after it found them to be in contravention of the provisions of the Competition Act, 2002.
Hindustan Motors (down 2.51%), Maruti Suzuki India (down 1.19%), Mahindra & Mahindra (down 0.6%), Force Motors (down 0.47%), Eicher Motors (down 0.38%) and Hero MotoCorp (down 0.19%) declined.
TVS Motor Company (up 4.68%), Ashok Leyland (up 0.84%), Bajaj Auto (up 0.28%) and Tata Motors (up 0.26%) edged higher.
The BSE Auto index was down 0.16% at 17,079.11. It outperformed the Sensex, which was down 0.17% at 26,390.93.
The BSE Auto index had outperformed the market over the past one month till 25 August 2014, rising 9.59% compared with 1.19% rise in the Sensex. The index had also outperformed the market in past one quarter, advancing 17.32% as against Sensex's 7.06% rise.
The Competition Commission of India (CCI) imposed penalty on 14 car companies including Maruti Suzuki India, Mahindra & Mahindra (M&M) and Tata Motors after it found them to be in contravention of the provisions of the Competition Act, 2002 (the Act).
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The CCI has levied a total penalty of Rs 2544.64 crore on 14 car makers at the rate of 2% of the average turnover. A penalty of Rs 1346.46 crore has been slapped on Tata Motors. The penalty for Maruti is Rs 471.14 crore and it is Rs 292.25 crore on M&M. The penalty is to be deposited within 60 days of receipt of the order.
The CCI said it found that the conduct of the car companies was in violation of the provisions of section 3(4) of the Competition Act, 2002 with respect to its agreements with local Original Equipment Suppliers (OESs) and agreements with authorized dealers whereby it imposed absolute restrictive covenants and completely foreclosed the aftermarket for supply of spare parts and other diagnostic tools. Further the Commission found that the these 14 car companies, who were found to be dominance in the aftermarkets for their respective brands, abused their dominant position under section 4 of the Act and affected around 2 crore car consumers. The 14 car companies were found to be indulging in practices resulting in denial of market access to independent repairers as the latter were not provided access to branded spare parts and diagnostic tools which hampered their ability to provide services in the aftermarket for repair and maintenance of cars. Having a monopolistic control over the spare parts and diagnostic tools of their respective brands, the car companies charged arbitrary and high prices for their spare parts. The car companies were also found to be using their dominant position in the market for spare parts and diagnostic tools to protect their market for repair services, thereby distorting fair competition, the CCI said.
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