The Competition Commission of Indian penalized Hyundai Motors India of Rs 87 crore ($13.6 million) for unfair business practice that restricted the maximum discount a dealer could offer for passenger cars.
The Commission in its order alleged that Hyundai Motor India Limited (HMIL) flouted competitive practices by putting a ceiling on maximum permissible discount level and mandating the use of recommended lubricants and oils.
The auto maker in a Wednesday late night statement said it would challenge the ruling. "We are studying the order in detail and will take necessary course of action to challenge the order at appropriate level to protect the interest of our customers and channel partners by abiding (with) all the laws of land," it added.
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In a 44-page order, the regulator said: "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".
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.
According to the watchdog, the arrangements perpetuated by the company caused hindrance in the distribution of goods and provision of services in relation to new cars.
It also resulted in creation of "barriers" to the new entrants, the order said on complaints filed by Delhi-based Fx Enterprise Solutions India and Kerala-based St. Antony's Cars.
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Further, the regulator noted the practice followed by the company to get the lubricants supplied by IOCL and Shell only and at pre-fixed price resulting in price discrimination is not accruing any benefit to the dealers as well as the consumers of the cars.
"The practice and arrangements followed by the OP also result into creation of barriers to the new entrants in the market with regard to the supply and marketing of lubricants for use in the cars manufactured by the OP," CCI said.
As per the regulator, that Hyundai Motor India mandates its dealers to use particular oil and lubricants and penalises its dealers where non-recommended oils are used, amounts to 'tie-in arrangement' in contravention of provisions of the Competition Act.
Following two separate complaints, the regulator had ordered a detailed by its investigation arm DG (Director General) in 2014.
