Honda, Hyundai, Volkswagen Come Under CCI & Income Tax Scanner


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Akash

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International car makers, Honda, Hyundai and Volkswagen, have come under the scanner of the competition watchdog CCI for abusing their dominant market position by selling auto parts to customers at high prices.

The Competition Commission of India (CCI) has asked its Director General (Investigations) to probe a consumer's complaint against the car makers, who allegedly abuse their dominant position by making available spare parts only through their authorised dealers, who in turn sell them on high rates.

"This practice by the international car makers does not give the consumer a fair price advantage as he has no choice but to buy the spare parts from authorised dealers. Prima facie it makes a case and the DG has been ordered to probe the matter further," an official told PTI.

The DG has been asked to submit his report on the findings within 45 days.

While Hyundai Motors denied having received any communication from the CCI, emails sent to Volkswagen and Honda remained unanswered.

Normally, auto spare parts from Indian car makers are available with any retailer, not necessarily authorised, but the case is not the same with international car makers.

Consumers are stuck after having bought a car from the international car makers, according to the complainant, who filed the case under section 4 of the Competition Act, 2002.

The Commission, which became fully functional in 2009, with the appointment of a chairman and six members, at present has the power to check anti-competitive agreements and abuse of dominant position, drawn from Sections 3 and 4 of the Competition Act, 2002.

Beginning June, 2011, the Commission will also have the powers to check high-voltage mergers and acquisitions.
Source: Economic Times
 
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Re: Honda, Hyundai, Volkswagen come under CCI scanner

Great news. But why only these 3 Cos.? Why not Skoda, Ford, Nissan etc.? Anyways, at least something has started in this regard.
 
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Re: Honda, Hyundai, Volkswagen come under CCI scanner

Good news , they should also try to regulate the prices at the A.S.S , they charge exorbitant amounts for some spares and accessories!


I think this is where TATA scores high!
 
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Malpractices By Automobile Manufacturers

‘Car companies restricting spares sales’

A section of car makers has allegedly been found engaging in anti-competitive practices by withholding sales of spare parts in the free market, resulting in controlled and hefty prices at dealerships and service centres authorized by them.

The findings are based on a probe by the investigative arm of fair-play watchdog Competition Commission of India (CCI).

In its report to the regulatory agency, the director general (investigation) has accused the auto players of controlling and restricting supplies only to their network, sources told TOI. The probe, spread over a year, studied the after-market supply chain and spoke to various players, including car companies, component manufacturers and open market players.


Companies, including Volkswagen, Honda, Ford and General Motors, said they would study the report before commenting on it, while Toyota stuck with the stand of exclusivity.

"Clearly it is not anti-competitive. Only accredited people should be allowed to fix parts as it is in the interest of the customers," said Toyota Kirloskar deputy MD Shekar Viswanathan. "It is inherently unsafe for non-trained people to fix parts." A spokesperson for GM India said the company cannot comment until it saw the fine print, while Honda did not answer queries sent on Tuesday evening. A spokesperson for Ford India said, "We will need time to review the development and understand the report before we can comment."

CCI had asked its investigative arm to probe the matter in March 2011 after a car buyer accused companies of abusing their dominant position by making spare parts available only through their authorized dealers, who in turn were allegedly sold them at high rates.

The practice is more prevalent with several of the newer car entrants, while the established ones such as Maruti Suzuki, Mahindra & Mahindra and Tata Motors make spares available in the open market. CCI will now look
into the findings of the DG's probe before deciding if there is a case of anti-competitive behaviour. It will also hear car companies and other parties before an order is issued in a few months.

A ruling against car companies will force several of them to sell components in the open market and restrict sales to exclusive dealerships. It will be a boon for consumers as car majors will not be able to scrap a vehicle's warranty if its owner gets a faulty part replaced in the open market.

The problem has been plaguing car owners for a long time. They are forced to buy parts only from exclusive dealers of companies at the rates they ask for, many-a-times waiting for several days if the component is out of stock. The problem is acute for those living in smaller cities where many of the international players do not have a dealership. The market size of service and spare parts industry is estimated at Rs 15,000 crore annually.
‘Car companies restricting spares sales’ - The Times of India
 
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CCI Probes Auto Companies’ ‘Monopolistic’ Practices

The Competition Commission of India (CCI) has launched investigations into the current trend of automobile companies not allowing their dealers to diversify with other brands. According to sources in the CCI, a report on the matter has been submitted.

The muscle-flexing , not widespread earlier, is now common not only in car companies but also in the truck and bus markets. Industry sources say Maruti dealers are now being discouraged from accepting dealerships of even luxury brands like Mercedes Benz and Audi or commercial vehicle brands like Ashok Leyland's Dost.

A Maruti dealer in the west, reportedly, had to give up a luxury car dealership even after the letter of intent had been issued. Ditto for two Maruti dealers in the north.

When contacted, a Maruti spokesman said in an email: "The MSIL (Maruti Suzuki India ) business association with dealers is principal to principal relationship determined by the dealer agreement. There has been no change in the dealer agreement. Also, there is just one type of dealer agreement which is the same for all dealers."

Sources say other companies like Toyota also do the same though their network is much smaller. Take Anand Wadhwa of Frontier Vehicles , a former Toyota dealer in Jabalpur who was asked to choose between Toyota and Volkswagen when he looked to expand. "My family was a Toyota dealer for nearly eightnine years. I had applied for a Toyota dealership in Delhi as well in 2005. We gave up the Jabalpur Toyota dealership because we were asked to choose between Toyota and VW and we chose VW," said Wadhwa.

Toyota Kirloskar joint MD Sandeep Singh, for his part, defended his company saying Toyota has "enough checks and balances not to do something like this. We have Hyundai and Ford dealers also in our network and we look at a dealer's managerial and financial capacity before taking a call. If expansion with another brand means it will hamper our business, we go across and talk to the dealer," he said.

In the case of Frontier Vehicles, he said, "Anand Wadhwa got married and wanted to move to Delhi with a Toyota dealership which we could not give him. So he took Ford and VW instead and we appointed another dealer for Jabalpur." Wadhwa countered that with, "I got married in 2002, asked for a Delhi expansion in 2005 and gave up the Toyota dealership in 2009 — so the three are not related."
CCI probes auto companies’ ‘monopolistic’ practices - The Economic Times
 
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Re: CCI Probes Auto Companies’ ‘Monopolistic’ Practices

CCI probed Car companies for restricting spare parts sales. Not sure if anything came out of it and whether at all CCI has any teeth.
 
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Re: CCI Probes Auto Companies’ ‘Monopolistic’ Practices

There is a separate thread existing on this matter, even i am awaiting for the results on this enquiry.
 
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Re: CCI Probes Auto Companies’ ‘Monopolistic’ Practices

CCI serves notices to carmakers for seling spare parts to consumers at higher prices

The Competition Commission has sent notices to 17 carmakers on an alleged anti-competitive practice of selling spare parts at higher prices to consumers and it is likely to schedule the hearings for next month to seek explanations.

The Commission has sent out show-cause notices to 17 carmakers, many of them foreign entities, regarding allegations of providing spare parts to customers at higher prices, which is against healthy competition, said a source close to the development.

The Director General of the Commission has submitted the investigation report on the matter, following which the notices have been served, the source said, adding that the hearings are likely to take place next month.

However, names were not disclosed. The Competition Commission of India (CCI) would take a final decision on the alleged anti-competitive practice after taking into account the explanations of the carmakers as well as the report of the Director General. The DG acts as investigating arms of the fair-trade regulator.

CCI is pursuing the case under Section 4 of the Competition Act that relates to abuse of dominant position by enterprises.

The probe was conducted after a complaint was filed with the CCI last year against certain carmakers for allegedly abusing their dominant market position by selling spare auto parts to customers at high prices.

Going by the complaint, the carmakers were making available spare parts only through their authorised dealers, who in turn sold them on high rates.

In August, the government had said the CCI is investigating allegations of anti-competitive practices by a section of carmakers in the country.

In a written reply to the Lok Sabha, Minister of State for Corporate Affairs RPN Singh had said CCI had received certain information against some carmakers.

"The CCI, which is a quasi-judicial body, is getting the matter investigated for appropriate action in the matter as per the provisions of the Competition Act, 2002," the Minister had said.

Generally, CCI refers complaints related to anti-competitive practices for further investigation by its DG, before taking any action.

CCI serves notices to carmakers for seling spare parts to consumers at higher prices - The Economic Times
 
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Exorbitant charges on Spares? Notice to Automobile companies.

Even as the Competition Commission of India (CCI) has shot off show cause notices to 17 leading automobile manufacturers on an alleged anti-competitive practice of selling spare parts at higher prices to consumers, sources indicated foreign car makers are more susceptible to being held accountable on the said charges than homegrown auto majors.

A senior industry executive in know of the development said, “Homegrown companies such as Maruti Suzuki, Tata Motors and Mahindra & Mahindra sell spares in open market except for a few models. Hyundai too has started making parts available in retail. It is mostly the foreign companies who have been insisting that their customers go to authorized dealers for repairs which lead to an increase in service and maintenance costs of vehicles.”

The CCI has scheduled hearings next month to seek explanations regarding the practice being followed by certain section of automobile manufacturers operating in India. “Nearly 50% of car owners move away from authorized dealerships due to higher servicing costs. Servicing expenses are higher by around 30% at company-operated service outlets than in independent and unorganized workshops. As margins get squeezed due to discounts in sales of new vehicles, dealers resort to increasing servicing costs to make up”, alleged the executive who attended the meeting in which 200 people were called to provide evidence by the Commission.

At present, independent service chains have around one% share in the Rs 25,000 crore after-market service and spares industry. The aftermarket service industry includes over Rs 6,000 crore of body shop and Rs 15,000 crore service and spares work. It is growing at a compound annual growth rate of over 20%.

Independent workshops account for a third of the servicing market In UK, France and Germany. The European Commission has passed a regulation ‘Right to Repair’ making it mandatory for all OEMs to make spares available in the open market, which has brought down servicing costs for consumers.

The Competition Commission of India (CCI) would take a final decision on the alleged anti-competitive practice after taking into account the explanations of the carmakers as well as the report of the Director General of the Commission. The DG acts as investigating arms of the fair-trade regulator.

The Commission is pursuing the case under Section 4 of the Competition Act that relates to abuse of dominant position by enterprises. The probe was conducted after a complaint was filed with the CCI last year against certain carmakers for allegedly abusing their dominant market position by selling spare auto parts to customers at high prices.
As per the complaint, the carmakers were accused of abusing their dominant position by making available spare parts only through their authorised dealers, who in turn sell them on high rates.
CCI has the mandate to eliminate practices that have adverse impact on competition and protect the interests of consumers. Generally, CCI refers the complaints related to anti-competitive practices for further investigation by its DG, before taking any action.

Source: CCI notice to auto companies likely to impact foreign players
 
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GM,MS,Honda,Ford,Daimler under I-T scanner

GM, Suzuki, Honda, Ford, Daimler under I-T lens for allegedly selling cars at a loss

Tax officials have opened up a new front in their battle to increase revenue collected from companies, targeting manufacturing firms that slash prices below cost in order to sell slow-moving inventory.

Car makers in particular, mostly multinationals, are in the spotlight, several tax officials and industry executives said.

Authorities are investigating whether the local units of General Motors Co., Suzuki Motor Corp, Honda Motor Co, Ford Motor Co and Daimler's Mercedes-Benz sold cars at a loss, thereby paying lower excise duty.

Excise duty is due on almost all goods manufactured in India and is levied on the assessed value -- usually the price at which the item is sold.

General Motors and Ford said they were cooperating with the tax authorities. Mercedes-Benz and the Indian subsidiaries of Honda and Suzuki declined to comment.

While no tax demand has been made yet against any of the car companies as part of the latest enforcement push, the probe is likely soon to be widened to sectors including makers of consumer goods and computers, four tax officials said.

The crackdown follows a spate of high-profile tax enforcement actions against global companies in India including Royal Dutch Shell Plc, Vodafone Group Plc and Nokia Oyj that has dented corporate sentiment.

India is scrambling to raise revenue to close a budget gap and avoid becoming the first of the so-called "BRIC" big emerging economies to have its credit rating cut to junk.

India's position is based on a Supreme Court ruling last year in favour of the tax office, which sought higher taxes on cars sold by Italy's Fiat more than a decade earlier.

INTERNATIONAL PRACTICE

Tax consultants say India's stance that tax should be levied at the "normal" value even if a manufacturer sells at a loss goes against international practice, under which excise taxes are levied on the transaction value.

Car industry officials worry that it is a potentially costly distraction for an embattled auto sector and will do further damage to the country's image as a place to do business.

"These are things that create a lot of confusion in the minds of manufacturers and we are looked at in a very negative manner because most of these companies are international," said Sugato Sen, deputy director general of the Society of Indian Automobile Manufacturers (SIAM).

Tax department officials, who declined to be identified because they were not authorised to speak to the media about ongoing investigations, said India was being unfairly deprived of revenue when manufacturers sold their goods at a loss.

"Whatever price you want to sell, please sell, but pay the excise duty on the normal price, whether you are into automobile, textile or something else," said a senior tax official. "Why should the department get penalised for that? It's your own choice."

India's stepped-up tax enforcement over the past year has prompted some multinationals to complain about aggressive and unpredictable tax treatment.

The focus on companies possibly selling below cost opens up a new front in the tax battle. Already, India is in numerous tax disputes with global companies over the value of intra-company transactions, known as transfer pricing.

Anglo-Dutch oil major Shell said in February it would challenge a claim its local unit underpriced shares transferred to the parent by $2.8 billion. Shell has said the claim is based on an "incorrect interpretation" of tax rules and "bad in law".

Click the link for the full article: GM, Suzuki, Honda, Ford, Daimler under I-T lens for allegedly selling cars at a loss - The Economic Times
 
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