Hyundai Fined for Lube Policies

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Hyundai Fined for Lube Policies

Indias competition regulator imposed a penalty of 870 million rupees (U.S. $13.5 million) on South Korean automaker Hyundai Motor Co.s local unit for antitrust practices, including controlling dealers prices and choices of lubricants.

The Competition Commission of India on Wednesday fined Hyundai Motor India Ltd. around 0.3 percent of its average annual revenue for the past three years and ordered it to cease and desist influencing aspects of its dealers business.

After two dealers brought forth contentions in 2014, the commissions director general launched an investigation that found that Hyundai penalized and threatened dealers with termination of contract if they did not purchase engine oil only from two designated vendors: Indian Oil Corp. Ltd. and Shell Oil Co., at pre-fixed prices, according to the June 14 order. This limits the choice of the dealer to choose another engine oil supplier.

Photo: Hyundai Motor Co.

Hyundai argued that it merely recommended preferred motor oil suppliers, which in this case, offered genuine oils specifically made for its vehicles, according to the order. The regulatory body noted that Requiring certain parts to be procured from a specific producer is likely to foreclose alternative channels for spare parts distribution, and said the practice amounted to a tying agreement.

CCI found the practices to be unfair to dealers, consumers and other lube suppliers.

CCI also charged Hyundai with restricting the prices of its cars at dealerships. Such arrangements also included monitoring of the maximum permissible discount levels through a discount control mechanism, the order noted. CCI also found the car manufacturer guilty of tying arrangements in regards to dealers sales of compressed natural gas kits and insurance packages.

Informants in the case were Fx Enterprise Solutions India Ltd. of Delhi and Kollam-registered St. Antonys Cars Pvt. Neither the dealers nor Hyundai Motor India responded to calls and emails for comment.