September 9, 2014
Non-life insurance companies in India have welcomed action by the Competition Commission of India (CCI) to impose a heavy fine on 14 car makers indulging in restrictive practices which cost the insurers and vehicle owners heavily.
Last month, CCI levied a penalty of INR25.45 billion (US$422 million) on 14 car manufacturers for violating the competition law. It found that these car makers pursued restrictive practices that prevent independent repairers coming into the market. It also directed the car companies to put in place an effective system to make the spare parts and diagnostic tools easily available through an efficient network.
“If more independent repairers come into the market and the component makers are able to sell to them at more competitive prices, then it is good for the vehicle owners as well as the general insurers,” Mr SS Gopalarathnam, managing director of Cholamandalam MS General Insurance, told the Indo-Asian News Service.
The car makers have also been directed to publish information regarding vehicle spare parts, retail prices, arrangements for availability over the counter, and details of matching quality alternatives, maintenance costs, provisions regarding warranty and any such other information which help consumer choice and facilitate fair competition in the market.
Separately, insurance companies complain that vehicles in India are designed in such a way that the car owner is forced to change the entire assembly than a small component, whenever there is a fault with the car.
Overseas the same companies follow the concept of “child parts”, that is, replacing the damaged or defective part and not the entire assembly whereas in India, many companies do not do so, according to insurance industry executives. Non-life insurers say that car makers have to take this into account while designing their vehicles, a measure which will also be environment friendly.