Background
Keeping up with its reputation of imposing hefty penalties, on
August 25, 2014, the Competition Commission of India
("CCI or Commission") in its first
order1 on vertical agreements have found 14 automobile
companies2 ("OEMs") guilty of
anti-competitive conduct and imposed a staggering penalty of INR
25.4464 billion (US$ 424 million approx.).3
This is the largest penalty imposed by the Commission in the year
2014. Under the Competition Act ("Act"),
CCI has been authorised to impose fines on entities engaging in
price manipulation, cartel formation or misuse of their dominance,
which can go as high as 10% of their turnover or three times their
annual profits.
However, the moot question is about the impact of the order. In
the absence of governing regulations and a specific regulator in
the auto manufacturing and after sales service/repair sector, the
implementation of CCI's order is a challenge. On penalties
specifically, the precedents largely suggest
