CCP imposed Fine on automakers
 April 15, 2015
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ISLAMABAD: The Competition Commission of Pakistan (CCP) on Tuesday slapped Rs140 million penalty on Pakistan Automobile Manufacturers Authorised Dealers Association (Pamada) for cartelisation and price fixing.

 

The penalty has been imposed on three relevant markets of body repairs and paint jobs, genuine automobile spare parts, and trained and experienced sales and technical staff.

The penalty has been imposed on three relevant markets of body repairs and paint jobs, genuine automobile spare parts, and trained and experienced sales and technical staff.

The order was issued by a bench comprising Chairperson CCP Vadiyya Khalil and three members including Dr. Shahzad Ansar, Mueen Batlay, and Ikram Ul Haque Qureshi.

The decision was made after an inquiry was conducted by the CCP in suspected cartelisation by Pamada and its members in the automobile sales and after sales markets.

The order passed by the CCP said that Pamada was guilty of collusive price-fixing in the markets for automobile body repair and paint jobs, and genuine automobile spare parts, as well as restricting competition in the market for trained and experienced technical and sales staff in the automobile sector.

All these charges were in violation of Section 4 of the Competition Act that prohibits decisions by associations which prevent, restrict or reduce competition.

“It was found that Pamada had taken decisions to fix the rates for automobile body repairs and paint jobs, which were circulated by Pamada to all its members for implementation,” the CCP orders said.

After the initial inquiry the CCP observed, “It is not the fact of a price increase that poses a competitive concern, but rather the collective determination and fixation of prices and that commercial decision making by an association on behalf of its members remains prohibited.”

The CCP fined Pamada Rs100m for this violation.

The CCP also found Pamada guilty of issuing a circular to a group of its members relating to one automobile manufacturer, prohibiting them from giving a discount on spare parts to consumers.

Prohibiting discounts falls within the umbrella of price fixing, and CCP fined Pamada Rs25m for this violation.

The third charge is that Pamada imposed a policy on its members to seek no-objection-certificate (NOC) from previous employer before hiring an employee of a fellow automobile dealer.

This way, the movement of experienced and trained staff between automobile dealers has been curtailed by Pamada and the CCP fined Rs15m for restricting competition in the relevant market.

The Commission has also warned Pamada and its members to refrain from cartelisation and collusive behaviour in future.

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