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The Competition Council fines AS „KIA Auto”



On 7 August, the Competition Council (CC) of Latvia took a decision to fine AS „KIA Auto” for restricting car owners to perform repairs and maintenance not covered by warranty at independent services and to install spare parts of other manufacturers than KIA for a period more than 10 years. A fine was imposed on AS „KIA Auto” in the amount of EUR 134 514,43 jointly and severally with its parent undertaking AS „Tallinna Kaubamaja”.

Furthermore, AS  „KIA Auto” was imposed with legal obligations: a) to eliminate infringement, and b) to inform owners of KIA motor vehicles on their rights to perform maintenance and car repairs not covered by warranty to independent services without losing warranty of the car. In addition, without losing warranty it is possible to install not only KIA genuine spare parts, but also analogue parts in an adequate quality.

Estonian undertaking AS „KIA Auto” is the only importer of KIA brand cars in Latvia authorised by manufacturer. AS „KIA Auto” selects and approves authorised representatives to vend KIA vehicles and to perform warranty repair paid by manufacturer or importer.

The investigation on the matter was initiated after a claim by a car owner to whom after a performed maintenance at the independent service a warranty repair was refused. During the investigation, the CC revealed that AS „KIA Auto” within maintenance and service book of the car during different periods of time had included warranty conditions, which anticipates that warranty maintains only in case maintenances and repairs are performed by authorised services and installed spare parts are KIA genuine. Additionally, each data of the maintenance must be certified with a signature of authorised service’s representative only, namely, it cannot be executed by independent services.

Furthermore, within the maintenance and service book it was stated that change of spare parts, installed by independent services, shall not be performed free from charge. Competition restrictive conditions were published on websites of AS “KIA Auto” as well as authorised representatives.

By its actions AS „KIA Auto” restricted car owners to choose services by independent services and spare parts by other manufacturers than KIA. Thus, the undertaking caused direct harm to consumers, reducing their choice opportunity and prohibiting the use of services of comparable quality and may be cheaper or advantageous by any other means.

At the same time, the damage was caused to independent services and the competition within the market as a whole. This way, while decreasing competition, decreases motivation of authorised services to offer lower prices of their services and more favourable conditions to consumers.

Rights of customers to perform car repair and maintenance not covered by warranty at independent services on their own funds is explained also by the European Commission.

In order to operate within KIA network, authorised services, which carried out warranty repairs, were directly dependent from AS „KIA Auto”. Therefore, the fine was not imposed to authorised services for a participation in the infringement.

According to the decision of the CC, AS „KIA Auto” was imposed with a fine jointly and severally with its parental undertaking AS „Tallinna Kaubamaja”, which could have an impact on the infringer’s actions and, in accordance with the case-law of the European Union, bears responsibility for AS „KIA Auto”. Imposing fine jointly and severally with parental undertakings of infringers, competition authorities in the European Union seeks to ensure greater prevention of competition infringements and more effective execution of the fine in case of restructuring of undertakings.