Business Standard

CCI orders probe against Tata Motors

- PRESS TRUST OF INDIA

The Competitio­n Commission of India (CCI) has ordered a detailed probe against Tata Motors for alleged abuse of its dominant position with respect to dealership agreements. The order has come on two complaints filed against Tata Motors, Tata Capital Financial Services and Tata Motors Finance (opposite parties).

The CCI observed that the complainan­ts are primarily aggrieved that Tata Motors has imposed unfair terms and conditions in the dealership agreement for commercial vehicles in abuse of its dominant position in contravent­ion of the provisions of Section 4 of the Competitio­n Act. Section 4 pertains to abuse of dominant position.

To assess the two complaints, the watchdog prima-facie delineated the “market for manufactur­e and sale of commercial vehicles in India” as the relevant one. In a 45-page order dated May 4, the regulator said it is of the view that prima facie a case of contravent­ion of the provisions of Section 3(4) and Section 4 of the Competitio­n Act is made out against Tata Motors and that the “matter requires to be investigat­ed”.

The watchdog has directed its Director General (DG), the investigat­ion arm, to probe the matter in detail.

Cases where there is prima-facie evidence of violation of competitio­n norms are referred to the DG for a detailed investigat­ion.

Before examining the issues on merit, the regulator said it is constraine­d to note that a fusillade of challenge has been laid to the various clauses of the agreements and the conduct emanating there from or antecedent thereto by the informants in an omnibus manner.

“In this backdrop, having considered the dominance of Tata Motors in the relevant market... the Commission deems it appropriat­e to confine the investigat­ion with respect to the clauses of the dealership agreements and conduct in respect of commercial vehicles... executed between the dealers and Tata Motors,” it said.

Further, the CCI made it clear that it was not examining the conduct of Tata Capital and Tata Motors Finance, or the agreements executed by them with the dealers for channel financing, which do not appear to command any significan­t market power in verticals they operate in.

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