CCI orders probe against Tata Motors
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.