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CCI orders probe against Tata Motors

(Photo: Bloomberg)Premium
(Photo: Bloomberg)

A lawyer for an auto dealer in UP which had a dealership contract with Tata Motors alleged that the latter’s business model encompassed both manufacturing and financing of commercial vehicles through non-banking finance companies such as Tata Capital Financial Services and Tata Motors Finance Ltd

New Delhi: The Competition Commission of India (CCI) has ordered a probe into allegations of anti-competitive practices against Tata Motors Ltd on behalf of two auto dealers.

The lawyer representing a Tata Motors’ dealer from Uttar Pradesh alleged that the company’s terms for the dealership encompassed both manufacturing and financing of commercial vehicles through NBFCs, Tata Capital Financial Services Ltd and Tata Motors Finance Ltd, which was “abusive, anti-competitive and detrimental to the financial health of authorised dealers". She also alleged that Tata Motors had breached provisions, prohibiting anti-competitive practices.

The proprietor of an authorized dealer in Nashik also alleged that the vehicle manufacturer had breached competition law provisions.

A spokesperson for Tata Motors said in an emailed statement that the company was looking into the order. “We have learnt that the CCI has passed an order directing the director general, CCI to initiate investigation against Tata Motors Limited’s (TML) commercial vehicles business in India. We understand that the CCI has passed a prima facie order and has not made any final or binding observations with regard to the allegations levelled against TML. TML is currently reviewing the copy of the order available in the public domain and will consult its legal counsels to take necessary steps," the spokesperson said.

The CCI said in its order that the defence offered by Tata Motors needs a detailed investigation to ascertain the effectiveness, veracity and validation of its plea. The regulator said it was of the view that prima facie a case of contravention of the provisions of the Competition Act, dealing with agreement among enterprises at different stages of production and abuse of dominance, was made out against the company and the director general must complete the investigation and submit his report within 60 days. However, the CCI said its order was not the final expression of opinion on the merits of the case.

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