Here’s Why CCI Ordered Probe Against Tata Motors

The automotive manufacturer has been alleged of abusing its dominant market position.

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The Competition Commission of India (CCI) has ordered a detailed investigation against Tata Motors. The probe has been ordered due to Tata Motors allegedly abusing its dominant position with respect to dealership agreements. The order has come after complaints were filed against Tata Motors, Tata Capital Financial Services Ltd and Tata Motors Finance Ltd (opposite parties).

The Complaints

Two former Tata dealers alleged that the company dictated terms around the quantity and type of vehicles that they should stock. The complainants have also said that Tata’s dealership agreement restricts the dealer from starting, acquiring, or indulging in any new business (of product of services) even it is not related to the automobile industry.

The lawyer representing a Tata Motors’ dealer from Uttar Pradesh alleged that the firm’s terms for the dealership encompassed both manufacturing and financing of commercial vehicles via NBFCs, Tata Capital Financial Services and Tata Motors Finance, wrote Livemint. The lawyer also alleged that the company had breached provisions, prohibiting anti-competitive practices. The proprietor of an authorised dealer in Nashik also alleged that Tata Motors had violated competition law provisions.

What’s Next?

CCI has directed its investigation arm, Director General (DG), to investigate the matter in detail. The DG must conclude the probe and submit the report within 60 days. Meanwhile, Tata Motors told Reuters that it was reviewing the competition watchdog’s order and will consult its legal counsels. The company added that CCI’s findings into the allegations were not final.

Zooming Out

So, what will happen if CCI finds out that Tata Motors was actually abusing its dominant position with respect to dealership agreements? The competition regulator can issue an interim order to restrain the company from carrying out anti-competitive acts. Apart from that, CCI can also impose a penalty on the company. However, we have to wait for DG’s report in the matter, as only it can tell what has happened, and it will also decide what CCI’s next course of action will be.

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