Madras High Court stays CCI action against Nissan

The court directs CCI not to enforce any penalty till the next hearing

Automobile major Nissan has got interim relief from the Madras High Court, which directed the Competition Commission of India (CCI) not to take any "coercive steps" against the company and not to enforce any penalty till the court's next hearing. The matter is posted for September 15.

Earlier this week, the CCI imposed a combined penalty of over Rs 2,500 crore on 14 car makers for indulging in unfair practices in the spare parts market, the latest in a series of tough enforcement actions by the newest among India's regulators. Tata Motors faces the maximum fine of Rs 1,346 crore, followed by Maruti Suzuki at Rs 471 crore, Mahindra & Mahindra at Rs 292 crore, General Motors at Rs 85 crore and Honda Car India at Rs 78 crore.

The other automobile majors facing the heat are Honda Siel, Volkswagen India, Fiat India, BMW India, Ford India, Hindustan Motors, Mercedes-Benz, Nissan Motors, Skoda Auto India and Toyota Kirloskar.

Hyundai Motor India, the wholly owned subsidiary of South Korean car maker Hyundai, had obtained a stay order from the Madras High Court against proceedings by the CCI in the case. Companies have been given 60 days to comply with the CCI order. Nissan, which faces the lowest penalty of Rs 1.63 crore, moved the Madras High Court against CCI's order.

Against the CCI's order Nissan, which faces the lowest penalty of Rs 1.63 crore, has moved to the Madras High Court. After considering the plea, the Court has directed the CCI not to take any action or enforce any penalty against Nissan till next hearing.

Senior Counsel P S Raman, who appeared for Nissan and Petitioner (Nissan) Counsel Anirudh Krishnan have confirmed the Court's direction and said the matter is posted for next month.

CCI has found that OEMs have violated competition norms with respect to its agreements with local Original Equipment Suppliers (OES) as well as with authorised dealers.

Through these agreements, the car makers "imposed absolute restrictive covenants and completely foreclosed the after market for supply of spare parts and other diagnostic tools", CCI said.

The regulator had also ordered the automobile companies to undertake certain compliances within 180 days from the receipt of the order and has directed them to submit a report within 60 days of receipt of the order on the action initiated for compliance with the Order.

The Commission also found that these companies, which were found to be dominant in the after markets for their respective brands, abused their position affecting around two crore car consumers, it added.

"The 14 car companies were found to be indulging in practices resulting in denial of market access to independent repairers as the latter were not provided access to branded spare parts and diagnostic tools which hampered their ability to provide services in the aftermarket for repair and maintenance of cars," CCI said.