CCI clears Tata Motors off charges of anti-competitive practices in 2 cases

The Competition Commission of India (CCI) has cleared Tata Motors (TML) in two cases of anti-competitive practices in 2019 and 2020 in its commercial vehicles’ (CV) unit.

There was ‘no sufficient material’ on record for the commission to infer that TML engaged in anti-competitive practices, leading to an adverse effect on competition.

In its order for the 2019 case and the 2020 case, the commission said that the evidence relied upon by the Director General (DG) in arriving at a finding of contravention of Section 3(4)(c) neither proves that TML prohibits passive sales nor has TML imposed any penalty on its authorised dealers for selling outside their allocated territory.

“All the emails relied upon by the DG only reveal that TML has been condemning its dealers for engaging in active sales outside the allocated territory,” the order said.

It added that although one of the authorised dealers, Puneet Automobiles, had submitted that TML had imposed a huge penalty on its dealers over territory restrictions, there is nothing on record to substantiate it.

An email sent to TML remained unanswered till the time of going to press. It said that it will respond.

In the 2019 case, a certain Neha Gupta had blamed TML, Tata Capital Financial Services, and Tata Motors Finance for contravention of provisions of Section 3 and 4 of the Act. In the 2020 case, Nishant P Bhutada (proprietor of Kanchan Motors) made similar allegations.

In the 2019 case, the informant had alleged that TML engaged in anti-competitive conduct with the authorised dealers, coercing them to order vehicles, according to its whims and fancies. The informant also said that the company confined them to a territory specified in the dealership agreement and did not allow them to operate outside such territories.

Further, the informant had stated that every authorised dealer of TML was obligated to raise finance from banks and/or non-banking financial companies such as Tata Capital and Tata Motors Finance.

Furthermore, the channel finance facility loan limit extended by Tata Capital and Tata Motors Finance to an authorised dealer was increased or decreased, according to the targets set by Tata Motors rather than considering the financial strength of that authorised dealer or market demand. Further, Tata Capital and Tata Motors Finance were also able to earn illegal income,” the informants had alleged.

In the 2020 case, TML dealer Kanchan Motors of Nashik made similar allegations that TML coerced dealers in various ways.

The DG submitted its investigation report on September 2, 2022. TML submitted its objections to the investigation report on November 14, 2022. It said that the investigation is based on email evidence presented by the informant without seeking any explanation from TML.