The Competition Commission of India (CCI) has ordered an antitrust investigation against Tata Motors Limited. The probe is ordered against the commercial vehicle business of Tata Motors Limited. It is India’s largest seller of commercial vehicles and CCI alleges that they have abused its market position while supplying commercial vehicles to some of its dealerships in India.
The allegations are made by former dealership partners of the company. According to the complaint, Tata Motors had set up strict terms around the quantity and type of vehicles the dealerships should stock. Also, Tata Motors worked with affiliate firms while advancing the credit to the dealerships. Tata Motors spokesperson said to CNB,
“We have learnt that the Competition Commission of India (“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.”
Competition Act breached
The unfair terms and conditions in the dealership agreement for commercial vehicle is an abuse of Tata Motor’s dominant position in the market. It is a contravention of the provisions of Section 4 of the Competition Act, Section 4.
To assess the complaints, CCI gave a 45-page order dated May 4. The CCI said that a case of contravention of the provision 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 now directed its Director-General, investigation arm, to probe the matter in detail. A probe is likely to happen in the near future. The order also mentions that Tata Motors coercing its dealer partners to order the vehicles according to its whims and fancies is anti-competitive. The order mentions that Tata Motors has denied all allegations before CCI. The investigation team needs to submit the final report on the matter within 60 days.
However, the probe can go on for months as such investigations take a long time. Tata Motors is a market leader in the commercial vehicle business. They hold more than 40% of the market share in the segment, which makes it the highest-selling commercial vehicle in the country. It offers a large range of trucks and buses in India and competes with the likes of Ashok Leyland and Mahindra & Mahindra.