Tata Motors reviewing CCI order on probe against commercial vehicle business

NEW DELHI: Homegrown auto major Tata Motors on Tuesday said it is reviewing the order by the Competition Commission of India (CCI) to initiate investigation against its commercial vehicles business in India for alleged abuse of its dominant position.

Last week, the CCI had passed an order directing the Director General, CCI, to initiate investigation against the company for alleged abuse of dominant position with respect to dealership agreements in its commercial vehicles business in India.

"The CCI, in connection with its prima facie order, has specifically noted in the order that nothing stated in the CCI's order shall tantamount to a final expression of opinion on the merits of the Case. It is reiterated that the company is reviewing the CCI's order and is engaging with its counsel to take suitable next steps," Tata Motors said in a regulatory filing.

The CCI order came on two complaints filed against Tata Motors, Tata Capital Financial Services Ltd and Tata Motors Finance Ltd.

The competition watchdog had observed that the complainants were primarily aggrieved that Tata Motors has imposed unfair terms and conditions in the dealership agreement for commercial vehicles.

It has been alleged that the company was abusing its dominant position in contravention of the provisions of Section 4 of the Competition Act, which pertains to abuse of dominant position.

On the allegation that the dealership agreement provides that the dealer shall not start, acquire or indulge in any new business (of product or services) even if it is not related to the automobile industry, the CCI had stated that the same appeared to be unduly restrictive and expansive in its coverage and interferes with the freedom of trade.

However, CCI had made it clear that it was not examining the conduct of Tata Capital and Tata Motors Finance or the agreements executed by them with the dealers for channel financing, which do not appear to command any significant market power in the verticals where they are operating.