The order from the Competition Commission of India (CCI) states that Tata Motors violated the provisions of Section 4 of the Competition Act
Tata Motors could be in a spot of bother after the country’s competition regulator pulled the Indian manufacturer over on an antitrust probe. The Competition Commission of India (CCI) has ordered an investigation into the matter pertaining to Tata Motors’ commercial vehicle division after charges levied by two former dealer partners.
The order has been passed on two complaints filed against Tata Motors, Tata Capital Financial Services Ltd and Tata Motors Finance Ltd (opposite parties). According to allegations levied by former dealer partners of the company, Tata imposed unfair terms and conditions on dealer purchases of commercial vehicles.
Abuse of Dominant Position
According to a report, the complaints specify that the company abused its privilege as a dominant party in contravention of the provisions of Section 4 of the Competition Act pertaining to abuse of a dominant position. The complaint further states that Tata Motors dictated terms around type and quantity of vehicles to be stocked by dealers.
The allegations don’t end there though. The former dealers alleged that the automaker worked in partnership with its affiliate financing firms while advancing credit.
Keeping all this mind, the watchdog has directed its Director General (DG), the investigation arm of the body, to initiate an investigation against the matter. Currently, Tata Motors is reviewing the 45-page order dated May 4, 2021, passed by CCI against the company’s commercial vehicle division. It will then pursue legal counsels to take necessary steps.
Further adding details to the order, CCI specified that Tata Motors seems to have exploited its dominant position in the market and needs an in-depth investigation. It further ordered its investigative arms to submit a report of this investigation within 60 days. However, investigations for such complex matters usually take months before getting resolved.
CCI specified that it is not evaluating the conduct of Tata Capital and Tata Motors Finance or the agreements finalised by them with the dealers for channel financing since the firms do not appear to command any significant market power. As of now, Tata Motors holds the lion’s share in the commercial vehicle segment and commands a 40 percent share of this space in the Indian market.
The automaker offers a range of trucks, buses and other construction-based vehicles in India and carries out its commercial vehicle operations from facilities in Jamshedpur, Pantnagar and Lucknow. The company competes against the likes of Ashok Leyland, Bharat Benz and Mahindra Trucks.