Competition Commission on Wednesday closed a case against Tata Motors on alleged abuse of dominant position with respect to agreements with its authorised dealers.
For the case, the market for the manufacture and sale of commercial vehicles in India was considered as the relevant one. The complaint was filed against Tata Motors, Tata Capital Financial Services and Tata Motors Finance. In May 2021, the regulator ordered the Director General (DG) to carry out a detailed probe into the allegations. DG, the investigation arm of the regulator, had submitted its report in September 2022. In its 32-page order, the CCI said it is unable to agree with the finding of the DG that Tata Motors coerced its dealers to offtake vehicles as per the company’s demands.
Further, the regulator said there is no sufficient material on record to arrive at a finding that Tata Motors enforced its territory clause leading to an appreciable adverse effect on competition in violation of Section 3(4)(c) of the Competition Act. This section pertains to exclusive distribution agreement. As per the order, CCI took note of Tata Motors’ submissions that it imposed restrictions on active sales outside the designated territory to inter alia ensure that dealers do not free-ride another dealer’s marketing and investments, incentivising dealers to invest in the dealership and enhance intra-brand competition, etc.
“In this regard, the Commission observes that while arriving at a finding of contravention of Section 3 (4) of the Act, it is imperative to carry out an assessment of the factors mentioned under Section 19(3) thereof to determine whether the alleged vertical restraint results in or likely to result in an appreciable adverse effect on competition or not. “In the absence of any factual basis or foundational evidence in this regard brought out by the DG, the Commission is unable to return a finding of appreciable adverse effect on competition arising out of the impugned conduct,” the order said. It was alleged that the company abused its dominant position and engaged in anti-competitive conduct with its authorised dealers.
While forming the prima facie opinion, CCI had decided to confine the investigation with respect to the clauses of the dealership agreements and conducts in respect of commercial vehicles, executed between the authorised dealers and Tata Motors only. “It was made clear that the Commission is not examining the conduct of Tata Capital and Tata Motors Finance or the agreements executed by them with the dealers for channel financing as they do not command any significant market power in the verticals in which they operate,” the order noted.