The Competition Commission of India (CCI) has ordered an investigation against Tata Motors for alleged abuse of market dominance and anti-comptetive practices.
Two complaints were filed against Tata Motors, Tata Capital Financial Services and Tata Motors Finance. The complainants claimed that Tata Motors has imposed unfair terms and conditions in their dealership agreement for commercial vehicles (CVs).
Moneycontrol has viewed a copy of the CCI's prima facie order.
The CCI noted that certain sections of certain clauses in the Tata Motors' dealership agreement could possibly prevent entry of new players and kill competition in the CVs market.
The regulator instructed the Director General (DG) to investigate matter under the provisions of Section 26(1) of the Act, ordered an investigation report within 60 days.
The regulator has also confined the investigation with respect to the clauses of the dealership agreements and conduct in respect of commercial vehicles… executed between the dealers and Tata Motors.
"Having examined the rival submissions on the point, the Commission is of the considered opinion that the defence raised by Tata Motors requires a detailed investigation to ascertain the effectiveness, veracity and validation of this plea," the order said.
"Based on the foregoing, the Commission is of the view that prima facie a case of contravention of the provisions of Section 3(4) and Section 4 of the Act is made out against Tata Motors, as detailed hereinabove in this order and the matter requires to be investigated."
The complainants also alleged that the dealership agreement restricts and confines dealers to the allotted territory, be extended or curtailed simply by oral instruction from Tata Motors."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 Tata Motors," a company spokesperson told BloombergQuint.