CCI May Probe Tata Motors And Two Group Companies

The Competition Commission of India (CCI) is in the process of reviewing a complaint that alleges that Tata Motors and two other group companies dictated terms around the quantity and type of vehicles which one of its former dealers in northern India called Varanasi Auto Sales ought to have stocked.

The watchdog would is expected to reach a decision within about six weeks, which could see a wider probe into the allegations or a dismissal of the complaint.

The CCI has powers to impose a penalty of up to 10% of the relevant turnover of a company in the last three financial years if it is found to have abused a dominant position.

The latest development comes after more than a dozen lawyers representing the three Tata companies attended a private hearing at the CCI in January 2010 and argued that there was no malpractice by the group's firms.

The complaint has alleged that Tata Motors broke rules by working in concert with group companies Tata Motors Finance and Tata Capital Financial Services while advancing dealer credit to its former dealer Varanasi Auto Sales.

Allegedly, Tata Motors would stop supplying vehicles to the dealer if repayment of loans advanced by two of its group finance firms was delayed, which is an indication that they were colluding.

According to documents, Tata Motors ended relations with Varanasi Auto Sales in 2017 due to poor performance.

Tata Motors stated that it had made submissions to the CCI and would provide full support to the watchdog.

Its group company Tata Capital Financial Services also denied the allegations, stating that it would also support CCI inquiries, adding that it had separately taken legal action against the dealer, which it claimed, had defaulted.