Madras HC dismisses petition of Nissan, Hyundai against CCI

The CCI has earlier ordered to investigate all the car manufacturers on alleged anti-competitive practices in spare parts business

The Madras High Court today dismissed petitions of auto majors Nissan Motors India Pvt Ltd and Hyundai Motor India Ltd against the decision of the Competition Commission of India (CCI) to initiate investigation against all car manufacturers related to alleged anti-competitive methods of the original equipment manufacturers. The Court said that the companies could approach the Competition Appellate Tribunal for redressal of their grievances, if they desire so.

Justice V Dhanapalan, in his order dated June 30, 2014, said, "Looked at from any angle, this Court is of the considered view that the writ petitioners (Nissan Motors India Pvt Ltd and Hyundai Motor India Ltd) are to approach only the Competition Appellate Tribunal to exhaust their statutory remedy under Section 53-B of the Act, but not this Court under Article 226 of the Constitution."

He added that accordingly, as these petitions did not meet any of the specific requirements, as to their maintainability, they are dismissed, as not maintainable.

"It is open for the petitioners to approach the competent forum viz., Competition Appellate Tribunal, for redressal of their grievances, if they so desire, within a period of six weeks from the date of receipt or production of a copy of this order, and, till such time, the parties to these proceedings shall maintain status quo as on date. It is also made clear that in the event of the approach of the petitioners, the Tribunal shall exclude the period of pendency of these writ petitions, while computating the period of limitation, if any," added the order.

The issue started when Shamsher Kataria, an informant, filed a complaint in January, 2011, with the CCI against three car companies, namely Honda Siel Cars India Ltd, Volkswagen India Ltd and Fiat India Automobiles Ltd, alleging anti-competitive methods or agreements and abuse of dominant position.

The commission, opining that there is a prima facie case under the relevant laws to the effect that anti-competitive practices being adopted by these companies have resulted in denial of market access to independent workshops and that the car buyer is forced to buy, repair or maintenance from the same manufacturer or its authorised dealers and genuine spare parts, diagnostic tools, software and technical information were not being made available to independent repair workshops has asked the Director General to conduct an investigation into the matter.

It also said that the car companies have limited number of authorised service centres and the dealers appointed by the car manufacturers as a matter of policy refuse to supply the spares in the open market and that the practices being adopted by the companies needed to be further scrutinised to determine whether they restrict the effective competition at each level of automotive aftermarket. The CCI asked the DG to submit a report within a period of 60 days from the date of communication of the order.

After preliminary investigation, the Director General requested the CCI for directions to initiate investigation against all the other car manufacturers in India as it said that it has gathered that similar practices were being followed by other car manufacturers in India in the areas of after sales service, procurement and sale of spare parts from original equipment suppliers (OESs), setting up of dealerships and the case involves a larger issue related to the prevalent conduct of the players and its implication on the consumers at large.

The Commission approved the same to initiate investigation against other car manufacturers also, through its orders, dated April 26, 2011, and the Director General submitted his report on July 31, 2012, concluding that the petitioners had contravened the provisions of the Act. Following this, the additional director general issued a notice asking the companies to file the required information.

Nissan argued in the Court on several points including that the company started commercial sale of cars in India just six months before the filing of the information by the informant and had a negligible share of 0.52 per cent in 2010-11 passenger car segment in India and cannot be said to be enjoying dominant position. They also said that the CCI did not give adequate opportunities of oral hearing to the company, which is violation of principles of natural justice. Hyundai also raised similar points.

It may be noted that these two are among the 17 car makers the CCI is investigating on the alleged anti-competitive practices.