7:22 pm - Wednesday November 4, 2015

M&M, Tata Motors to challenge CCI order

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Tata Motors and Mahindra & Mahindra on Tuesday said they would challenge the Competition Commission of India (CCI) penalty on them for violation of trade norms in the spare parts and after services market.

The CCI, in its 251-page order dated August 25, 2014, had imposed a total penalty of Rs.2,544.64 crore against 14 car companies, including Mahindra & Mahindra, Tata Motors, and Honda Cars India.

Reacting to the order, Tata Motors and Mahindra & Mahindra said they would file appeals against the order “before the appropriate authorities”.

Tata Motors, which has been levied with the highest fine of Rs.1,346.46 crore, in a filing to the BSE said the company had received an order from CCI. In its Order the CCI has directed the 14 passenger vehicle companies to undertake in India compliances and filing of a report within 180 days. “The company would be filing an appeal against this order before the appropriate authorities,” it said.

As per the Competition Act, 2002, orders passed by the Competition Commission of India can be challenged before the COMPAT (Competition Appellate Tribunal) within 60 days.

Likewise, M&M, in a filing to the BSE, said, “The company aggrieved by this order proposes to appeal against it before the appropriate forum.

The penalty imposed on M&M is Rs.292.25 crore. Meanwhile, in an e-mailed reply on the issue, Honda Cars India spokesperson said, “We are aware of the order. However, there is no official communication from CCI to Honda Cars India as yet. Once we receive the same, we will evaluate the order and respond accordingly.”

Other companies fined by CCI are: Maruti Suzuki India, Volkswagen India, Fiat India Automobiles, BMW India, Ford India, General Motors India, Hindustan Motors, Mercedes-Benz India, Nissan Motor India, Skoda Auto India and Toyota Kirloskar Motor.

Ramnath Subbu writes from Mumbai:

Typically, issues with the CCI take time to get resolved, industry watchers said, adding that most would appeal against the order.

“For most automobile manufacturers, sales of spares account for 8-10 per cent of gross sales,” Surjit Arora, Automobile analyst at Prabhudas Lilladher, a broking outfit, said adding that margins on their sales too were higher than on other products.

Sales of spares, which had been growing at an average 15-20 per cent in the last few years, will be impacted “and car makers will have to depend more on volume growth,” Mr. Arora said, adding that even an adverse ruling in future might not impact companies significantly as they had huge cash reserves and “the volume momentum for most is very strong.”

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