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Case Nos. 21 of 2019 & 16 of 2020 Page 1 of 32 COMPETITION COMMISSION OF INDIA Case No. 21 of 2019 and Case No. 16 of 2020 Case No. 21 of 2019 WITH Case No. 16 of 2020 In Re: Nishant P. Bhutada M/s. Kanchan Motors Opposite Tractor House Mumbai Agra Road Tigrania Corner, Dwarka Nashik- 422001 Informant In Re: Neha Gupta 33-A, Sunder Nagar Market Sunder Nagar New Delhi- 110003 Informant And Tata Motors Ltd. Bombay House, 24, Homi Mody Street Fort Mumbai- 400001 Opposite Party No. 1 Tata Capital Financial Services Limited 11th Floor, Tower A, Peninsula Business Park Ganpatrao Kadam Marg, Lower Parel Mumbai- 400013 Opposite Party No. 2 Tata Motors Finance Ltd. Think Techno Campus (Lodha) 2nd Floor, Building ‘A’ Off Pokhram Road 2 Adjacent to TCS Yantra Park Thane (West)- 400601 Opposite Party No. 3 Case Nos. 21 of 2019 & 16 of 2020 Page 2 of 32 And Tata Motors Ltd. Bombay House, 24, Homi Mody Street Fort Mumbai- 400001 Opposite Party No. 1 Tata Capital Financial Services Limited 11th Floor, Tower A, Peninsula Business Park Ganpatrao Kadam Marg, Lower Parel Mumbai- 400013 Opposite Party No. 2 Tata Motors Finance Ltd. Think Techno Campus (Lodha) 2nd Floor, Building ‘A’ Off Pokhram Road 2 Adjacent to TCS Yantra Park Thane (West)- 400601 Opposite Party No. 3 CORAM: Ms. Ravneet Kaur Chairperson Ms. Sangeeta Verma Member Mr. Bhagwant Singh Bishnoi Member Appearances: For Informant in Case No. 21 of 2019 Ms. Neha Gupta, In-Person with Mr. Sarim Naved, Ms. Swati Rana, Ms. Komal, and Mr. Pranay Kumar, Advocates For Informant in Case No. 16 of 2020 Mr. Nishant Bhutada, In-Person with Mr. Mayank Bagla, Advocate. Case Nos. 21 of 2019 & 16 of 2020 Page 3 of 32 For the Opposite Party No. 1 Mr. Rajshekhar Rao, Senior Advocate with Mr. Samir Ghandhi, Mr. Gaurav Bansal, Mr. Atish Ghoshal, Mr. Nitin Nair, Ms. Meherunissa Anand, Mr. Shaurya Kumar, Ms. Aditi Bhatt and Ms. Neha Khandelwal Advocates, alongwith Mr. Madhav Uppuluri, General Counsel of OP-1 and Mr. Sharmendra Chaudhry, Deputy General Manager & Regional Head (Law) of OP-1 ORDER 1. The Information under Section 19(1) (a) of the Competition Act, 2002 (“the Act”) in Case No. 21 of 2019 was filed by Ms. Neha Gupta (“Informant No. 1”) against Tata Motors Limited (“TML/OP-1”), Tata Capital Financial Services Limited (“Tata Capital/OP-2”) and Tata Motors Finance Limited (“Tata Motors Finance/OP-3”) alleging contravention of provisions of Section 3 and Section 4 of the Act. 2. Subsequently, Information in Case No. 16 of 2020, containing similar allegations, was filed by Mr. Nishant P Bhutada, Proprietor of M/s Kanchan Motors (“Informant No. 2”) under Section 19(1)(a) of the Act against TML, Tata Capital, and Tata Motors Finance alleging contravention of provisions of Section 3 and Section 4 of the Act. About the Opposite Parties (OPs) 3. TML (OP-1) is a subsidiary of Tata Sons and is inter alia engaged in the business of designing, developing and manufacturing among others, commercial vehicles (CVs) and spare parts and providing value-added services such as Annual Maintenance Contract (AMC), refurbished, pre-owned vehicle business (Tata OK), loyalty programs relating to sales & services of vehicles, retail channel finance & insurance, hire purchase, loan financing, leasing or any other financing business of own or subsidiaries/ associates/ affiliates. 4. Tata Capital (OP-2) is a non-banking financial company (NBFC) and is focused on providing a broad suite of financial products like motor finance, personal loans, home loans, consumer durable loans, etc. Case Nos. 21 of 2019 & 16 of 2020 Page 4 of 32 5. Tata Motors Finance (OP-3) is stated to be engaged in the business of financing the entire range of Tata Motors commercial and passenger vehicles. Facts as stated in the Information in Case No. 21 of 2019 6. Parents of Informant No. 1 had established Varanasi Auto Sales Pvt Ltd (“VASPL”) which was appointed as an authorised dealer of TML to sell commercial vehicles (“CVs”), spare parts and accessories, provide after-sales services and value-added services in the districts of Varanasi, Gazipur, Balia, Chandauli, and Sant Ravidas Nagar in the eastern part of State of Uttar Pradesh. The last renewed dealership agreement between VASPL and TML was signed on 11.10.2011 for a period of five years, which stood terminated w.e.f. 24.08.2017. 7. Informant No. 1 alleged that TML is a dominant entity in the commercial vehicles segment in the State of Northern India, especially Uttar Pradesh and is engaging in anti-competitive conduct with its authorised dealers. Particularly, it was alleged that TML coerced its authorised dealers to order vehicles according to its whims and fancies (by compelling the dealers to copy-paste the list of vehicles provided by TML itself on the dealer's letterhead, and sending them back to TML), which is in violation of Section 3(4) and Section 4 of the Act. The Information also purported to highlight certain alleged onerous provisions of the agreement dated 11.10.2011 executed with TML which inter alia restricted the dealers from starting, acquiring, or indulging in any new business even if it is not related to the automobile industry. Lastly, it was alleged that the dealers are confined to a territory specified in the dealership agreement and are not allowed to operate outside such territories. 8. The Informant stated that every authorised dealer of TML is obligated to raise finance/ loan from banks and/ or NBFCs such as Tata Capital and Tata Motors Finance. Tata Capital and Tata Motors Finance sanctioned finance facility in a discretionary manner mainly relying upon the number of vehicles Tata Motors authorised its dealers to off-take for sale. Furthermore, the channel finance facility loan limit extended by Tata Capital and Tata Motors Finance to an authorised dealer was increased or decreased as per the targets set by Tata Motors rather than considering the financial strength of that authorised dealer or market demand. Further, Tata Capital and Tata Motors Finance were also able to earn illegal income Case Nos. 21 of 2019 & 16 of 2020 Page 5 of 32 from the authorised dealers by imposing high-interest rate, penal interest, other illegal charges, and adjustments on the channel finance loan facility extended by them. Facts as stated in the Information in Case No. 16 of 2020 9. Kanchan Motors was an authorised dealer of TML/OP-1 in the Small Commercial Vehicles (SCV) [Cargo and Passenger range] category and also for the passenger/utility vehicles category including their spare parts, accessories, after-sales services, and value-added service in the district of Nashik, Maharashtra. It was inter alia averred that Opposite Parties by abusing their dominant position, sanctioned or restricted the finance facility depending upon the number and model of vehicles that TML wished the authorised dealer to off-take rather than considering the financial credibility of the dealer. The Information also impugned the same clauses (as in Case No. 21 of 2019) in the agreement dated 10.02.2017 executed between the Informant and TML. It was further alleged that the OPs engaged themselves in tie-in arrangement by coercing the dealer to order the SCV or passenger/utility vehicle according to the list provided by TML via e-mail and later asking the dealer to paste the contents of the attachment without any changes on the dealer’s letterhead and sending back the scanned copy of such list. It was further alleged that discount on vehicles was contingent only if the off-take of SCV or passenger/utility vehicle was more or equal in number against the sales made by the dealer in a particular month. 10. The Commission in its ordinary meeting held on 10.10.2019 noted that the Information in Case 21 of 2019 has been filed by Ms. Neha Gupta, Advocate in her capacity raising purported disputes/ conduct arising out of the Dealership Agreement executed between Tata Motors and VASPL, which stood terminated w.e.f. 24.08.2017. Moreover, it was observed that VASPL had neither authorised the Informant to file the Information nor had it approached the Commission on its own. Thus, in view of the aforesaid the Commission considered it appropriate to call VASPL and OPs for a preliminary conference on 21.09.2020. Having heard the learned counsel(s) for these Parties, the Commission directed the VASPL to file an affidavit with an advance copy to the OPs, detailing the arguments made during the preliminary conference. Thereupon, the OPs were directed to file their respective affidavits in response to the affidavit to be filed by the Informant/ VASPL. Accordingly, the Informant/ VASPL filed its affidavit on 05.03.2020 and Tata Motors and
