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CCI order expanding monopoly probe against car makers upheld

PTI |

The Madras High Court has upheld an order of the Competition Commission of India broadbasing a probe into alleged monopolistic trade practices in sale of automotive spare parts to cover all car manufacturers in the country.

Justice V Ramasubramanian passed the order while dismissing two petitions by Hyundai Motor India and BMW India Private Limited challenging the April 26, 2011 CCI order permitting its Director General (DG) to enlarge scope of investigation into the alleged monopolistic trade practices by three car manufacturers to cover all the manufacturers.

He made it clear that the car manufacturers who monopolised spare parts trade by refusing to sell them in open market, thereby inviting adverse notice and investigation by CCI have to face the probe.

"The decision taken by the commission was only to expand the scope of the investigation. Therefore, I do not think that either the Director-General or the CCI overstepped their jurisdiction vested in them in law," the judge said in his order yesterday.

If found guilty, these car companies, numbering more than a dozen, would end up paying penalty of more than Rs 2,550 crore for monopolistic, restrictive or unfair trade practices adopted them.

The matter relates to a complaint before CCI by one Shamsher Kataria on January 17 and 27, 2011 stating Honda, Volkswagen and Fiat companies were adopting monopolistic trade practices by refusing to sell spare parts of their cars outside their own dealer network.

On February 24, 2011, the commission directed its DG to conduct an investigation. In the course of investigation, the DG found that the practices adopted by the three companies were just the same as those carried on by the other car manufacturers.

The commission then on April 26, 2011 passed an order permitting the DG to include other car manufacturers also within the scope of the investigation.

Rejecting the contentions of Vijay Narayan, senior counsel for the petitioner companies that the DG of the CCI had no suo motu power to initiate an investigation, and had overstepped the jurisdiction vested in him by law, Justice Ramasubramanian said, "All that the Director-General did was to simply place additional information before the commission. The commission then passed an order on April 26, 2011.

"Thereafter, the director-general issued a notice to the companies on May 4, 2011. The moment the commission passed an order directing him to expand the scope of the investigation, Section 41(1) came into play. Therefore, I do not think that the DG did anything in excess of what he was directed to do by the commission," the judge held.