Spare Parts Case: Final Hearing on Tata, Mahindra Plea in October

New Delhi: The Delhi High Court on Tuesday fixed October 28 for the final hearing of pleas by two Indian carmakers challenging provisions of the Competition Act as well as a Competition Commission of India (CCI) order imposing a penalty on them for violating trade norms in the after-services and spare parts market.

A bench of Chief Justice G Rohini and Justice Rajiv Sahai Endlaw also extended the stay on the order imposing penalty on Mahindra & Mahindra and Tata Motors till the next date of hearing.

While Mahindra had been ordered by CCI to pay a fine of over Rs 200 crore, Tata was slapped with an amount of Rs 1,400 crore.

The court also asked the CCI to file counter affidavit within two weeks and directed the carmakers to submit their rejoinder "within a week thereafter".

However, the judges made it clear to the auto majors that the stay order is only applicable to them.

On August 25, CCI had fined Mahindra, Tata and 12 other companies Rs 2,554 crore for allegedly violating trade norms in the spare parts and after-services market and asked them to deposit the amount within 60 days.

For each entity, the individual fine amounted to 2 per cent of its average turnover.

Besides the two, the other companies on which penalties have been imposed were Mercedes Benz India Pvt Ltd, Toyota Kirloskar Motor Pvt. Ltd, Honda Cars India Ltd, Volkswagen India, Fiat Group Automobiles India Pvt Ltd, Ford India Pvt Ltd, General Motors India Pvt Ltd, Nissan Motor India Pvt Ltd, Hindustan Motors Ltd, BMW, Maruti Suzuki India Ltd and Skoda Auto India Pvt. Ltd.

A single-judge bench of the high court had recently given three weeks interim protection from the CCI order to BMW and Mercedes-Benz. The same bench had also stayed the operation of the order against Maruti.

Earlier, the High Court had sought CCI's response on the plea of the two carmakers.

The court had directed CCI to inform it whether the Competition Appellate Tribunal (COMPAT) is functional and also whether the Supreme Court is seized of any matter challenging provisions of the Competition Act, while the carmakers were ordered to produce a copy of the August 25 order of the antitrust regulator imposing a fine on them.

The provisions challenged by the two companies pertain to the imposition of penalty (section 27(b) of the Act) and the holding of meetings by CCI (section 22) to adjudicate a matter.

Senior advocate Gopal Subramaniam, appearing for M&M, had contended that both provisions are ultra vires the Constitution.

He had said that under the Act, CCI is arbitrarily imposing penalties without giving a hearing.

This view was echoed by senior advocate Abhishek Manu Singhvi, appearing for Tata, who said CCI is imposing penalty "as it sees fit".

They had also contended that in the present case, the issue was heard by a seven-member quorum of CCI. However, the order under challenge was passed by only three members.

Counsel for CCI, on the other hand, had contended that the order can be challenged before COMPAT which is functional right now and added that the apex court is seized of a matter challenging provisions of the Competition Act.

Tata had contended that while calculating the amount, CCI also took into account the turnovers of its subsidiary companies such as Jaguar and alleged that the provision for imposing penalty was "being misused".

They had also said that CCI had suo motu expanded the scope of the investigations into the entire car industry even though it had originally received a complaint against three automobile firms - Honda, Volkswagen and FIAT.

The two companies also questioned whether the anti-trust regulator had the powers to expand the scope of investigations on its own even if the complainant had not named a company in the original complaint.