Supreme Court Grants Relief To Nissan, Ford And Toyota In Antitrust Violation Case 

Carmakers held guilty of anti-competitive practices get a breather from the Supreme Court.

A customer inspects a car battery. (Photographer: Tony Avelar/Bloomberg News)
A customer inspects a car battery. (Photographer: Tony Avelar/Bloomberg News)

Toyota Kirloskar Motor Pvt Ltd., Ford India Private Ltd. and Nissan Motor India Pvt Ltd. have secured an interim relief order from the Supreme Court against the Competition Appellate Tribunal’s (COMPAT) December order. The COMPAT had upheld the 2014 order of the Competition Commission of India (CCI) that had found 14 car companies guilty of anti-competitive practices in the auto spare parts industry. The remaining 11 had appealed the CCI order before the Delhi High Court.

Toyota, Ford and Nissan were supposed to submit a schedule to the CCI by February 7, laying out a plan for implementing the directions given by COMPAT. In its order, published on Tuesday, the apex court has granted the three an interim stay on COMPAT’s order.

The order of COMPAT had negative implications on the safety of the car owners and public at large, to the extent that it directed the car companies to allow manufacturers to sell the spare parts in the absence of any quality and safety regulations in India, a media note by law firm Shardul Amarchand Mangaldas said. The firm is representing Nissan Motor in the matter.

Further, the impugned order of the COMPAT also sought to legislate on certain industry issues which was not within its powers.
Shardul Amarchand Mangaldas

It was argued that the manufacture/sale of passenger vehicles and after-sales services are not two separate markets as determined by the CCI and upheld by COMPAT, said JSA’s competition law partner Amitabh Kumar, who is representing Ford India.

The CCI and COMPAT had painted all the car manufacturers with the same brush, saying they had agreements with restrictive clauses. We argued that the vertical restraint we’ve been charged with is incorrect because in Ford’s case, there was no written agreement with dealers that was restrictive. There cannot be an assumption of an agreement without any evidence of it.
Amitabh Kumar, Partner, JSA

In its December order, the COMPAT had given following directions to the three car manufacturers:

  • Remove all restrictions imposed through agreements and practices on original equipment suppliers.
  • Open additional distribution channels to the open market for spare parts on a country-wide basis.
  • Remove all restrictions on supply of spare parts by original equipment suppliers to authorised dealers.
  • Allow original equipment suppliers, authorized dealers and authorised distribution channels to sell spare parts/diagnostic tools, etc. to independent repairers.
  • Remove blanket condition that warranties would be cancelled if the consumer avails of services of any independent repairer.
  • Develop extensive information system with the objective of removing asymmetry in information on details of automobiles and their spare parts.
  • Make available in public domain information regarding spare parts, their price, over-the-counter availability, alternatives, maintenance costs, warranty provisions, etc.

Additionally, the COMPAT had also directed the Ministry of Road Transport and Highways to develop voluntary standards for certification of garages/independent repairers and standardise automobile spare parts.

The apex court will now hear the matter after eight weeks.