Exactly a day ago we reported that the Competition Commission of India has imposed a penalty on 14 Indian car manufacturers. Reacting to this, two major Indian carmakers Mahindra and Tata have decided to challenge the penalty imposed on them.
"The company aggrieved by this order proposes to appeal against it before the appropriate forum," Mahindra & Mahindra said in a filing to NSE.
Similarly, in a filing to BSE, Tata Motors said it "would be filing an appeal against this order before the appropriate authorities".
The Competition Act 2002 suggests that orders passed by the Competition Commission of India can be challenged before the COMPAT (Competition Appellate Tribunal) within 60 days.
According to CCI, auto companies violated competition norms with respect to its agreements with local Original Equipment Suppliers (OESs) and also with authorised dealers.
Through these agreements, the car makers "imposed absolute restrictive covenants and completely foreclosed the aftermarket for supply of spare parts and other diagnostic tools", CCI has said.
Mahindra was penalised to the tune of Rs 292.25 crore, whereas Tata was slapped a fine of Rs 1,346.46 crore by the CCI.
On reception of this order, the penalised parties have to undertake certain compliances within 180 days and submit a report within 60 on the action initiated for compliance with the order.
The decision to challenge this order may or may not pay dividends for these two manufacturers and other auto companies will take note of it. Although, there are two months for other manufacturers if they decide to challenge the penalty, we expect more manufacturers to join the bandwagon against the judgement. But, will this be beneficial for the customer?