Restriction on sale of spare parts: Supreme Court stays COMPAT order against three car companies

The Supreme Court of India yesterday stayed an order of the Competition Appellate Tribunal (COMPAT) in the case involving imposition of fine on car manufacturers by Competition Commission of India (CCI)..The COMPAT had found three car companies – Nissan, Ford and Toyota manufacturers guilty of anti-competitive conduct in the spare parts market, upholding the fine imposed by CCI..A Bench of Justices Dipak Misra and R Banumathi granted interim relief in the appeals filed by these companies..Senior Advocate Kapil Sibal appeared for Nissan along with a team from Shardul Amarchand Mangaldas. The Shardul Amarchand Mangaldas team was led by the competition law partner Harman Singh Sandhu and the litigation partner Anuj Berry..J. Sagar Associates represented Ford Motor and the team was led by Partner Amitabh Kumar along with Senior Associate Samir Agrawal and Associate Akansha Mehta..The dispute has its genesis in a complaint filed by one Shamsher Kataria alleging anti-competitive trade practices by three companies – Honda, Volkswagen and Fiat. He had alleged that genuine spare parts and the technical know–how required to effectively repair, maintain and service the automobiles were not available to independent workshops but could only be procured through authorised dealers. This, he had averred, had effectively created a monopoly over the supply of such genuine spare parts and repair maintenance services..The CCI upon receiving the information chose to examine all the car manufactures in India totalling seventeen and imposed fine of Rs. 2544 crore on fourteen of them for restricting the sale and supply of genuine spare parts of automobiles in open market..Three companies – Hyundai Motors, Mahindra Reva, and Premier Ltd. escaped the CCI knife. This was because these companies challenged the power of the Director General (DG) to order investigation against car manufactures not named in the complaint by the informant and the consequent act of the CCI suo moto conducting enquiry against the manufacturers on the recommendation of the DG. Subsequently, other companies also moved the High Court raising the same issue..Three companies, Ford, Nissan and Toyota, however, chose to appeal against the CCI order to COMPAT. In December last year, COMPAT dismissed the appeal filed by the three companies prompting them to approach the Supreme Court.