Author: Radhika Kapoor

Introduction

The automobile industry in India has long been one of the most dynamics sectors of the economy, contributing significantly to GDP growth, employment, and innovation. However, given the scale and market concentration in this sector, issues of anti-competitive practices, restrictive trade practices, and abuse of dominant position have repeatedly come under this
scanner. Under the provision of Competition Act, 2002 the CCI functions to promote fair competition, particularly in the automobile market. The Commission acts as a regulator, watchdog, and adjudicator to prevent anti-competitive agreements, and promote consumer welfare. This article explores in detail the role of CCI in regulating the automobile industry in India,
analyzing key cases, regulatory measures and the challenges faced in implementing competition law in this sector. 1
The Competition Act, 2002 (amended in 2009) empowers the Competition Commission of India to:
 Prohibit anti-competitive agreements (Section 3)
 Prevents abuse of dominant position (Section 4)
 Regulate combinations (merger and acquisition) Section 5 and 6
 Competition Advocacy (Section49)
These provisions apply directly to automobile manufacturers, suppliers, and dealers. The 2023 reforms to the Competition Act focus on enhancing the CCI’s role and effectiveness in law enforcement.

The Automobile Industry in India – An Overview
India is one of the largest automobile markets in the world, with major domestic and international players competing across passenger’s vehicles, commercial vehicles, and two- wheelers. The sector is characterized by:

1. Oligopolistic Market Structure: The market is dominated by a small number of leading
   manufacturers. Example – Tata Motors
2. High Entry Barriers; Due to capital intensive requirements, technology dependence, and
   brand loyalty
3. Inter-dependence on ancillary industry: Auto components, spare parts, etc.
4. Consumer Sensitivity: Customers are highly price sensitive and brand conscious, which
   sometimes restrict competitive entry.
   Given this landscape, competition issues such as abuse of dominance, restrictive supply chain
   agreements, and cartelization have been reported frequently, justifying a strong role for the
   CCI.

Role of CCI in the Automobiles Industry

Section 3 prohibits agreement that could potentially lead to a significant negative impact on competition in India. These includes horizontal agreements as well as vertical agreements. One of the most significant interventions of the CCI was the landmark case Shamsher Kataria the CCI held such practices amounted to restrictive trade agreements under Section 3 of the Act. It imposed penalty of around Rs. 2.5 Cr on 14 cars manufacturers. This judgment opened spare parts market, improved consumer choices, and reduced monopolistic holds manufacturers over after – sale services. The case demonstrated how the CCI protects both consumer interests and small players in the automobiles supply chain.

Section 4 prevents enterprise with a dominant position from abusing their powers by imposing unfair conditions. Limit production in one market to enter another. In the automobile industry, abuse of dominance is often examined in relation to control over the aftermarket for spare parts, diagnostic tools serving as seen in Shamsher Katria Case. For example in 2017 Hyundai was fined for imposing resale price maintenance (RPM) through discount control policies. The CCI observed that such practices distorted competition by preventing dealers from offering competitive discounts. This case underlined that even multinational automobile companies must adhere to fair trade practices in India.

Regulating Merger and Acquisition – Merger and Acquisition in the automobile industry often have cross-border implications. The CCI plays a vital role in assessing whether such combinations would have AAEC in India the act mandates prior approval from the CCI for merger, acquisitions, and amalgamations that cross prescribed asset. The objective is to prevent practices that may have an appreciable adverse effect on Competition (AAEC) in India. For Example – the CCI reviewed the global merger of Fiat Automobiles and Stellantis Group to ensure that Indian consumers and dealers were not adversely affected. This reflects CCI’s proactive role in scrutinize international transactions that may affect Indian market. The CCI intervention have consistently been aimed at enhancing consumer choices, improving service quality, and reducing monopolistic practices. The spare parts
case is a prime example where consumer welfare was prioritized. Additionally, CCI monitors collusions in pricing strategies and discounts in the automobile sector to ensure customers benefit from market competition. The role of CCI is foster innovation,
consumer choice, and long-term industry growth.

Competition Advocacy – Unlike the traditional regulators, the CCI also has an advocacy mandate. It is empowered to promote awareness, train industry stakeholders, and advice the government on competition policy. This function is particularly important in the automobile sector were dealers’ arrangements, electric vehicles, and digital mobility platforms require forward-looking policy guidelines. Beyond enforcement, the CCI also engage in competition advocacy. It issues guidelines and conducts stakeholders’ consultations with automobiles associations, and government bodies. The Commission has emphasized the:

• Adoption of transparent dealership agreements
• Encouraging start-up EV Vehicles
• Prevent Cartels in auto parts and manufacturing

Challenges and Limitations faced by CCI in automotive sector

Despite its significant contributions, the CCI faces multiple challenges in regulating the
automobile industry:

1. Complex Global Supply Chain – International linkages in auto parts manufacturing and assembly make it difficult to trace cartelization.
2. Technological Advancements – The rise of electric vehicles, hybrid models, and autonomous driving requires new regulatory insights.
3. Information Asymmetry – Consumer often lack awareness of their rights under competition law, reducing the deterrence effect.
4. Enforcement Challenges – Delays in adjudications and appeals before NCLAT, and the Supreme Court often weakens the immediate enforceability of CCI’s decision. This dual responsibility often creates tension between strict enforcement and policy advocacy. The CCI therefore, faces the delicate task of balancing competition enforcement for start ups in the EV ecosystem.

Recent Development and Future Outlook

 The automobile industry is rapidly shifting towards electric mobility, digital platforms, and data-driven service.
 The CCI is expected to play a crucial role in preventing the emergence of monopolies in the EV ecosystem by ensuring fair access to technology and infrastructure. 7
 Additionally, the Competition (Amendment) Act, 2023 strengthens the CCI’s enforcement powers, enable faster investigating timelines, and settlement mechanisms.
 The CCI drawings inspiration from EU Competition law, is expected to issue guidance on how sustainability considerations will be balanced against competition concerns in India’s automobile market.

Conclusion

The Competition Commission of India has emerged as a vital regulator in shaping fair practice within the automobile industry. Through landmark cases like Shamsher Kataria, and scrutiny of global mergers, the CCI has safeguarded the consumer rights, checked abuse of dominance, and opened markets for the greater competition.