CCI Dismisses Allegations of Abuse of Dominance against Bajaj Auto Limited and Anti-Competitive Agreements against Bajaj Auto Limited and M/s SK Automobiles

On August 8, 2020, CCI passed an order dismissing the information filed by Mr. Mainejer Prasad Gupta against Bajaj Auto Limited (‘Bajaj’) and M/s SK Automobiles (‘SK’), which alleged a contravention of provisions of Section 3(4) and Section 4 of the Act.[1]

The informant had applied for a dealership in Hojai, Assam, in response to an advertisement issued by Bajaj. However, Bajaj did not consider its application and instead allotted a dealership in another town called Nilbangan (which was located 8 km away from Hojai) to SK, which was Bajaj’s existing dealer in Nagaon and Tezur, in Assam. The informant submitted that Bajaj’s conduct in (a) allowing for setting up a showroom in Nilbagan, instead of Hojai; and (b) granting SK the dealership despite it not fulfilling the requirements of the dealership agreement, i.e. by SK not keeping the stock in proximity of the showroom, resulted in limiting and controlling the market in violation of Section 3(3) of the Act. This conduct was also alleged to be an anti-competitive exclusive distribution agreement under Section 3(4) of the Act.

The informant further alleged that since SK is Bajaj’s existing dealer in Nagaon and Tezpur, it abused its dominance by colluding with Bajaj and securing the dealership in Nilbangan. The informant identified two relevant geographic markets in this case, i.e. Tezpur and Hojai. It was alleged that SK had used its dominant position in Tezpur to enter into Hojai.

CCI noted that the alleged conduct cannot be examined as collusion under Section 3(3) of the Act as dealers and manufacturers are not horizontally placed. CCI also dismissed allegations of exclusive distribution agreements given that Bajaj only had a market share of l2% in the overall market of two-wheelers in India. Further, SK was not considered as having any market power by its dealership in Tezpur, particularly given there are other dealers of other brands in and around Hojai, even if the geographic market were to be defined very narrowly.

Therefore, in the absence of any market power held by Bajaj and SK, CCI also dismissed allegations of abuse of dominance. CCI also noted that the informant’s mere willingness to commence a dealership agreement that failed to materialize would not raise any competition concerns that would warrant intervention.

CCI accordingly passed a closure order under Section 26(2) of the Act dismissing all the allegations.

 

[1] Case No. 23 of 2020, Order Dated August 6, 2020.

Published In:Inter Alia Special Edititon - Competition Law - October 2020 [ English
Date: October 19, 2020