CCI Dismisses Allegations of Abuse of Dominance against KAMCO

On May 5, 2020, the CCI dismissed a complaint alleging abuse of dominance under Section 4 of the Act against Kerala Agro Machinery Corporation Limited (‘KAMCO’), filed by Venkateswara Agencies (‘Informant’). KAMCO, an undertaking of the Government of Kerala is engaged in the manufacturing of agricultural machineries[1]. The Informant has been the authorised dealer of KAMCO to customers in West Godavari, East Godavari, Krishna, Srikakulam and Guntur Districts of Andhra Pradesh (collectively referred to as ‘Districts’) since 2006.

The Informant alleged that it built the foundation for the KAMCO brand in the Districts by spending a considerable amount of money in advertising. It was alleged that despite this, KAMCO opted to authorise other dealers for some of the Districts along with the Informant, and that KAMCO arbitrarily stopped issuing new stocks to the Informant. The Informant further alleged that to meet the demand for new stocks, it had to procure the same from unauthorised dealers by paying excessive amounts.

The CCI noted that the Informant sought relief in relation to two allegations, the first relating to KAMCO giving authorised dealerships to other dealers, and the second relating to KAMCO refusing to supply new stocks to the Informant. The CCI found no competition concern in relation to the first allegation as the dealership agreement entered into between KAMCO and the Informant granted KAMCO the right to appoint other authorised dealers. Further, the CCI opined that such appointment would improve intra-brand competition and ensure wider choice to consumers In relation to the second allegation, the CCI observed that based on evidence KAMCO had made supply of machineries and spare parts to the Informant. Consequently, the CCI held that the dealership agreement could not be said to raise any anti-competitive concerns, and dismissed the complaint accordingly.

[1] Venkateswara Agencies v. Kerala Agro Machinery Corporation Limited, Case No. 38 of 2019, order delivered on 5 May 2020.

Published In:Inter Alia Special Edition - Competition Law - June 2020 [ English
Date: June 10, 2020