CCI Dismisses Complaint against Sony India Private Limited

On May 11, 2020, the CCI dismissed a complaint alleging abuse of dominance under Section 4 and entry into anti-competitive agreements under Section 3(4) against Sony India Private Limited (‘SIPL’) and Sony Corporation, Japan (‘SCJ’)(together, ‘Sony’), filed by Accessories World Car Audio Private Limited (‘Informant’). The Informant is a distributor of Sony car audio products engaged in the business of sale and marketing of car audio and related accessories. SIPL is engaged in the manufacture of electronic multimedia products, with SCJ being its holding company[1].

The Informant alleged that it was appointed as a distributor for Sony car audio products for the territories of South, East, and Central Delhi. Prior to such appointment, the Informant was allegedly asked to deal exclusively in Sony products. Per the Informant, the requirement to not deal with competing brands, which was implemented in 2012, was imposed solely on it, and not on any other distributor. The Informant also alleged the existence of an arbitrary territorial restriction imposed solely on the Informant and not other distributors. The Informant alleged that any violation of Sony’s terms resulted in steps such as denial of incentives, denial of billing, and termination of the distribution agreement.

The CCI noted that based on public information, the market for car audio products was fragmented, with existence of players such as JBL, Kenwood, Bose, etc. Owing to the nature of the market, CCI opined that Sony did not appear to enjoy a dominant position of strength. Accordingly, the CCI refused to go into questions of abuse of dominance, since dominance of Sony was not established.

In relation to vertical agreements, the CCI noted that market power of the imposing enterprise would be an important consideration while assessing the anti-competitive impact of vertical restraints. Further, the CCI also noted that vertical restraints are not generally perceived as being anti-competitive when substantial portion of the market remains unaffected. The CCI observed that market for car audio was such that the presence of a large number of players exerted competitive restraints on Sony. Accordingly, the CCI held that owing to Sony’s lack of market power, vertical restraints imposed by Sony were unlikely to have an appreciable adverse effect on competition (‘AAEC’).

In light of the above, the CCI found no contravention of Section 3(4) or Section 4 of the Act arising out of Sony’s conduct and dismissed the complaint accordingly.

[1] Accessories World Car Audio Private Limited v. Sony India Private Limited & Anr., Case No. 03 of 2020, order delivered on 11 May 2020.

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