2 June, 2015
On 11 February 2015, the Competition Commission of India (“CCI”) issued a decision dismissing a complaint by Bhasin Motors (India) Private Limited (“Bhasin Motors”) against Volkswagen Group Sales India Pte Ltd (“Volkswagen”) alleging that the latter had abused its dominant position, after coming to the conclusion that the issues raised were not competition law matters, and accordingly, no case was made out.
Bhasin Motors, an authorised dealer of Volkswagen cars for the territory of Delhi/National Capital Region, alleged that Volkswagen, a subsidiary of Volkswagen AG, had breached the terms of a dealership agreement between the parties by appointing Frontier Automobile Pvt Ltd (“Frontier”) in the same geographical area of Bhasin Motors’ showroom, despite the fact the parties had agreed upon clearly demarcated territories in the agreement.
It was also alleged that Volkswagen had abused its dominant position in the market and exploited Bhasin Motors by forcing it to sign a unilateral agreement which contained “unfair and one-sided” clauses that excluded Volkswagen from any obligation and liability. A further allegation was that Volkswagen had acted in a discriminatory fashion by setting different sales targets for Bhasin Motors and Frontier, and that Volkswagen had reneged its prior agreement to extend a line of credit to Bhasin Motors to place orders for Volkswagen cars, by failing to disburse the funds.
Bhasin Motors claimed that the occurrence of the abovementioned issues resulted in a reduction in sales, which was exacerbated further when several of Bhasin Motors’ employees left and joined Frontier. Subsequently, Volkswagen unilaterally terminated the dealership agreement with Bhasin Motors.
In considering the allegations, the CCI came to the view that the issues arising from the complaint did not indicate any competition concerns, and dismissed the complaint pursuant to section 26(2) of the Indian Competition Act (No. 12 of 2003). Section 26(2) empowers the CCI to dismiss complaints where a prima facie case cannot be made out.
The CCI found that Volkswagen had a “very negligible share” in the market, which it defined to be the passenger car segment in India, and that the market was dominated by a number of other players, such as Maruti, Hyundai and Tata. In this regard, the CCI considered that Volkswagen could not be said to be a dominant player and as such the question of abuse of dominance did not arise.
In Singapore:
In assessing whether a practice is an abuse of dominance in Singapore, the Competition Commission of Singapore will also undertake the preliminary analysis of whether a dominant position is held. Where the entity in question does not hold a dominant position, then no case of abuse of dominance can be made.
For further information, please contact:
Cavinder Bull, Director, Drew & Napier
cavinder.bull@drewnapier.com
Chong Kin Lim, Director, Drew & Napier
chongkin.lim@drewnapier.com
Scott Clements, Drew & Napier
scott.clements@drewnapier.com
