CCI Rejects Dealer’s Complaint Against Honda
CCI Rejects Dealer’s Complaint Against Honda
Observes that the allegations did not fall in the category of anti-competitive practices
The Competition Commission of India (CCI) has dismissed a dealer’s complaint against Honda Motorcycle & Scooter India Pvt Ltd. It held that commercial disputes and transactional issues on agreements do not fall under the Competition Act, 2002.
The grievance under Section 19(1)(a) alleged contravention of the provisions of Section 4. It sought interim relief under Section 33, directing Honda to immediately restore the dealership of the complainant.
The dealer held that Honda abused its dominant position in the market by entering a contract, subject to the termination of the dealer's existing agreement with Suzuki Motorcycle India. However, the company later dumped the unpopular models.
The Commission observed that the allegations were about commercial transactions and were not in the purview of the Act.
The competition regulator held, "The purchase and sale of a particular model or a make by any authorized agency of a vehicle manufacturer is business-related. This agreement does not give rise to any anti-competitive conduct.”
The matter snowballed after Honda declined to permit the induction of a new director, and later, terminated the dealership agreement.
The Commission noted that the agreement was subject to terms and conditions. The five-warning letters to the dealer and the correspondence between the parties reflected the dispute.
Commenting on the matter, Bharat Budholia, a partner at AZB & Partners said, "The decision of the CCI is consistent with its practice of not adjudicating allegations arising from contractual disputes unless it results in an appreciable adverse effect on competition.”
However, Akshayy S. Nanda, a partner at Saraf and Partners stated that there could be different parameters for dominant undertakings as they have significant responsibilities. "These entities hold significant market power and have a heightened duty not to impose unfair conditions on other market participants.”
He added, "Importantly, these laws are not intended to resolve commercial disputes between individual parties. Instead, their primary focus is to prevent practices that may have an appreciable adverse effect on competition within the country.”
Meanwhile, the challenge is about assessing fairness objectively while evaluating the impact of the practices as a whole and not limited to an individual.
The CCI held, “The Informant exercised his choice in becoming a dealer of Suzuki earlier and of the OP [Honda] later. Choosing the dealership of any company is a matter of choice for any dealer who enters a contractual relationship with a manufacturer on acceptable terms and conditions.”
Explaining the scenario, Natasha Treasurywala, a partner at Desai & Diwanji remarked that a commercial dispute is not barred under the Competition Act. "While some private contractual disputes may also end up falling foul of the Competition Act because there are wider implications on market conduct, in this case, the CCI has found otherwise.”
The Commission held that choosing the dealership of any company was a matter of choice for any dealer on acceptable terms and conditions. One could not suddenly say it was an abuse of dominant position because the terms no longer worked to his advantage.
