Background

On September 14, 2023, CCI dismissed a complaint by Sri Balaji Enterprises (‘Informant’) against M/s Venkateshwara Associates (‘Hero Spare Parts Stockist’), Hero Moto Corp Limited, Maruthi Agencies, Manish Enterprises and Shyam Auto Mobiles (collectively, ‘Opposite Parties’) alleging contravention of Section 3 and 4 of the Competition Act. ^[1]

Allegations

The Informant is a partnership firm and was appointed as a non-exclusive Hero Genuine Part Distributor (‘HGPD’) in the district of Mahabubnagar, Telangana.  It alleged that the Opposite Parties violated Sections 3 and 4 of the Competition Act due to the following practices:

i.    Discriminatory Trade Discount Policy: It was averred that Hero Motocorp Ltd. Provided a lesser discount of 18% to the Informant as compared to the 21% offered to Maruthi Agencies, Manish Enterprises and Shyam Automobiles. It was also alleged that TDS and GST charges were charged from the Informant, whereas it was absent with regard to Maruthi Agencies, Manish Enterprises and Shyam Auto Mobiles;

ii.   Price Differentiation: Maruthi Agencies, Manish Enterprises and Shyam Automobiles were able to offer goods at lower prices to retailers as compared to the Informant; and

iii.  Discriminatory Targets: The Informant also alleged that huge targets were assigned to the Informant (and were not applied to the other Opposite Parties allowing them to perpetuate their dominance) for every month for purchase and sale of the goods and incase of failure to achieve these targets, the Informant was threatened with cancellation of its distributorship. The forced purchase and sale of goods caused piling up of huge deadstock with the Informant and also resulted in financial losses to it.

Interim Relief: The Informant also sought interim relief under Section 33 of the Act.

CCI’s Assessment

The CCI dismissed the information and closed the matter under Section 26(2) of the Competition Act (accordingly also denying the Informant’s prayer for interim relief) inter alia for the following reasons.

i.    Section 3 of Act: The CCI noted that the appointment of the Informant was on a non-exclusive basis in the district of Mahabubnagar, Telangana and the Opposite Parties appear to be in the vertical chain of business. No case of cartelisation accordingly seems to have been made out since discounts suggested by Hero Moto Corp Limited were in the nature of minimum discounts for entities in the vertical chain of business; and

ii.   Section 4 of the Act: The CCI observed that the allegation of abuse of dominance has been leveled against more than one entity and thus, does not merit consideration.

[1] Sri Balaji Enterprises v. Hero Moto Corp. Ltd. & Ors., Case No. 14 of 2023.