2019 (11) TMI 1814 - AT - Companies Law

Abuse of dominant position by an enterprise - HELD THAT - Nothing has been placed on record to establish that in the relevant market i.e. the segment of passenger cars, BMW India enjoyed a dominant position. The material available in public domain which has been considered by the CCI unmistakably demonstrates that BMW India had insignificant presence in the relevant market and BMW passenger cars did not occupy a significant market share. Merely because, the act of refusal on the part of OP-1 to renew dealership of Informant beyond 31st December, 2017 may have caused pecuniary loss to the Informant does not raise any competition concern, even if, the consequence of such termination of dealership has proved advantageous to the dealers of OP-1 in neighbouring states of Gujarat to sell BMW cars to customers hailing from Gujarat. As regards, fiscal loss to the State of Gujarat in the form of Taxes leviable on sale of cars suffice it to say that apart from the Informant having no locus to raise such issue the revenue resources available to the State would depend on the profitability of business and it lies within the domain of the manufacturer, whether setting up of dealership in a particular State would promote its business and generate profit. There are no ground to interfere with the well reasoned order impugned in this appeal, we take note of the fact that the Informant is said to have obtained financing facilities from OP-2 for running its business and default of debt advanced by OP-2 to the Informant is stated to be staggering amount exceeding Rs.54 Crores, in respect whereof OP-2 is stated to have filed application under Section 7 of the Insolvency and Bankruptcy Code, 2016 being C.P.(IB)No.161/2017 pending consideration before the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench. There are no merit in this appeal. The appeal is accordingly dismissed.

Summary

Issues:
1. Allegations of abuse of dominant position by the Appellant against Respondent No. 1 and Respondent No. 2.
2. Interpretation of Section 4 of the Competition Act, 2002 regarding abuse of dominant position.
3. Determining if Respondent No. 1 enjoyed a dominant position in the passenger car segment in India.
4. Analysis of termination of the dealership agreement between the parties and its legal implications.
5. Consideration of financial loss to the Informant and the State of Gujarat due to termination of the dealership.
6. Evaluation of the allegation that the information filed with the CCI was a counterblast in response to financial default by the Informant.

Detailed Analysis:

1. The appeal stemmed from an order by the Competition Commission of India (CCI) closing the Appellant's information alleging abuse of dominant position by Respondent No. 1 and Respondent No. 2. The CCI based its decision on the expiration of the Dealership Agreement between the parties due to non-renewal, leading to the dismissal of the Appellant's claims.

2. The concept of abuse of dominant position under Section 4 of the Competition Act, 2002 was central to the case. The Tribunal emphasized that while holding a dominant position is not prohibited, its abuse is forbidden. The key inquiry was whether Respondent No. 1 abused its dominant position in the passenger car segment in India by terminating the dealership agreement with the Appellant.

3. The Tribunal examined whether Respondent No. 1 held a dominant position in the passenger car market, concluding that BMW India did not enjoy significant market share compared to competitors like Maruti, Hyundai, and TATA. This assessment was crucial in determining the validity of the Appellant's allegations of abuse of dominance.

4. Regarding the termination of the dealership agreement, the Tribunal noted that the Appellant was informed of non-renewal in advance. The Tribunal rejected the Appellant's argument that the termination allowed dealers outside Gujarat to sell BMW cars in Gujarat, causing financial loss. It clarified that while breach of agreement may lead to civil liability, it does not necessarily constitute abuse of dominant position.

5. The Tribunal addressed the financial loss claimed by the Appellant and the alleged fiscal loss to the State of Gujarat due to termination. It dismissed the competition concerns raised, stating that the termination did not establish abuse of dominance. The Tribunal also rejected the argument that setting up a dealership solely benefited the dealer or the state in terms of revenue generation.

6. Lastly, the Tribunal acknowledged the financial default by the Appellant, leading to insolvency proceedings. It considered the Respondents' claim that the information filed with the CCI was a counterblast in response to the debt default. Despite this context, the Tribunal found no merit in the appeal and dismissed it without costs.

This detailed analysis encapsulates the key legal issues, interpretations, and conclusions drawn in the judgment by the National Company Law Appellate Tribunal, New Delhi.