2024 (1) TMI 1387 - CCI - Companies Law

Contravention of provisions of Section 4 of Competition Act, 2002 - taking undue/ illegal advantage of Faster Adoption and Manufacturing of Electric Hybrid Vehicles Policy (FAME) launched by the Ministry of Heavy Industries and Public Enterprises, through Department of Heavy Industries (DHI) - HELD THAT - The Commission has perused the Information, material provided by the Informant as well as publicly available information and observes that the gravamen of allegations of the Informant is under-pricing by the OPs of their ETWs so as to avail the demand incentive/ subsidy provided by the Government under the FAME policy, charging for essential components such as charger, software etc. separately from the customer, and consequently foreclosing the benefit of subsidy to other manufacturers whose products actually fall within the price limit set under the FAME policy. The Informant has alleged abuse of dominant position by the OPs in contravention of provisions of Section 4 of the Act. For an analysis of the case under Section 4 of the Act, the first requirement is to delineate the relevant market as per Section 2(r) of the Act which comprises of relevant product market and relevant geographic market in terms of Section 2 (t) and 2(s) of the Act. The next step is to assess the dominance of OPs in the relevant market so delineated, in terms of the factors enumerated under Section 19(4) of the Act. Once the dominance of an OP is established, the final step is to analyse the allegations pertaining to abuse of dominance in terms of provisions of Section 4 of the Act. The relevant product market in the instant matter may be delineated as market for manufacture and sale of ETWs. Further, it may be noted that the conditions of demand and supply are generally homogenous across India except differences in taxes imposed/incentives provided by different state governments. Therefore, the relevant geographic market may be delineated as India, and thus, the relevant market in the instant matter may be carved out as market for manufacture and sale of ETWs in India - the Commission notes that there appears to be no single player which is able to exert market power in its favour or appears to demonstrate a position of strength to operate independently of market forces in terms of explanation (a) to Section 4 of the Act, in the relevant market. Therefore, none of the OPs appear to have a dominant position in the relevant market. The Commission finds that no prima facie case of contravention of the provisions of Section 4 of the Act is made out against any of the OPs in the instant matter. Accordingly, the information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act.

Summary

Issues:
Alleged contravention of Section 4 of the Competition Act, 2002 by Ola Electric Ltd., VIDA Hero Moto Corp Limited, TVS Motors, and Ather Energy Private Limited regarding the Faster Adoption and Manufacturing of Electric & Hybrid Vehicles Policy (FAME).

Detailed Analysis:

1. Allegations and Background:
The Informant, under Section 19(1)(a) of the Act, filed a complaint against the OPs for violating Section 4 of the Act by taking advantage of the FAME policy. The FAME policy aimed to promote electric and hybrid vehicles to reduce fossil fuel dependence and air pollution. The OPs allegedly sold essential components separately to stay within the subsidy limit, undermining the policy's intent.

2. Abuse of Policy and Competition Impact:
The OPs are accused of abusing the FAME policy by pricing essential components separately, leading to market distortion and denial of benefits to genuine manufacturers. This practice allegedly resulted in adverse effects on market competition and consumer interests, impacting small manufacturers' ability to compete.

3. Relevant Market and Dominance Assessment:
The relevant market was identified as the market for Electric Two Wheelers (ETWs) in India. The dominance of OPs in this market was evaluated based on market share data. However, the Commission noted that no OP demonstrated a stable market share or dominance, with intense competition expected due to market growth and new entrants.

4. Dominance Determination and Conclusion:
After assessing market dynamics, the Commission found that none of the OPs had a dominant position in the relevant market. As a result, no prima facie case of contravention of Section 4 of the Act was established against the OPs. The Commission ordered the closure of the case under Section 26(2) of the Act, rejecting the relief sought under Section 33.

5. Confidentiality and Order Conclusion:
The Informant's request for confidentiality was granted for three years, as per Regulation 35(1) of the CCI (General) Regulations, 2009. The Secretary was directed to communicate this decision to the Informant. The order was concluded, stating that no relief was warranted against the OPs based on the findings of the Commission.

This detailed analysis outlines the key aspects of the judgment involving allegations of competition law violations related to the FAME policy and the Commission's decision regarding the lack of dominance by the OPs in the relevant market, leading to the closure of the case.