Shreekant, booked two newly launched SUVs "Zeta", in Jan 2023 from VayuGati Limited, a prominent automobile manufacturer in India. Such booking amount was to be deposited without knowing the price of the car and without
CS Professional · Resolution of Corporate Disputes, Non-Compliances & Remedies · PYQS · December 2024
Shreekant, booked two newly launched SUVs "Zeta", in Jan 2023 from VayuGati Limited, a prominent automobile manufacturer in India. Such booking amount was to be deposited without knowing the price of the car and without knowing when the vehicle would be made available. The car got launched in June 2023 when prices and delivery time frame of the same was announced. The base model was launched at ₹ 12.74 lacs (ex-showroom price) and the other models were priced accordingly. As per Shreekant, this was an unreal price for the product as the market was expecting the prices to be around ₹ 10.00 lacs. Lot of dealers in the market forced accessories, extended warranty etc. to customers before promising delivery of their much-awaited launch. He further stated that by such conduct in the market, VayuGati Limited generated an artificial hype in the market that there will be 8 to 10 months of waiting on this product. Customers, expecting a huge waiting period, proceeded to buy the car without thinking through whereas it is observed that actual sales pattern of the car is reducing month by month post the launch. As per Shreekant, seeing the sales pattern, VayuGati Limited started to do deep discount on new bookings, calling it with a different name "Thunder", loaded with lot of freebies. He asked VayuGati Ltd to refund the excess price charged on his bookings which the company rejected and said that there is no reduction in prices from their side and they are not planning any refund. Aggrieved by the refusal of the VayuGati Ltd to grant him a refund, Shreekant has filed an application with present information with the Competition Commission of India alleging that the Company has abused its dominant position in the market and imposed unfair and unethical pricing strategy with respect to his bookings 'Zeta', which also amounts to an unfair trade practice. Hence, it should be penalized as well as directed to refund the excess charged. He has also stated that till the time the Commission's inquiry in the matter is completed, the VayuGati Ltd be stopped from any selling 'Zeta' cars in the Indian market. Referring to the judicial pronouncement, analyze and decide whether Shreekant's allegation be accepted by CCI.
Answer & Explanation:
The facts of the given situation are similar to case of "Harmit Ahuja v. Maruti Suzuki India Ltd" as decided by Competition Commission of India (Commission). In this case the Informant had made allegations with regard to abuse of dominant position by Maruti Udyog Ltd. (OP). As such, the first step the Commission shall had to advert to was to define a 'relevant market' and assess whether the OP was in a position of dominance in the same. As the allegations made in the present information pertain to the car Jimmy", an SUV, it was noted from the information available in the public domain and evidently, in 2022 and 2023, the SUV sales made by the Maruti Suzuki were 249100 and 206000 respectively, while the sales made by Mahindra & Mahindra were 239800 and 204500 respectively. Assuming that the above stated data comprises the entire SUV segment of the passenger cars markets in India, the market share of the Maruti Suzuki in the same in 2022 and 2023 comes to approx. 22% and 21.5% respectively. It was laid down that in light of the data extracted above, in the opinion of the Commission, Maruti Suzuki does not hold a market share large enough to enable it to operate independently of competitive forces prevailing in the market or to affect its competitors or consumers or the market in its favour. As such, Maruti Suzuki does not appear to be a dominant player in the market. Therefore, in the opinion of the Commission, a case of violation of the provisions of Section 4 of the Competition Act, 2002 (Act) cannot be made out against Maruti Suzuki. Further, the Commission also noted that the grievance raised by the informant is an inter-se dispute between the informant and Maruti Suzuki regarding the price of the product sold by Maruti Suzuki to the information. In the opinion of the Commission, on the basis of the grievances alleged by the informant, no competition issue or concern seems to arise from the facts and allegations stated by the informant. Once a buyer purchases a product from a seller at a given price, it cannot insist to avail benefit of any future discount which may be offered on such product by the seller. The discounted price alleged also does not seem to be predatory in nature. In view of the above, the Commission was of the considered opinion that no prima facie case of contravention of the provisions of Section 4 of the Act was made out against Maruti Suzuki in the present matter. Applying the ratio of the above decision to the given situation, it can be said that Shreekant's allegations against VayuGati Ltd. may not be accepted by CCI as VayuGati Ltd. does not appear to be a dominant player in the market and also once Shreekant purchases a car from VayuGati Ltd at a given price, he cannot insist to avail benefit of any future discount which may be offered on such product by Vayugati Ltd.
Topics: Competition Law
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