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India – COMPAT Upholds CCI’s Decision In The Case Against Lamborghini.

9 April, 2014

 

 

On February 28, 2014, COMPAT dismissed the appeal filed by Exclusive Motors Pvt. Ltd. (‘Exclusive Motors’) against an earlier decision of CCI under Section 26(2) of the Act dismissing, at a prima facie stage, the complaint against Automobili Lamborghini SPA (‘Lamborghini’) and Volkswagen Group Sales India Pvt. Ltd. (‘Volkswagen India’).


Exclusive Motors had, in its complaint before CCI, inter alia alleged that: (i) Lamborghini’s exclusive supply agreement with its group company, Volkswagen India was inconsistent with Section 3(4) of the Act; (b) Lamborghini’s agreement with Volkswagen India and its partner (Auto Hangar) had the effect of determining the sale and purchase of cars and was hence inconsistent with Section 3(3) of the Act; and (c) Lamborghini had abused its dominant position by imposing unfair and discriminatory conditions. CCI did not find any merit in Exclusive Motor’s complaint. In its order dated November 6, 2011, CCI had observed that, to establish a contravention of Section 3 of the Act, there must exist an agreement between two enterprises. Since Lamborghini and Volkswagen India belonged to the Volkswagen AG Group, they were part of a “single economic entity”, an agreement between them would be in the nature of an internal agreement and would hence not be considered as an agreement for the purposes of Section 3 of the Act. On the allegation of abuse of dominance, CCI observed that Lamborghini was not in a dominant position in the market for “Super Sports Cars” and hence there was no question of abuse of dominance.


In appeal, COMPAT agreed with CCI’s decision of excluding agreements between enterprises belonging to a “single economic entity” from the purview of Section 3 of the Act. On facts, the COMPACT examined the shareholding pattern of Lamborghini and Volkswagen India and affirmed that they both belonged to the “Volkswagen AG Group”. On claims under Section 4 of the Act, COMPAT once again agreed with CCI’s prima facie view and upheld its decision. COMPAT recounted CCI’s assessment of the relevant market and Lamborghini’s relative position of strength in the market. Additionally, COMPAT observed that the right of an enterprise to appoint its own group company as an importer is unquestionable and such appointment can not raise competition concerns.

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com


Shuva Mandal, AZB & Partners 

shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com


Percy Billimoria, AZB & Partners 
percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

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