By way of a 14 March 2018 order,(1) the Competition Commission of India (CCI) has directed the director general to investigate Honda Motorcycle and Scooter Private Ltd (Honda) for allegations regarding the imposition of vertical restraints and abuse of its dominant position in the market for the manufacture and sale of scooters in India. The director general was directed to conduct a detailed investigation after the CCI arrived at a prima facie finding that the following activities had violated of Sections 4(2)(a)(i), 4(2)(a)(ii) and 4(2)(d) of the Competition Act:
- requiring the purchase of accessories and merchandise items;
- forcefully billing slow-moving vehicles;
- imposing compulsory deductions for advertising expenses;
- imposing restrictions on insurance and finance options;
- making the purchase of annual maintenance contracts, extended warranties and roadside warranties contingent on the purchase of booklets from Corporate India Warranties (I) Private Ltd; and
- terminating dealerships without prior notice and refusing to provide stock.
The CCI further held that, in violation of Section 3(4) of the act, Honda had imposed vertical restraints on its dealers by:
- implementing a resale price maintenance, including monitoring maximum permissible discount levels through a discount control mechanism; and
- levying penalties for non-compliance.
For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email ([email protected]). The Vaish Associates website can be accessed at www.vaishlaw.com.
Endnotes
(1) CCI decision dated 14 March 2018; for the full text, please see the CCI's website.
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