CCI Closes Complaint Against Hero Moto Corp Limited, Citing No Contravention Of Competition Act, 2002
The Competition Commission of India (‘CCI’) comprising Ravneet Kaur (Chairperson) and Sangeeta Verma (Member) closed the complaint filed by Sri Balaji Enterprises (‘Informant’) alleging contravention of provisions of Section 3 and Section 4 of the Competition Act, 2002 ('Act'). The complaint has been filed against Hero Moto Corp Limited (‘OP-1’), Hero Moto Corp....
The Competition Commission of India (‘CCI’) comprising Ravneet Kaur (Chairperson) and Sangeeta Verma (Member) closed the complaint filed by Sri Balaji Enterprises (‘Informant’) alleging contravention of provisions of Section 3 and Section 4 of the Competition Act, 2002 ('Act').
The complaint has been filed against Hero Moto Corp Limited (‘OP-1’), Hero Moto Corp. Limited (Zonal Office) (‘OP-2’), Hero Moto Corp. Limited (Regional Office) (‘OP-3’), Venkateshwara Associates (Hero Spare Parts Stockist) 4’), Maruthi Agencies (‘OP-5’), Manish Enterprises (‘OP-6’), Shyam Auto Mobiles (‘OP-7’) and Hero Moto Corp. Limited (‘OP-8’), collectively referred to as (‘OPs’).
The Informant was appointed as a Hero Genuine Part Distributor (HGPD) on a non-exclusive basis in Mahabubnagar, Telangana, by OP-1. The Informant alleged that OP-1's trade discount policy for 2019-20 was unfair, requiring HGPDs to make advance payments to super stockists within seven days. The policy also imposed restrictions on HGPDs' stock purchases, penalized delays, and subjected them to lower discounts compared to OP-5 to OP-7. OP-1 to OP-4's support for OP-5 to OP-7 allegedly violated their own trade policy and failed to protect the Informant from market suppression.
Counterfeit products circulated unchecked despite the Informant's alerts, causing financial losses. OP-1 to OP-4 set challenging monthly targets for the Informant, leading to unsold stock and threats of distributorship cancellation. The Informant claimed that the operational guidelines favored OP-5 to OP-7, strengthening their market dominance. Despite facing unfair conditions, the Informant promoted OP-1 to OP-4's brand at personal expense, while OP-5 to OP-7 benefited.
In an email, the Informant reported various grievances to OP-1 to OP-4, but the issues remained unresolved. OP-3 proposed compensation during a meeting but later demanded a share, threatening to withhold it. OP-8 issued a pre-termination notice allegedly to support OP-5 to OP-7's market dominance. A criminal complaint was filed against the Informant when they resisted OP-3's compensation demand.
Overall, the Informant faced unfair practices and market suppression by OP-1 to OP-4 and alleged collusion with OP-5 to OP-7. Despite their efforts, the Informant's business suffered due to this unfair competition and lack of support from OP-1 to OP-4.
Observations of the Commission:
The CCI closed the case and observed that OP-1 appointed the Informant on a non-exclusive basis in the Mahabubnagar district of Telangana, and the OPs seem to be part of the same business chain. Additionally, the discounts recommended by OP-1, as per the operational guidelines on record, are essentially the minimum discounts for entities in this business chain. Therefore, regarding the alleged agreement among some of the OPs, it appears that no violation of Section 3 of the Act has been established.
Furthermore, the Informant's claims about the dominance of multiple entities (OP-5 to OP-7) due to the actions of other OPs do not warrant consideration under Section 4 of the Act. Consequently, the Commission believes that there are no competition concerns based on the nature of the allegations and the conduct of the parties involved as described by the Informant.
Case Title: Sri Balaji Enterprises vs. Hero Moto Corp. Limited
Case No.: Case No. 14 of 2023