The Competition Commission of India passed an order dated 14th June 2018 whereby imposed a penalty on Hyundai India Motors Ltd. at the rate of 0.3% of its average relevant turnover of the last three financial years which was approximated to be Rs. 87 Crores for violation of section 3(4)(a), 3(4)(b), 3(4)(d), 3(4)(e) read with section 3(1) of the Competition Act, 2002 (hereinafter referred to as ‘the Act’). The same stood appealed by Hyundai India Motors Ltd. before Hon’ble National Company Law Appellate Tribunal (hereinafter referred to as ‘NCLAT’) wherein the said penalty got quashed.

The fact pattern in the matter of Hyundai India Motors Ltd. v. Competition Commission of India and Ors. is that two informants namely- Fx Enterprise Solutions India Pvt. Ltd. and St. Antony’s Cars Pvt. Ltd. respectively referred to as 1st Informant and 2nd Informant respectively had made allegations against the appellant that it indulges in activities like entering into exclusive dealership arrangements with its dealers wherein the dealers are required to obtain prior consent of the Appellant before taking up dealership of another brand, dealers are forced to procure spare parts, accessories and all other requirements, either directly from the ‘Hyundai Motors’ or through vendors approved by the ‘Hyundai Motor’, imposes Discount Control Mechanism due which amounts to resale price maintenance, and lastly allegations regarding price collusion was also leveled against the appellant. The Competition Commission came to a conclusion based upon the report submitted by the Director General that the appellant is liable for violation of the above-mentioned sections of the Act and therefore imposed a penalty of 87 Crores.

In the appeal filed before NCLAT, it was observed that the conclusions made by the Commission is solely based upon the report submitted by the Director General and is not substantiated with any evidentiary proof of the same. Along with this the Tribunal also observed that the order passed by the Commission falls short to determine ‘relevant geographical market’ as well as ‘relevant product market’, and the commission also failed to take into consideration any benefits to consumers and improvements in production or distribution of goods or provision of services due to the practice of the appellant.

Therefore, owing to such infirmity a bench comprising of Hon’ble Chairperson Justice S. J. Mukhopadhyaya, Member (Judicial) Hon’ble Justice A.I.S Cheema and Member (Technical) Balvinder Singh quashed the order of CIC and ordered a refund of the amount paid by the appellant in pursuance of the said order if any.

Source of image: