Inter Se Dispute Between Toyota And Car Buyer Lacks Market-Wide Anticompetitive Implications, CCI Dismisses Information

Brief Facts:

The Informant booked a car, 'Innova Hycross Hybrid ZX(O)', with the Dealer. Initially, the Dealer assured delivery within two months, but the receipt later indicated an eight-month waiting period. The Informant alleged that other customers who booked the same car on or after his booking date received their cars before him, indicating unfair treatment. When the Informant approached the Dealer's officials to understand the reason behind this, they could not provide a satisfactory explanation and evaded his queries about booking and delivery details.

The Informant also mentioned the presence of Direct Sales Agents (DSAs) who offered guaranteed delivery within a few days for a premium of about Rs. 2.25 Lakh. He alleged that the Dealer's practices favoured certain consumers, creating artificial scarcity and imposing 'Resale Price Maintenance' on customers, which adversely affected competition. The Informant eventually received the car on 05.04.2023 but continued to raise issues through a legal notice dated 14.04.2023. Toyota Kirloskar Motors Pvt. Ltd. (“Toyota”), the manufacturer, reiterated that the car was delivered despite a waiting period of 30-32 weeks. Toyota also claimed that the Informant had accepted the booking slip without protest and only raised concerns four months later.

The Dealer stated that the Informant was aware of the long waiting period and that the Dealer had promised to try for early delivery upon his request. After delivering the car on 05.04.2023, the Dealer requested the Informant to withdraw the legal notice, but he demanded an extended warranty, which the Dealer refused. The Dealer denied all allegations raised by the Informant in notices dated 27.03.2023 and 14.04.2023.

The Informant claimed that the relevant product was 'strong hybrid passenger vehicles' and the relevant geographic market was 'India'. He stated that Toyota held a dominant position in this market and charged excessive prices by creating false scarcity, compelling customers to pay a premium for early delivery. He also mentioned that additional costs, such as handling charges, extended warranties, and forced accessory purchases, increased the sale price significantly.

Feeling aggrieved, the Informant filed a complaint before the Competition Commission of India (“CCI”). He alleged that the Dealer's and Toyota's conduct violated Sections 4(2)(a), 4(2)(c), and 3(4) of the Competition Act, 2002 (“the Act”).

Observations of the CCI:

The CCI noted that the Informant's primary grievances were an arbitrary change in the delivery time of the car from two months to eight months, a pick-and-choose policy in-car delivery, an unlawful demand of premium by DSAs, the imposition of Resale Price Maintenance, and forcing customers to purchase accessories. The Informant alleged that Toyota held a dominant position in the relevant market of strong hybrid passenger vehicles in India and violated Sections 4(2)(a)(ii) and 4(2)(c) of the Act.

The Commission noted that Toyota, in its response dated 06.04.2023 to the Informant's notice, stated that the Informant was informed about the eight-month waiting period at the time of booking and accepted it. Toyota cited a semiconductor shortage beyond the manufacturer's control as the cause of the delay affecting the automobile industry. Toyota also clarified that the Dealer was not its agent, and their relationship was on a principal-to-principal basis, thus Toyota had no role in vehicle delivery to consumers. The Dealer, in its response, denied employing DSAs and asserted it could not be held responsible for third parties demanding premiums for early car delivery. The Dealer also denied prioritizing other customers over the Informant and accused the Informant of abusing his position as an advocate.

The CCI noted that such allegations seemed to be an inter se (between or among themselves) dispute between the Informant and the Dealer/Toyota, lacking market-wide anti-competitive implications. Long waiting periods, dependent on various factors like those cited by Toyota, typically do not warrant antitrust scrutiny. Regarding prices, the CCI held that it was an outcome of market demand, supply forces and consumer preferences. The Informant did not provide evidence showing these prices were unfair or discriminatory under the Act. Thus, the allegations did not reveal any anti-competitive concerns, and the CCI found no reason to analyze abuse of dominant position by the Dealer or Toyota.

Regarding the 'Resale Price Management' allegation under Section 3(4) of the Act, the CCI noted that the Informant failed to provide evidence of any agreement causing an appreciable adverse effect on competition (AAEC) in India.

Therefore, no prima facie case of contravention of Section 3 or 4 of the Act was made against the Dealer or Toyota, and the CCI directed the matter be closed under Section 26(2) of the Act.

Case Title: Balbir Singh Nagpal vs Toyota Kirloskar Motors Private Limited and Anr.

Case No.: Case No. 04 of 2024

Date of Pronouncement: 12.07.2024

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