EXCLUSIVE MOTORS PVT. LTD. Vs. AUTOMOBILI LAMBORGHINI SPA

JUDGEMENT

(1.) THE appellant -M/s. Exclusive Motors Pvt. Ltd. has challenged an order passed by Competition Commission of India (hereinafter referred to as "CCI") under Section 26, holding that there was no prima -facie case and closing the same.

(2.) THE appellant -informant had claimed in the information that the appellant -informant was in the business of importing and selling Super Sports Cars in the territory of Delhi. It was inter -alia alleged that the opposite party Automobili Lamborghini S.P.A. was the manufacturer of Super Sports Car. The opposite party is a subsidiary of Audi AG, which in turn is a part of Volkswagen Group, which Group is stated to own majority of luxury brands such as Audi, SEAT, Lamborghini, Volkswagen, Skoda, Bentley, Bugatti and Porsche. It was alleged that the appellant -informant was appointed as an importer and dealer of Super Sports Car manufactured by opposite party by way of an agreement dated 01.11.2005. The appellant -informant had allegedly invested substantial time, efforts and money to develop Indian market for opposite party's cars, which market was negligible prior to the agreement. It was stated that in 2011, the opposite party appointed it own Group Company Volkswagen Group Sales Pvt. Ltd. (Volkswagen India) as an exclusive importer of the cars of opposite party and sent a letter dated 24.01.2012 informing of this arrangement and requesting termination of the Dealership Agreement dated 01.11.2005 and to enter into a fresh Dealership Agreement with Volkswagen India. It was alleged that the proposed new agreement entailed a larger deposit amount and deferred with the earlier agreement in as much as, the period required for termination on the part of either parties was reduced from 12 months to three months and hence the appellant -Informant did not agree for executing an agreement with Volkswagen India. It was alleged that as a result of this the respondent Lamborghini -opposite party sent a letter dated 24.01.2012, which was followed by a subsequent notice dated 12.03.2012, terminating the Dealership Agreement dated 01.11.2005 with effect from 31.03.2013. It was then stated that during the notice period, the opposite party had offered its products to appellant -Informant at much higher price than to its own company i.e. Volkswagen India and thus had adopted discriminatory pricing policy.

(3.) THE Commission considered this information in details. In so far as the contravention under Section 3 was concerned, the Commission took the view that for such contravention, there had to be a proved agreement between two or more enterprises. It held that the agreement between M/s. Lamborghini, the opposite party and its Group Company Volkswagen India could not be considered to be an agreement between the two enterprises as envisaged under Section 2(h) of the Act. According to the Commission, the agreements between entities constituting one enterprise, could not be assessed under the Act. In that the Commission relied on the internationally accepted doctrine of "single economic entity". It also took into consideration the contention of the appellant -Informant that Volkswagen was not a subsidiary of Automobili Lamborghini S.P.A., as per the admission in the letter dated 02.04.2011. According to the appellant, it was a separate legal entity owned by Volkswagen Group. However, the Commission took the view that this objection could not be entertained, as the opposite party and Volkswagen India were the part of the same Group and hence they would be considered as economic entity for the purposes of the Act and any internal agreement between them could not be considered as an agreement for the purpose of Section 3 of the Act.