CCI Closes Complaint against Hero Moto Corp Citing No Contravention of Competition Act

CCI Closes Complaint against Hero Moto Corp Citing No Contravention of Competition Act

The forum did not find any substance in the allegations of the distributor

The Competition Commission of India (CCI) has closed the complaint filed by Sri Balaji Enterprises (informant) against Hero Moto Corp alleging contravention of Sections 3 and 4 provisions of the Competition Act, 2002.

Collectively referred to as OPs, the complaint was filed against Hero Moto Corp Limited (OP-1), Hero Moto Corp Limited (OP-2 Zonal Office), Hero Moto Corp. Limited (OP-3 Regional Office), Venkateshwara Associates (OP-4 Hero Spare Parts Stockist), Maruthi Agencies (OP-5), Manish Enterprises (OP-6), Shyam Auto Mobiles (OP-7), and Hero Moto Corp. Limited (OP-8).

Sri Balaji Enterprises, 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 2019-2020 was unfair, requiring HGPDs to make advance payments to super stockists within seven days. The policy also imposed restrictions on stock purchases and penalized delays. It subjected them to lower discounts compared to OP-5 to OP-7. Also, 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.

Thereafter, despite alerts, counterfeit products circulated unchecked, causing financial losses to the informant. OP-1 to OP-4 had set challenging monthly targets for the informant, leading to unsold stock and threats of distributorship cancellation.

Sri Balaji Enterprises claimed that the operational guidelines favored OP-5 to OP-7, strengthening their market dominance. Despite facing unfair conditions, it continued to promote OP-1 to OP-4's brand at personal expense, while OP-5 to OP-7 benefited.

The informant, via email, reported various grievances to OP-1 to OP-4, but the issues remained unresolved. During a meeting, OP-3 proposed compensation but later demanded a share, threatening to withhold it. OP-8 issued a pre-termination notice to support OP-5 to OP-7's market dominance. Also, a criminal complaint was filed against the informant for resisting the OP-3’s compensation demand.

Overall, it meant that the informant faced market suppression by OP-1 to OP-4 and alleged collusion between OP-5 to OP-7. Despite its efforts, the informant’s business suffered due to the unfair competition and lack of support from OP-1 to OP-4.

The Coram of Ravneet Kaur (Chairperson) and Sangeeta Verma (Member) observed that OP-1 appointed the informant on a non-exclusive basis, and the OPs seemed to be a part of the same business chain. Additionally, the discounts recommended by OP-1, as per the operational guidelines, were minimum discounts for entities in the business chain. As for the alleged agreement among some OP’s, no violation of Section 3 of the Act was established.

The Bench noted that the informant's claims about the dominance of multiple entities (OP-5 to OP-7) due to the actions of other OPs, did not warrant consideration under Section 4.

Thus, the Commission believed that as described by the informant regarding the allegations and the conduct of the parties involved, there were no competition concerns.