CASE- EXCLUSIVE MOTORS PRIVATE LIMITED VS AUTOMOBILE

LAMBORGHINI S.P.A CASE NO. 52 OF 2012

FACTS OF THE CASE

Exclusive Motors Pvt. Limited is a South Delhi based supercars selling company whose
primary business is, to make agreements with the Super Sports Car Companies like
Lamborghini, Aston Martin, Bentley etc. and buy cars from those companies and sell it to the
Customers throughout India through their dealerships. For Indian sales-based promotions
costs were borne by Exclusive Motors
in the year 2011, Volkswagen India, another sub-company belonging to the Volkswagen
Group was launched in India to sell cars under the Volkswagen badge.

Thus, Volkswagen dealerships were opened, and Lamborghini cars were decided to be sold
through these dealerships as against the existing Exclusive Motors dealerships. Now, in this
notice period, the importing price of Lamborghini cars was much higher to Exclusive Motors
against the prices bought by Volkswagen India. Exclusive Motors claimed this as a price
discriminatory policy and violation of section 3&4 of competition act.
The agreements of Lamborghini with Volkswagen India were suspected to be anti-
competitive and contravening Section 3 as they directly determined the sale and purchase
price of the Lamborghini cars.

ISSUES RAISED

1. Whether Volkswagen India and Automobile Lamborghini be considered as separate

enterprises although they both belong to Volkswagen Group under Section 2 (h)?
2. Whether Automobile Lamborghini S.P.A is abusing its Dominant Position under
Section 4?
 3. Can an internal agreement between the two subsidiaries belonging to the same group
be considered as an agreement for the purpose of Section 3?

ARGUMENTS FROM THE INFORMANT’S SIDE

1. The informant, therefore, alleged contravention of section 3 and 4 of the Act. The
agreements of the opposite party with its group company and its Partner are alleged to be
anti-competitive and in contravention of section 3 as they directly determine the sale and
purchase price of the car.
2. Also, the exclusive distribution agreement between the opposite party and its group
company Volkswagen India is alleged to violate section 3 of the Act since it excluded the
informant and other prospective dealers to become the importers and dealers of opposite
party products. Regarding section 4, the informant considered the relevant market as the
market for ‘distributing super sports cars in India’.
3. The informant stated that the opposite party held 52% share in this market individually
while with other Volkswagen group cars, its share amounted to 60%. Therefore, the
opposite party violated section 4 and by imposing unfair and discriminatory conditions
and section 4 by denying market access to the informant. On the aforesaid basis, the
informant prayed the Commission to direct an inquiry under section 26 of the Act into the
anti-competitive practices adopted by the opposite party and Volkswagen India.

ARGUMENTS FROM THE OPPOSITE PARTY’S SIDE

1. The informant paid attention to the size of the opposition and did not compare the size
with other competitors. This information does not mention the economic power of the
other party, nor does it mention the commercial advantage that the other party has over the
competitor. It was selling more cars than the opposition. He increased sales per
opposition. Other competitors with some presence in the Indian market include the Aston
Martin Mask Latti Bugatti and the Gunperuto Apollo. Brands such as Aston Martin,
Ferrari, and Lamborghini form part of this market, but the presence of these vehicles in
India is very small, so it cannot be said that they are all dominant when it comes to market
share. In terms of economic power and resources, all competitors are in the same position,
and not all competitors have a commercial advantage over others.
2. Therefore, it cannot be said that the opponent was a dominant company in the Indian super
sports car market companies could open offices in any country and have the right to
import
 cars directly through their offices or form subsidiaries to import cars from other
countries. No cheating and no competition issues.
3. Since the number of cars sold in India is very small, there is absolutely no need for the
other party to have a lot of income, and it is not a reason to start a lawsuit if the
opposing party himself wants to import Indian cars through a group company. Even if
the opponent is the dominant player, even on the opposite side. The opposition offered
the informant to terminate the existing contract and enter into a new contract with its
group company, Volkswagen India.
JUDGEMENT

 CCI held that since both Volkswagen India and Automobile Lamborghini belong to
the same group, they are part of a Single Economic Entity and there is no question of
Cartelization. Here CCI opined that Agreements between entities constituting one
enterprise cannot be assessed under the Act. This is with accord with the
internationally accepted doctrine of ‘single economic entity’. As long as the opposite
party and Volkswagen India are part of the same group, they will be considered as a
single economic entity for the purpose of the Act”.
 In order to check dominance CCI consider the relevant market which here is market
for Super Sports Car in India. CCI after considering the market share, size, resources,
economic power of opponents and its competitors found that there was ‘No
Dominance’ of Automobile Lamborghini in the market and hence there was no
ground for investigation.
Hence, CCI found that there was no contravention of Section 3 and Section 4 so there
is no prima facie case. Case observed to be closed under section 26(2).
 In an appeal before COMPAT it was observed that An internal agreement between
subsidiaries, which are a part of the same group, cannot be considered as an
agreement for the purpose of Section 3 of the Act” thereby endorsing the view of
CCI.

CONCLUSION
The concept of single economic unity by the objective of cartelization is only possible if the
two entities are completely relevant. In this case, they are in the same group part of a single
economic entity and no questions about cartelization. It is only an internal arrangement of a
group from the business perspective and therefore does not apply as an agreement.
In this case, although the concept of the single economic entity has brought something clear,
the ambiguity of the perspective of the competition board still exists as internationally about
it. Therefore, a vertical agreement can only exist between entities that are not part of the same
group or the economic entity. Therefore, the search must be based on the premise that your
authorized manufacturers and service providers are separate companies.