CCI Decision on Toyota Kirloskar Motors Complaint

July 24, 2024

The Competition Commission of India (CCI) bench consisting of Ravneet Kaur (Chairperson), Anil Agrawal (Member), Sweta Kakkad (Member), and Deepak Anurag (Member) ruled that internal disputes lacking broader market-wide anti-competitive impacts are not regulated under the Competition Act, 2002. Consequently, it dismissed the complaint filed against Toyota Kirloskar Motors and its dealer, which included allegations such as extended car delivery times, imposition of resale price maintenance, and high pricing.

Summary of Events

The Informant reserved a ‘Innova Hycross Hybrid ZX(O)’ car from the Dealer. Initially, the Dealer promised delivery within two months, but the receipt later indicated an extended waiting period of eight months. The Informant claimed that subsequent customers who booked the same model after him received their cars earlier, suggesting biased treatment. When the Informant questioned the Dealer’s officials about this discrepancy, they failed to provide a satisfactory explanation and avoided clarifying booking and delivery specifics.

The Informant also noted the involvement of Direct Sales Agents (DSAs) who promised guaranteed delivery within a few days for an additional fee of approximately Rs. 2.25 lakh. He alleged that the Dealer’s practices favored certain customers, creating artificial scarcity and enforcing ‘Resale Price Maintenance,’ which negatively impacted competition. The Informant eventually received the car on 05.04.2023 but continued to express concerns through a legal notice dated 14.04.2023. Toyota Kirloskar Motors Pvt. Ltd. (“Toyota”), the manufacturer, reiterated that despite a waiting period of 30-32 weeks, the car was delivered. Toyota further stated that the Informant had accepted the booking slip without objection and raised issues only four months later.

The Dealer indicated that the Informant was informed about the extended waiting period and assured efforts to expedite delivery upon his request. Following the car’s delivery on 05.04.2023, the Dealer urged the Informant to withdraw the legal notice, but he insisted on receiving an extended warranty, which the Dealer declined to provide. The Dealer refuted all allegations presented by the Informant in notices dated 27.03.2023 and 14.04.2023.

The Informant asserted that the relevant product was “strong hybrid passenger vehicles” and identified the geographic market as “India.” He alleged that Toyota held a dominant position in this market and engaged in charging excessive prices through artificial scarcity, forcing customers to pay premiums for early delivery. Additionally, he highlighted additional costs such as handling charges, extended warranties, and mandatory accessory purchases, which significantly inflated the overall sale price.

Discontented with these practices, the Informant lodged a complaint with the Competition Commission of India (“CCI”), alleging violations of Sections 4(2)(a), 4(2)(c), and 3(4) of the Competition Act, 2002 (“the Act”).

CCI’s Assessment

The CCI acknowledged the Informant’s concerns regarding the sudden extension of the car’s delivery timeline from two months to eight months, selective delivery practices, and allegations of direct sales agents (DSAs) charging premiums. The Informant also accused Toyota of imposing Resale Price Maintenance and compelling customers to purchase accessories.

In response to these allegations, Toyota, in its communication dated 06.04.2023, stated that the Informant was informed about the extended waiting period upon booking and had accepted it. Toyota attributed the delay to a semiconductor shortage affecting the automotive industry globally, asserting it was beyond their control. Toyota clarified that the Dealer operated independently as a principal, not as their agent, and was responsible for vehicle delivery to customers. The Dealer denied engaging DSAs and disavowed any responsibility for third-party premiums on early car delivery. Additionally, the Dealer refuted claims of favoritism towards other customers and accused the Informant of misusing his position as a legal practitioner.

Upon reviewing the submissions, the CCI concluded that the dispute primarily concerned interactions between the Informant and the Dealer/Toyota, lacking broader anti-competitive implications in the market. Extended waiting periods due to factors like semiconductor shortages are commonplace in the automotive industry and do not typically raise antitrust concerns. Regarding pricing, the CCI noted it was influenced by market dynamics, supply-demand forces, and consumer preferences. The Informant failed to substantiate that these prices were unfair or discriminatory under the Act.

Consequently, the CCI found no evidence to support allegations of abuse of dominant position by the Dealer or Toyota under Sections 4(2)(a)(ii) and 4(2)(c) of the Act. Moreover, regarding the allegation of Resale Price Maintenance under Section 3(4) of the Act, the Informant did not provide sufficient evidence demonstrating an agreement leading to an appreciable adverse effect on competition in India.

Therefore, lacking a prima facie case of contravention of Section 3 or 4 of the Act against the Dealer or Toyota, the CCI directed the closure of the matter under Section 26(2) of the Act.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

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