Competition watchdog dismisses complaint against vacation exchange firm RCI

The Competition Commission has dismissed a complaint of alleged anti-competitive practices against global vacation exchange firm RCI India for entering into a pact with subsidiary of Mahindra Holidays and Resorts, saying the agreement does not have any impact on the competition in the Indian markets.

RCI India is a subsidiary of RCI Inc and looks after the business of timeshare exchange in India.

A timeshare is a model in which customers own a right to use certain properties owned by timeshare companies for a fixed duration every year for a certain number of years, subject to availability, according to an order by the Competition Commission of India (CCI).

The order comes following a complaint filed by former director of RCI India who alleged that RCI through various agreements has been making illegal transactions with its clients including Mahindra Holidays and Resorts India Ltd.

The complaint stated that RCI Europe had executed an agreement with Luxembourg-based Covington S.A.R.L., a subsidiary of Mahindra.

According to the agreement, RCI Europe would provide interest free loan of 10 million euros to Mahindra (India) which was to be used by Covington for buying Holiday Club Resorts OY.

It has been alleged that the loan transaction creates barriers to competition for its rival in the timeshare exchange market.

While disposing of the case, the regulator noted "the acquisition, alleged to be anti-competitive, has taken place outside India and is in the context of a product meant for consumption outside India... Though Mahindra (India) seems to be the ultimate acquirer of the Holiday Club, the present case does not seem to have any impact on the competition in the Indian markets."

Further, the CCI said, "Acquisition of Holiday Club does not appear to bring any material change in the position of Mahindra (India) as a competitor in the Indian markets. Thus, the present case does not appear to raise any competition concern in India, to warrant scrutiny under the Act.