BMW India gets clean chit from NCLAT over dominance abuse charge

In a relief to luxury car-maker BMW India, the National Company Law Appellate Tribunal (NCLAT) has dismissed a petition filed by one of its former dealers, alleging abuse of dominant position.

A two-member bench headed by Chairperson Justice S J Mukhopadhaya has upheld the earlier order passed by fair trade regulator CCI, which had also rejected Parsoli Motors' plea on May 30, 2018.

Competition Commission of India (CCI) has said that as BMW has a negligible share in the passenger car segment in India, hence the question of abuse of dominant position did not arise.

The NCLAT, which is an appellate authority over CCI, said it "find no ground to interfere with the well reasoned order impugned in this appeal" and dismissed it.

The appellate tribunal also took note of the fact that the informant Parsoli Motors had obtained loan from BMW India Financial Services, which is another respondent, for running its business and defaulted it.

The company has filed insolvency plea before the Ahemdabad bench of National Company Law Tribunal to recover amount exceeding Rs 54 crore.

Parsoli Motors Works was a dealer selling BMW cars in Gujarat since 2007. However, the dealership agreement was terminated in December, 2017.

After that it approached CCI alleging abuse of dominant position against the luxury car maker.

It had contended that it was not given sufficient time to exit from the business and as effect of termination of its dealership, the company was allowing dealers outside Gujarat to sell BMW cars to customers in the state, which was resulting in loss to the state government also.

It contended that the luxury car-maker has not only violated its own policy but also cheated the state exchequer.

However, CCI had found that BMW India has negligible share in passenger car segment in India which is dominated by its formidable competitors like Maruti, Hyundai, Tata etc. The fair trade regulator concluded that BMW India cannot be said to be a dominant player, therefore, the question of abuse of dominant position did not arise at all.

This was challenged by Parsoli Motors before the NCLAT.

The appellate tribunal also agreed to the finding of CCI and said that BMW India has "insignificant presence" in the relevant market.

"Even if it is assumed for the sake of argument that the termination of the dealership of the Informant or refusal on the part of OP-1 (BMW India ) to further renew dealership in favour of the Informant is in derogation of the policy framed in this regard and the Informant had altered its position by raising infrastructure and making investment for running such dealership, breach thereof may give rise to civil liability but not have the consequence of abuse of dominant position," said the NCLAT order.

Over the claim of loss to the exechequer of Gujarat, the appellate tribunal said, "It is inconceivable that an Automobile Company would setup a dealership solely for the benefit of the dealer or for generating revenue for the State where such dealership is located".

"Argument raised on this score being highly illogical and repugnant to reason is rejected," it added.