ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Hyundai and the Law of Resale Price Maintenance in India

The Competition Commission of India’s landmark order in the Hyundai case on resale price maintenance is analysed in light of the CCI’s broader decisional practice on RPM. It finds that, unlike in other cases, the CCI did not examine the possible benefits of RPM in increasing the sale of cars. In effect, the CCI presumed that the very existence of the discount control measure was unlawful, without the need to assess competitive effects. The Hyundai case is used to highlight the inconsistencies in the CCI’s decisional practice on RPM.

The Competition Commission of India’s (CCI) order in Fx Enterprise Solutions India Pvt Ltd v Hyundai Motor India Limited (2017) (hereinafter Hyundai) was the first and the only instance in Indian history so far where a company was found to have engaged in anticompetitive resale price maintenance (RPM) in violation of Section 3(4)(e) of the Competition Act, 2002. The order was subsequently set aside by the National Company Law Appellate Tribunal’s (NCLAT) decision in Hyundai Motor India Ltd v Competition Commission of India (2018). The CCI has appealed the NCLAT decision to the ­Supreme Court of India, where the matter is currently pending. Yet, many in the Indian competition law community hailed the CCI’s decision as providing a worthy legal precedent for evaluating RPM. Equally, the NCLAT’s decision has been ­criticised for wrongly acquitting Hyundai when there was clear evidence that Hyundai implemented a scheme to control the discounts offered by retailers. The Hyundai case has ­become iconic in Indian competition law and is widely cited by competition ­experts. Yet, a proper reading of this case shows the problematic approach of the CCI. This paper studies the Hyundai decision in light of other orders of the CCI on RPM and argues that the CCI’s decision in this case amplifies the ­inconsistencies in the CCI’s conduct of economic analysis in RPM cases.

RPM is the practice of prescribing the price at which goods can be sold downstream. It can take place either through a minimum retail price (by way of a price floor), or a maximum retail price (by way of price ceiling), or both. Prescribing a ­resale price reduces price competition, which may impact consumers adversely. However, price ceilings are looked upon more favourably than price floors because they generally do not cause higher prices and are meant to avoid the problem of double mark-ups.

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Updated On : 19th Dec, 2020

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