The Competition Commission of India (CCI) has held that a dealership termination, even if commercially harsh, does not by itself become a competition law violation unless there is material showing an anti-competitive agreement causing appreciable adverse effect on competition under Section 3(4), or dominance and abuse under Section 4 of the Competition Act, 2002. Where the dealer is free in practice to take another competing dealership, where the agreement permits discounting below Maximum Recommended Retail Price (MRRP), and where the manufacturer holds less than 1% market share in the relevant market for sale and distribution of passenger cars in India, no prima facie case arises under Sections 3(4) or 4 of the Competition Act.
Accordingly, the Commission held that no prima facie case of contravention of Sections 3(4) and 4 was made out against Nissan Motor India Pvt Ltd. and accordingly closed the information under Section 26(2) of the Act.
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The Coram of Ravneet Kaur (Chairperson), Anil Agrawal (Member), Sweta Kakkad (Member), Deepak Anurag (Member) first noted that for Section 3(4) of the Competition Act, 2002 to apply, there must be an agreement, and here the relationship was governed by the dealership agreement. It examined the allegation that the agreement had imposed exclusivity, which restricted the dealer from dealing in other new motor vehicles or spare parts without Nissan’s written consent.
On facts, the Commission found that the informant had not produced evidence to show that Nissan actually prevented it from acquiring competing dealerships. On the contrary, material in the public domain showed that the informant had acquired another dealership with VinFast while the Nissan dealership was still subsisting. On that basis, the Commission held that the allegation of exclusive dealership or unlawful restriction under Section 3(4) lacked substance.
As to resale price maintenance, the Commission examined Clause 6-2 of the dealership agreement and found that dealers were only prohibited from selling above the Maximum Recommended Retail Price. The clause expressly allowed the dealer to sell at a price lower than the MRRP. Since there was no restriction on minimum resale price or discounting, the Commission held that the allegation of resale price maintenance was not made out.
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On refusal to deal, the Commission held that the dealership had been terminated under Clause 16 of the agreement, which allowed either party to terminate the agreement during its subsistence by giving 90 days’ notice, without assigning reasons. The Commission treated the cancellation of the dealership as a standard commercial dispute and observed that freedom of contract and selection of trading partners are normal business practices and not, by themselves, anti-competitive conduct.
For the abuse of dominance claim, the Commission rejected the informant’s proposed relevant market limited to Nissan-branded passenger vehicles and related services. It held that the primary market could not be confined only to Nissan vehicles and instead delineated the relevant market as the “distribution and sale of passenger cars in India.”
After examining sales data of passenger vehicle manufacturers in India, the Commission noted that Nissan’s market share was less than 1%, specifically 0.48% for FY 2026 as reflected in the data considered by it. It therefore found Nissan’s market presence to be minuscule and held that neither the informant nor customers were shown to be dependent on Nissan, particularly when the informant was free to take another dealership and consumers had multiple alternatives in the market.
Briefly, an information was filed by Rajeev Bakshi under Section 19(1)(a) of the Competition Act, 2002 against Nissan Motor India Pvt. Ltd., alleging contravention of Sections 3 and 4 of the Act. The informant stated that he was a partner of “M/s You We and Cars”, an authorised dealer of Nissan vehicles for South Delhi and Faridabad, and that the dealer relationship was governed by a dealership agreement dated Oct 01, 2024.
The informant claimed that, relying on Nissan’s assurances of continuity and support, the dealership had invested more than INR 10 crore in infrastructure, plant and machinery, inventory, manpower and business development. He alleged that despite these investments, Nissan issued a termination notice dated Sep 05, 2025 under Clause 16 of the dealership agreement, without a show cause notice, reasons or hearing, even though the agreement was to remain valid till March 31, 2026.
The case of the informant was that the termination was part of a wider anti-competitive pattern, including coercive pricing policies, forced investments, delayed reimbursements, bypassing of dealer networks and systematic erosion of dealer viability. He alleged vertical restraints under Section 3(4), including resale price maintenance, exclusive distribution, exclusive supply arrangements and refusal to deal, and also alleged abuse of dominant position under Section 4, including unfair conditions, denial of market access, margin squeeze and leveraging of dominance.
The informant defined the relevant market as the market for distribution and sale of Nissan-branded passenger vehicles and related after-sales services in India, particularly a dealer-specific vertically integrated market controlled by Nissan. He also sought an investigation under Section 26(1), interim relief under Section 33 to restrain the termination, cease-and-desist directions and penalties under Section 27.
