OLA is Not in a Dominant Position to Abuse Dominance in the Relevant Market of Electric Two-Wheelers in India | CCI

Case Details: XYZ v. Ola Electric Ltd. - [2024] 158 taxmann.com 603 (CCI)

Judiciary and Counsel Details

• • Ms Ravneet Kaur, Chairperson, Anil Agrawal, Ms Sweta Kakkad & Deepak Anurag, Member

Facts of the Case

In the instant case, the Competition Commission of India (CCI) received a complaint against major players in the Electric Two Wheeler (ETW) market namely Ola Electric Ltd. (“Ola”), VIDA Hero Moto Corp Limited (“VIDA”), TVS Motors (“TVS”) and Ather Energy Private Limited (“Ather”), (hereinafter, together referred to as “OPs”). The informant contended that the OPs are exploiting the Faster Adoption and Manufacturing of Electric & Hybrid Vehicles Policy (FAME), introduced by the Ministry of Heavy Industries and Public Enterprises for unjust or unlawful gains.

Background of the FAME Policy

The Ministry of Heavy Industries and Public Enterprises launched the Faster Adoption and Manufacturing of Electric & Hybrid Vehicles (FAME) policy in 2015. The policy aims to promote the adoption of electric and hybrid vehicles in India, to reduce the country’s dependence on fossil fuels, reduce air pollution, and mitigate the impact of climate change.

FAME I was launched for 3 years, commencing from 01.04.2019. FAME II was introduced vide notification dated 25.06.2021 and extended till 31.03.2024. The policy provides incentives to manufacturers and buyers of electric and hybrid vehicles to increase demand for these Electric Vehicles (EVs) /Hybrid vehicles by making them more affordable and accessible. One of the eligibility criteria for availing of the demand incentive under the FAME scheme is that the maximum ex-factory price of a 2-wheeler is to be INR 1.5 Lac per vehicle.

Allegation on the OPs

It was alleged that Ola and other manufacturers had been repeatedly abusing the sacrosanct limit set by the government by selling integral equipment such as charger and proprietary software/upgrades outside the limit of Rs. 1.5 lakhs, at an additional cost. This allowed them to fall within the government-mandated limit of ex-factory prices of Rs. 1.5 lakhs under the FAME policy, which otherwise they would not be eligible for, thus undermining the basic intent of the FAME policy. As a consequence, it deprived genuine manufacturers from availing the benefit of the budget allocated for EVs under the INR 1.5 Lac threshold. By doing so, the entities/ groups have usurped major chunk of the corpus which the Government has allocated as demand incentive under the policy.

The informant also alleged that these OPs are abusing their dominant position in the relevant market, in violation of various provisions of the Act by indulging in practices resulting in denial of market access, since the small manufacturers would not be able to take the benefit of the FAME policy and as a result find it difficult to establish themselves in this highly competitive market. Consequently, these entities continue to maintain a higher market share as a result of the illegal use of the benefit under the policy, thereby having a negative impact on competition.

CCI Held

The CCI reviews the market share of Ola, Vida, TVS Motors, and Ather for the year 2022. CCI noted that none of the companies, including those accused, seemed to have a consistent market share or position. The Commission noticed the presence of various players, both well-established and new, in the Electric Two Wheeler (ETW) market whichanticipates increased competition as the market expands. The commission further, noted that there appeared to be no single player which can exert market power in its favour or appeared to demonstrate a position of strength to operate independently of market forces, in the relevant market. Therefore, none of the OPs appear to have a dominant position in the relevant market.

The CCI founds no prima facie case of contravention of Section 4 of the Act against any of the accused entities. It concluded that none of the OPs hold a dominant position in the relevant market and accordingly, ordered for disposal of the complaint, and no relief was to be granted u/s Section 33 of the Act.