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(h) Restriction regarding the sale of batteries: The OP further mandated the purchase and use of batteries manufactured by Exide India Limited (EIL) and Amara Raja Ltd. The batteries could not be purchased even from the authorised distributors of these manufacturers. If other products were used, the Informant would get a negative assessment score, which would be a ground for termination of dealership. Such restriction on the purchase of batteries, in favour of the said two companies amounts to a tie-in arrangement.

5.7. The Commission has given a careful examination to the alleged imposition of several unfair conditions on the Informant through the Dealership Agreement which merit examination as abuse of dominant position in the 'market for manufacture and sale of scooters in India'.

5.8. It appears that the OP has made it mandatory for the Informant and other dealers to purchase oil and lubricants only from two vendors namely: M/s. Idemitsu Lube India and Tide Water Oil Company (India) Ltd and that too at a price higher than the prevalent market price. Further, the Commission observes that vide circular dated 25th February, 2014, the OP has made it mandatory for the dealers to purchase Honda genuine engine oil through the OP's authorised vendors only. The Commission further notes that through Clause 10.13(c) of the Dealership Agreement, the OP has made it mandatory for the dealers to adhere to the instructions and guidelines on purchase of spare parts, accessories, various consumable items, warranty and any other matter. Furthermore, Clause 10.21 of the Dealership Agreement lays down that, "Dealer is strictly prohibited to purchase, stock, use and sell non-genuine spare parts and consumables. Dealer is also restrained from promoting fuel additives at its all locations (including network locations) which are not recommended by the Company". It appears that the OP has classified certain accessories as 'genuine' without any basis and is charging a higher price for the same. The OP has also made it compulsory for the dealers to use batteries manufactured by only two companies i.e. EIL and Amara Raja Ltd. or else the dealers would get a negative assessment score, which could be a ground for termination of the dealership. As per the Informant, all these restrictions are enforced through threats of penalty.

5.11. Based on above, the Commission is prima-facie satisfied that the restrictions imposed by the OP for sale of oil, lubricants and batteries are unfair and in contravention of Section 4(2) (a)(i) of the Act. Similarly, the condition for mandatory purchase of accessories, merchandise items, forceful billing of slow moving vehicles, compulsory deduction of advertising expenses, restrictions on insurance and finance options, making purchase of AMC, EW and RSA contingent upon purchase of booklets from Corporate India Warranties (I) Private Limited, termination of dealership without prior notice and refusal for stock buyback appear to be unfair and suggest prima-facie contravention of Section 4(2) (a)(i) of the Act. The Commission is also prima-facie satisfied that the Dealership Agreement has been concluded with the said supplementary obligations which, by their nature or commercial usage, have no connection with the subject of the contract. Thus, the Commission is of the prima-facie view that the conduct of the OP merits examination under Section 4(2) (d) of the Act.

(a) Oil & lubricants, batteries, accessories, merchandise items, insurance and finance services: The requirement that dealers shall source oil & lubricants, batteries, accessories, merchandise items, and insurance and finance services only from designated sources are in the nature of exclusive supply agreement and refusal to deal. As pointed out by the Informant, such restrictions limit the dealers from procuring same/similar items from other sources at a cheaper price. This restriction on the choice of dealers can limit the benefits to the consumers that would have resulted otherwise. Further, it appears that the merchandise and accessories have nothing to do with the operation of the two-wheelers. The Informant has further alleged that the OP forces its dealers to adhere to the said stipulations by giving the threat of termination of dealership or imposition of penalty. The Commission notes that the alleged prohibition on dealers to source the same products specified by the OP from open market can create barriers for suppliers of oil and lubricants, batteries, etc., who compete with these suppliers besides better prices to the consumers. A stipulation that appears to create entry barriers, scuttle choice of consumers, result in higher prices, thereby denying benefits to the ultimate consumers is likely to result in appreciable adverse effect on competition. Thus, the Commission is prima-facie satisfied that the said mandatory requirements amount to contravention of Section 3(4) (b) and 3(4) (d) read with Section 3(1) of the Act.