The Competition Commission of India (CCI) recently dismissed a plea against electric two-wheeler (ETW) manufacturers Ola Electric, Hero MotoCorp, TVS Motors and Ather that alleged they were abusing their dominant position in the market.
An anonymous person filed a plea before the anti-trust regulator alleging that these ETWs were abusing the Faster Adoption and Manufacturing of Electric & Hybrid Vehicles Policy (FAME) subsidy provided by the government to lower the cost of their vehicles. It was further alleged that this act of abuse allows them to sell their vehicles at a lower price thereby denying market access to smaller manufacturers.
What was the case?
The Government launched the FAME policy in 2015 to promote the adoption of electric and hybrid vehicles in India, with the goal of reducing the country’s dependence on fossil fuels, reducing air pollution and mitigating the impact of climate change. Each FAME policy has an end date, for instance FAME ended in 2019, FAME 1 ended in 2022. At present, the FAME II policy is in place and is expected to end in March 2024.
The policy provides incentives to manufacturers and buyers of electric and hybrid vehicles with the aim to increase demand for these Electric Vehicles (EVs) /Hybrid vehicles by making them more affordable and accessible.
The policy provided for a subsidy of Rs 10,000/- per KWh for all vehicles except buses which was subsequently enhanced to Rs. 15,000/- KWh. One eligibility criterion for availing of the demand incentive under the FAME scheme is that the maximum ex-factory price of a two-wheeler is to be Rs 1.5 lakh per vehicle.
It was alleged that these ETW manufacturers are abusing the limit set by the government by selling integral equipment such as chargers and proprietary software/ upgrades at an additional cost over and above the Rs. 1.5 lakh limit. For instance, while the vehicle itself is priced at Rs. 1.5 lakh, these upgrades are charged as additions to the vehicle. However, if these charges are added to the cost of the vehicle, these companies may not be able to avail the subsidy.
The complainant alleged that these actions deprived genuine manufacturers from availing of the benefit of the budget allocated for EVs under the Rs. 1.5 lakh threshold. Furthermore, the complainant stated that this action resulted in an adverse effect on competition in the relevant market for the market participants and the consumers.
Furthermore, the complainant said, the ETW manufacturers abused their dominant position in the market in violation of various provisions of the competition law. These practices denied market access, to small manufacturers as they 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.
What was CCI’s order?
In its order, the CCI noted that as per publicly available information on the two-wheeler market, Hero Electric and Okinawa have a market share of 28.23 percent and 20.08 percent respectively, followed by Ampere with a 10.65 percent market share, whereas Ather, Ola and TVS have a share of 8.63 percent, 6.21 percent and 4.09 percent respectively.
The order said, “Thus, the Commission notes that none of the market players appear to have a stable market share or position.” According to CCI, the electric vehicles market is in a growth stage with players coming up with different ranges of vehicles, and hence the competition is expected to intensify as more players fight for market share.
Thus the CCI concluded that there is no dominant player in the market able to exert market power in its favour or appear to demonstrate a position of strength to operate independently of market forces. Since there is no dominant player in the market, there is no case for abuse of dominant position.
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