Restrictive Conditions in Automobile Dealership Agreements in the Light of Antitrust Regime under Competition Act, 2002

The Automobile Industry is one of the vital sectors in terms of its contribution to the Indian economy. In a global context, India’s automobile industry ranks fourth in manufacturing volume. It significantly contributes to India’s GDP, accounting for approximately 7.5% of its total GDP, and employs about 35 million people. From manufacturing automobiles to delivering them to consumers, the industry has various entities at different levels of the supply chain that are interdependent on each other. The industry's two pillars are the automobile dealers and the original equipment manufacturers (hereafter referred to as OEMs). Thus, from the antitrust perspective, it becomes essential to analyze the position &dynamics between these two important players and to prevent the imposition of unfair and restrictive conditions, which would otherwise lead to an adverse impact on the interest of all the stakeholders. In the first part, an attempt is made to discuss the relationship between the dealers and the OEMs to showcase how the manufacturers are in the predominant position as compared to the dealers while establishing the terms of the dealership agreement. The second part delves into analyzing the regulatory framework governing such clauses through the prism of antitrust laws. The concluding part provides suggestions to bolster the regulatory framework dealing with anticompetitive clauses of the agreement.