2024 (11) TMI 1004 - CCI - Companies Law

Alleged anti-competitive practices under Sections 3(4) and 4 of the Competition Act, 2002 - exclusive supply obligation - forced co-branding - refusal to deal - resale price maintenance - HELD THAT - The Commission notes that the Informant has primarily relied upon an undated and unsigned document titled Propel Agreement to allege exclusive supply obligation and forced co-branding . The Commission also notes that other two allegations i.e., refusal to deal and resale price maintenance are stated to be imposed through oral directions. Accordingly, the Commission directed the Informant to furnish a copy of an actual agreement signed between the OP-1 and a processor. The Informant, in its response dated 07.02.2024, stated that it does not have access/ possession of a signed agreement. Despite being given the opportunity, the Commission observes that the Informant has not been able to produce a valid and subsisting copy of the said Propel Agreement on the edifice of which the entire allegations rest - A bare perusal of the said Propel Agreement reveals that it is only an agreement to meet the requirements of the end consumers through the assistance imparted by the manufacturers to the processors by way of supply of raw materials, imparting technical and marketing training, rendering services to the customers as per the requirements, among others. With regard to the allegation of exclusive supply obligation, the Commission observes that exclusive purchase obligation is said to be imposed on processors only in respect of High Performance Glass Allied Products and Clear Tempered Glass . However, no such imposition of exclusivity is observed from the submitted Propel Agreement, in respect of clear float glass/other glass, thereby implying that the processor has a choice to procure clear float glass from other glass manufacturers. With regard to allegation of forced co-branding, the Commission has perused clause 3.3 of the said Propel Agreement which reveals that the OP-1 would facilitate the processor to use its own trademark/brand name alongside trademark/brand name of OP- 1 under certain terms and conditions. Thus, the Commission is of the view that co- branding, in itself, does not raise competition issue. As regards allegations of refusal to deal, it has been submitted by the Informant that processors/ distributors are being offered significant discounts on products of OP-1, if they purchase exclusively from OP-1. Additionally, the processors who are dealing with competitors of OP-1 will not be sold products of OP-1. The Commission is of the view that the Informant has merely alleged the conduct to be carried out through oral directions and has not substantiated the same with any evidence. It may be noted that offering discounts on the basis of volume of purchase may not be anti-competitive, per se. In relation to allegation of resale price maintenance ( RPM ) being practiced through oral direction, the Informant has claimed that in certain cases, OP-1 is stated to have directly approached the large bulk customers and negotiated prices directly with them. The processors and distributors are then forced to issue invoices at such prices - the Commission notes that OP-1 would have no control over the price charged by the processors from the end consumers for the services provided by it. It is clear that the processors are free to charge the price from the end users for the value addition/ enhancement they carry out in the glass received from OP-1 and OP-1 does not control it. This nowhere shows that the price of end product is being controlled by the OP-1 as OP-1 only charges for the products it sells to the processor. The Commission is of the view that no prima facie case is made out against OP-1 in respect of either Section 3(4) or 4 of the Act. Accordingly, the Information filed is directed to be closed forthwith under Section 26(2) of the Act. Considering the grounds put forth by the Informant for the grant of confidential treatment, the Commission grants confidentiality to such documents/ information in terms of Regulation 35 of the General Regulations read with section 57 of the Act for a period of three years from the passing of this order. The Commission also grants confidentiality on the identity of the Informant as prayed. It is, however, made clear that nothing used in this order shall be deemed to be confidential or deemed to have been granted confidentiality as the same has been used for the purposes of the Act in terms of the provisions contained in Section 57 thereof.

Summary

Issues Involved:

1. Alleged anti-competitive practices under Sections 3(4) and 4 of the Competition Act, 2002.
2. Exclusive supply obligation.
3. Forced co-branding.
4. Refusal to deal.
5. Resale price maintenance.
6. Relevant market definition and dominance assessment.
7. Confidentiality of the Informant's identity and information.

Issue-wise Detailed Analysis:

1. Alleged Anti-Competitive Practices:

The Informant alleged that Saint Gobain India Pvt. Ltd. (OP-1) and Compagnie De Saint-Gobain (OP-2) engaged in anti-competitive practices violating Sections 3(4) and 4 of the Competition Act, 2002. The allegations were based on an unsigned and undated document titled 'Propel Agreement', which purportedly imposed restrictive conditions on processors and distributors of glass products.

2. Exclusive Supply Obligation:

The Informant claimed that the Propel Agreement required processors to exclusively purchase glass from OP-1, which allegedly violated Sections 3(4)(b) and 3(4)(d) as well as Sections 4(2)(a)(i), 4(2)(b)(i), and 4(2)(c) of the Act. However, the Commission found no evidence of exclusivity for clear float glass in the submitted Propel Agreement and noted that exclusivity was limited to specialized glass products. The Commission concluded that such exclusivity had a rationale of quid pro quo, benefiting both parties, and did not appear to be anti-competitive.

3. Forced Co-Branding:

The Propel Agreement allegedly forced processors to co-brand with OP-1, contravening Sections 3(4)(b) and 3(4)(d) as well as Sections 4(2)(a)(i), 4(2)(b)(i), 4(2)(c), and 4(2)(e) of the Act. The Commission found that the co-branding provision allowed processors to use OP-1's brand alongside their own, which did not raise competition issues.

4. Refusal to Deal:

The Informant alleged that OP-1 offered discounts to processors who purchased exclusively from it and refused to sell to those dealing with competitors. The Commission noted that these allegations were based on oral directions and lacked evidence. Offering discounts based on purchase volume was not deemed anti-competitive per se.

5. Resale Price Maintenance:

The Informant claimed that OP-1 negotiated prices directly with large customers, forcing processors to invoice at those prices, violating Section 3(4)(e) and Section 4(2)(a)(ii) of the Act. The Commission found that the Propel Agreement allowed processors to set their own prices for value-added services, indicating no control by OP-1 over final consumer prices.

6. Relevant Market Definition and Dominance Assessment:

The Informant proposed two relevant markets: the market for clear float glass and the market for coated glass in India, asserting OP-1's dominance. The Commission did not delineate the relevant market or assess dominance, as it found objective justifications for the conditions imposed in the Propel Agreement.

7. Confidentiality of the Informant's Identity and Information:

The Informant requested confidentiality under Regulation 35 of the General Regulations and Section 57 of the Act. The Commission granted confidentiality for three years, ensuring the Informant's identity and certain documents remained confidential.

Conclusion:

The Commission concluded that no prima facie case was made against OP-1 for violations of Sections 3(4) or 4 of the Act. The Information was closed under Section 26(2) of the Act, and confidentiality was granted to the Informant's identity and specific documents.