Informant has been running a Business-to-Business (B2B) online trade platform with the name 'Udaan'. The Informant filed a case under Section 19(l)(a) of the Act, inter alia, alleging contravention of provisions of Section 3(4) read with Section 3(1) of the Act, by Britannia.
The Informant stated that 'Good Day' and 'Marie Gold' were among the fastest moving stock keeping units (SKUs) in the biscuit portfolio and therefore constituted a 'must have' stock for any distributor. It was contended that Britannia's significant and consistent market strength could cause an appreciable adverse effect on competition (AAEC) in the market in
Britannia, on the other hand, contended that as a manufacturer, it had the liberty to pick its vertical partners/ distributors and that it had a strong network of distributors across the nation and that not dealing with the Informant did not cause any AAEC in the Indian biscuit market. On basis of the above arguments, CCI framed the relevant issues pertaining to the scope of section 3(4) of the Act.
The Commission, at the outset, dealt with the preliminary objection raised by Britannia regarding the lack of locus standi of the Informant. CCI, while relying on its previous ruling in
On the issue of Britannia's market power, the Commission acknowledged its vast network of distributors as well as considered its presence and reach throughout
The Commission, while placing reliance on its previous ruling, In Re:
On the allegation of discrimination, the Commission determined that neither the Informant nor its group entity could be regarded to be in the same situation as the other Britannia distributors. It stood by its judgement in
There are apparently no barriers to entry neither in the manufacturers' market nor in the distributor's market, considering the presence of a large number of biscuit manufacturers in the upstream and a large number of distributors of Britannia in the downstream market. The Commission found no substance in the arguments considering that a large distribution network provides more choices to retailers and consumers. Moreover, selective distribution is an industry practice and one of the business strategies adopted by businesses. This falls within the domain of reasonable autonomy accorded to any trade participant. There must be some autonomy available to the manufacturers to deal with own goods the way they wanted, in alignment with their business requirements. However, such autonomy cannot be absolute.
CCI's stance on this case was much awaited as it was expected that the Commission would look into the aspect of SDAs and make deliberations. A ray of hope exists as this matter may recognize the gap in the Act concerning SDA and provide a green light to the framework for SDA in
The Commission's ruling in the present case may not be final as the Informant can always proceed with filing an appeal before the NCLAT. However, it is not likely that NCLAT would interfere with the CCI's order as no evidence could have been produced suggesting any formal agreement to assert parity. It is equally important to maintain the manufacturers' freedom to choose its distributors, especially at a time when more and more players are turning to internet sales, to sustain traditional offline distribution channels.
Finally, while relying on the aforesaid rationale, the Commission concluded that the Informant could not establish any exclusionary practice of Britannia and hence, passed an order under Section 26 (2) of the Act. This order also serves to supply an emphasis on the duty on informants/ complainants to disclose all pertinent facts and not conceal any material facts in antitrust proceedings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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