24 六月 2019

Competition law - Restrictions on sub-dealers when not anti-competitive

24th June

CCI has held that no case u/s. 3(4)(c) of Competition Act was made out against a mobile phone company for putting restriction on sub-dealers regarding online sale and selling phones outside demarcated region.

Commission in Karni Communications v. Haicheng Vivo Mobile held that imposition of Resale Price Maintenance through Minimum Operation Price Policy not appeared to have caused appreciable adverse effect on competition. It observed that there is enough competition to discipline an enterprise from imposing restrictive conditions on downstream player.

The Competition Commission observed that informants had complete flexibility to move away from the agreement in case they do not wish to abide by the policy and there is plethora of mobile brands for business.

On the question of restriction on online sales on the distributors/retailers by opposite party, the Commission noted that the clause does not directly withhold the supply of the products in the market and therefore no appreciable adverse effect on competition was caused. It noted that the products are readily available on various e-commerce portals, and that the opposite party has its own dedicated site for online sale.

It noted that the opposite party was able to justify its Market Infiltration policy (MIP) policy on the premise that system of tracking of IMEI numbers helped in prevention of duplication of smart phones and in checking counterfeits.

Further, the CCI was of the view that the informant could not substantiate the allegation of facilitating a cartel at the retailer level under the aegis of the All India Mobile Retailers Association, and in absence of any tangible evidence no case can be made out for contravention of s.3(3) of the Competition Act.

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