The healthy competitive spirit in the modern market not only bolsters the productivity and international competitiveness of the business sector but also promotes dynamic markets and economic growth. It increases the standard of living and the well-being of consumers. It elevates the country’s economy as a whole. Fair and open competition means lower prices and greater choice while enabling the vendors and manufacturers to deliver a greater variety of products to their customers around the world. It creates efficient and glowing atmosphere everywhere.
In order to ensure that the businesspersons do not opt for unfair trade practices hampering healthy market competition, the Government has enforced the Competition Act, 2002 (hereinafter referred to as the “Act”). The Act aims to promote and sustain competition in the market, protect the interests of the consumers and ensure freedom of trade is carried on by other participants in the market. The competition regulator of the country- Competition Commission of India (hereinafter referred to as the “CCI”) ensures proper monitoring of the competitive trade practices.
A former Maharashtra-based stockist and distributor (hereinafter referred to as the “distributor”) of products of M/s Mondelez India Foods Private Limited (hereinafter referred to as “Mondelez”) had alleged that the latter terminated the distribution agreement between the two entities on frivolous grounds.
The CCI has dismissed a case against confectionery giant Mondelez, the same not being contrary to Section 3 of the Act covering anti-competitive agreements, Section 4 of the Act pertaining to abuse of dominant position.
The Act prohibits anti-competitive agreements where one of the enterprise or association of enterprises or person or association of persons enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. In the present case, the distributor rose the issue of resale price maintenance and restriction imposed on distributors to come up with their own discount schemes by Mondelez. CCI held that resale price maintenance is not a per se violation of the Act and the same needs to be substantiated by a supporting evidence which was lacking in the matter.
Abuse of Dominant Position
Dominant position which is a position of strength, enjoyed by an enterprise, in the relevant market, which enables it to operate independent of the competitive forces prevalent in the market or affect its competitors or consumers or the relevant market in its favour. By the abuse of this dominant position, an enterprise may directly/ indirectly impose unfair/ discriminatory practices, limits/ restricts production of goods/ provision of services, indulging in practices resulting in denial of market access, etc. The requirement posed by Mondelez that its software be mandatorily used by the distributors appears to be an organised set up for data and inventory management and thus the same does not amount to be abusive in nature.
With the above judgement, CCI has elaborated on the provisions of the Act clearly indicating the anti-competitive agreements as well as abuse of dominant position which are strictly regarded as unlawful and bear penal consequences.