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12 September 2019
On 15 January 2019 the Competition Commission of India (CCI) dismissed allegations of resale price maintenance against Kaff Appliances (India) Pvt Ltd under Section 26(6) of the Competition Act 2002. The information was filed by Jasper lnfotech Private Limited (Snapdeal, the informant).
It was alleged that Kaff – having been aggrieved by the sale of its products (a variety of kitchen appliances) at discounted prices on Snapdeal's online marketplace – displayed a caution notice on its website and emailed the informant indicating that the products sold on Snapdeal were:
Further, Kaff stated in the notice that it would not honour the warranties of the products that were sold under its brand name on Snapdeal. In Snapdeal's opinion, it appeared as if Kaff was allegedly attempting to impose a price restriction in the form of a minimum operating price on the products that were being sold on Snapdeal's website.
The director general surveyed 211 of Kaff's dealers and distributors. However, the survey did not lead to any agreement or understanding. The dealers and distributors denied selling their products below net landing prices and stated that they required no approval for online selling. The survey further revealed that the dealers offered their respective prices for the products displayed on Snapdeal and other online retailers and that any extra discount or cashback was funded by the online retailers themselves. Thus, with regard to the dealers, the CCI did not find any evidence of an imposition of a minimum resale price maintenance.
Further, as far as the three pieces of evidence (ie, the email, the caution notice and the legal notice) Kaff did not deny their existence and justified sending them. Kaff claimed that the caution notice was issued to warn the general public about the selling of counterfeit products on the online portals. Similarly, the legal notice was issued to give Snapdeal an opportunity to remove Kaff's products from its online portal as they were counterfeit and procured from unauthorised and unverified sources. With regard to the email dated 4 February 2014 sent by Mohit Seth of Kaff – wherein Kaff warned that it would allow the sale of products on Snapdeal's portal only if a minimum operating price was maintained – the CCI observed that this email had been sent two months prior to the caution notice dated 16 April 2014, which had been displayed by Kaff on its website.
The CCI observed that although the existence of the email, the caution notice and the legal notice had been established, the justifications offered could not be completely disregarded and the right of the manufacturer to choose the most efficient distribution channel should not be interfered with, unless the said choice would lead to anti-competitive effects.
Further, the presence of many competing dealers suggested a fair degree of intra-brand competition. Moreover, competition among distributors was found to be even stiffer as they were exclusively dealing with Kaff's products. Thus, the CCI noted that with regard to the dealers, the evidence did not reveal the existence of any price restriction or minimum resale price maintenance. As regards the informant, although the existence of the caution notice, the legal notice and the email had been established, it was not conclusively established that they had been used as instruments to impose a resale price maintenance on the informant.
For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email (email@example.com). The Vaish Associates website can be accessed at www.vaishlaw.com.
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Man Mohan Sharma