Disposed

Informant (Confidential) v. Grasim Industries Limited. (Gil)

CCI16 May 201851/2017, 54/2017 and 56/2017

Case brief

AI extract

What is this about?

The Commission examined allegations of alleged abuse of dominant position by the OP in the sale of Viscose Staple Fibre. It observed prima facie violations of Section 4 of the Act regarding discriminatory practices and refusal to deal, directing the Director General to investigate under Section 26.

What did the court decide?

Directed the Director General to cause an investigation into the alleged contraventions of Section 4 of the Act.

Informant (Confidential) Vs. Grasim Industries Limited. (Gil) — Consumer Protection | CCI (2018)

¶1

Case No. 56 of 2017

¶2

The Informant in this case has also raised similar allegations and stated that the OP is refusing to supply VSF to its company in which the Informant is employed. It is alleged that the OP stopped the supply of VSF to the company despite the company enjoying a credit limit of more than Rupees one crore.

¶3

It is also alleged that the OP is harassing its company by delaying/ denying the discount scheme benefits offered by it owing to its monopoly in the sale of viscose in the market. Further, it is also alleged that owing to certain legal disputes, the OP has been refusing to sell VSF to the company.

¶4

Upon considering the information, the Commission heard the Informant in Case No. 56 of 2017 on 1^st November, 2017 and the Informants in Case No. 51 of 2017 and Case No. 54 of 2017 on 15^th November, 2017.

¶5

The Commission has perused the information and other material available on record. From the facts of the case and allegations raised by the Informants, it is observed that the primary grievance of the Informants pertains to the alleged abuse of dominant position by the OP which is in violation of the provisions of Section 4 of the Act.

¶6

It is observed that the contentions of the Informants relate to the conduct of the OP in imposing discriminatory conditions on sale of VSF; monitoring the customers by collecting details of their consumption, production and sales; denying discounts to those who are not complying with its directions; and practising unfair policies with respect to discounts offered.

¶7

The Informants in Case Nos. 51 and 56 of 2017 have not proposed any relevant market in their respective information whereas the Informant in Case No. 54 of

¶8

Case No. 51, 54 & 56 of 2017 Page 5 of 8

¶9

2017 has defined the relevant market as market for sale of Viscose Staple Fibre in India. It may be noted here that vide order dated 10^th November, 2016, the Commission in a previous case (Case No. 62 of 2016) with similar allegations has already held the OP as dominant in the relevant market of ‘ provision for sale of Viscose Stable Fibre in India’ . Considering the aforesaid order and submission of the Informant in Case No. 54 of 2017, Commission considers the above mentioned market as the relevant market in these cases also. Further, with regard to dominance of the OP, in the absence of any material pointing to the contrary, Commission is of prima facie view that the market dynamics vis-a-vis the OP have not changed to any significant extent and that the OP still holds a dominant position in the relevant market defined above.

¶10

Coming to the examination of the alleged abusive conduct of the OP regarding not disclosing its discount policies and providing differential treatment to different customers with respect to discounts offered to them, Commission observes that OP is offering various discounts/ incentives/ rebates, inter alia quantity discount, continuity discount, umberlla discount, comfort blend discount etc . Before giving discounts, OP compells its customers to disclose information regarding their production capacities, list of their suppliers, buyers, their turnover, and balance sheet as a pre-condition for supply of VSF. This information is to be provided by the customers in the format specified by the OP. Further it is alleged that access to this confidential data also permits the OP to monitor the downstream market of viscose yarn thereby enabling it to regulate and influence the price of VSF. The Commission observes that such a conduct amounts to imposing supplementary obligations on the sale of VSF, which by nature and according to commercial usage have no connection with the subject matter of the contract. The OP is able to impose such conditions on the VSF buyers owing to its dominance in the VSF market in India. As such, the OP appears to be prima facie violating the provisions of Section 4(2)(a)(i) and Section 4(2)(d) read with Section 4(1) of the Act. Moreover, in an

¶11

Case No. 51, 54 & 56 of 2017 Page 6 of 8

¶12

earlier case, similar conduct of the OP was found to be abusive by the Commission and the DG was directed to investigate the same.

¶13

The Informant in Case No. 54 of 2017 has alleged that the OP had arbitrarily withdrawn all sales terms (credits and discounts) agreed between the two parties and thus, ultimately refused to supply VSF to it. The Informant has submitted that against the requirement of 275 MT, it had received only 37.49 MT of VSF. For the period of February-August, 2017, it did not receive any supply of VSF from the OP. Due to this, the Informant’s production of yarn reduced substantially and it could not supply yarn to its customers. The Informant has further submitted that due to non-supply of yarn, its customers have switched over to others and thus, its business is being wiped out because of the abusive conduct of the OP. The Commission observes that OP is the sole supplier of VSF in the relevant market. Hence, such denial/refusal to deal by OP affects not only the spinning companies who buy VSF for manufacturing yarn, but, also affects the end-users at large, as there exists no other alternative supply option for VSF in the Indian market and import of VSF is also uneconomical owing to imposition of anti-dumping duties. Further, the withdrawal of sales terms and discounts would leave the product of the Informant at a price point at which no takers would be available. The Informant appears to be discriminated vis-à-vis similarly placed customers to whom discount is being provided by the OP. Therefore, the Commission is of the view that prima facie there is contravention of the provisions of Section 4 (2)(a)(ii) and Section 4(2)(c) read with Section 4(1) of the Act by OP.

¶14

In view of the foregoing, Commission directs the DG to cause an investigation into these cases under the provisions of Section 26(1) of the Act and file a consolidated investigation report within a period of 60 days from the date of receipt of this order. During the course of investigation, if involvement of any other party or individual is found, the DG shall investigate the conduct of such other parties also who may have indulged in the said contravention.

¶15

Case No. 51, 54 & 56 of 2017 Page 7 of 8

¶16

The Commission makes it clear that nothing stated in this order shall tantamount to final expression of opinion on the merits of the case and the DG shall conduct the investigation without being swayed in any manner whatsoever by the observations made herein.

¶17