Agreement Executed Between Saint Gobain India And Its Processor Is Not Anti-Competitive, CCI Dismisses Complaint Against Saint Gobain India
The Competition Commission of India (Commission) bench, comprising Ms. Ravneet Kaur (Chairperson), Ms. Sweta Kakkad (Member), and Mr. Deepak Anurag (Member), has dismissed the complaint against Saint Gobain India. The bench found that the exclusive supply obligations, co-branding arrangements, and resale price maintenance clauses in the agreement between Saint Gobain India and one of its processors are not anti-competitive measures.
Background Facts
The informant mentioned that Saint Gobain India Pvt. Ltd. (Opposite Party No. 1/OP-1) is engaged in the business of designing, manufacturing, and distributing materials and services for the construction and industrial markets.
According to the informant, OP-1 is exploiting its influence in the relevant markets by forcing, directly or indirectly, downstream market players to deal exclusively with OP-1.
Additionally, OP-1 is using its dominant position in the market for the production and sale of clear float glass in India to enter into and protect its influence in the market for the production and sale of coated glass in India.
Informant alleged that OP-1 has entered into agreements with processors, fabricators, and distributors, through which certain conditions have been imposed upon these players in the distribution network of glass products, which violate Sections 3(4) and 4 of the Competition Act, 2002.
The informant further mentioned that they have found an agreement named the "Propel Project Participation Agreement," which will be executed in the future between OP-1 and one of its processors. This agreement imposes exclusive supply and forced co-branding obligations on processors, violating Sections 3(4) and 4 of the Competition Act, 2002.
Therefore, the informant filed a complaint before the Commission seeking an investigation under Section 26(1) of the Competition Act, 2002.
Observation by Commission
The Commission observed that the Informant relied upon an undated and unsigned document titled the "Propel Agreement" to contend exclusive supply obligations and forced co-branding by OP-1. The Informant also failed to present a copy of the actual agreement signed between OP-1 and the processor.
Regarding the allegation of exclusive supply obligations, the Commission held that such obligations were only applicable to High-Performance Glass & Allied Products and Clear Tempered Glass. Additionally, the Propel Agreement did not have exclusivity concerning clear float glass or other glass, which means that processors are free to procure these products from other manufacturers.
Regarding forced co-branding, the Commission found that the Propel Agreement allowed processors to use their trademark alongside OP-1's under certain conditions. Therefore, the Commission held that co-branding in itself does not violate the Competition Act.
On the issue of resale price maintenance (RPM), where the Informant contended that OP-1 negotiated prices directly with large bulk customers, forcing processors and distributors to issue invoices at those prices, the Commission observed that the Propel Agreement allowed processors to determine pricing for their processing services above the price of OP-1's products. Therefore, it can be concluded that OP-1 did not control the end prices charged by processors to consumers.
Further, the Commission held that OP-1 having a larger market share alone does not constitute a violation of Section 4 of the Competition Act. Therefore, the Commission held that OP-1 had not violated Sections 3(4) and 4 of the Competition Act, 2002, and thus dismissed the complaint against the opposite parties.
Case – XYZ Versus Saint Gobain India Pvt. Ltd & anr
Citation - Case No. 16 of 2023