CCI Dismisses Allegations Against LG Electronics, Concludes No Contravention Of Competition Act

The Competition Commission of India (CCI) closed and dismissed the relief in a case filed by Perfect Infraengineers Limited (PIL) against LG Electronics Limited (LG) stating that no case of contravention of the provisions of the Competition Act, 2002 is made out.

PIL had approached CCI alleging contravention of the provisions of Sections 3 and 4 of the Act.

Brief Facts:

PIL specializes in air conditioning repair, sales, and service. PIL, in collaboration with Suntrac, USA, introduced 'Hybrid Thermal Solar' (HTS) panels in India. PIL claims that when integrated with air conditioners, these panels can significantly reduce electricity consumption by 30-40 percent without any negative consequences.

PIL approached LG with a proposal to integrate HTS panels into LG's Variable Refrigerant Flow/Variable Refrigerant Volume (VRV/VRV) ACs for Envirocare and Delhi Metro Rail Corporation (DMRC). However, LG declined PIL's request and even informed DMRC through email about their refusal to allow the integration of PIL's HTS panels with LG's VRF/VRV ACs installed at DMRC premises.

To address any concerns, PIL assured DMRC that the HTS panels would not harm the ACs and even offered to take full responsibility for the entire VRF/VRV ACs, free of charge, in the unlikely event of any issues. PIL also proposed to fully indemnify LG in case any spare parts wore out, deteriorated, or required repairs. Additionally, PIL informed LG that the HTS panels had received certification from Intertek, an internationally recognized energy consumption and saving testing body.

PIL alleges that LG's refusal not only caused significant prejudice and hardship to Envirocare and DMRC but also impacted PIL itself.

Contentions of the Parties:

LG responded to PIL's allegations, stating that the relevant market is the sale of variable refrigerant flow air conditioners for heating, ventilation, and cooling. LG emphasized that Daikin is the market leader with a 44% average market share over the past three years, while LG's share was only 16% during the same period. LG justified its refusal based on valid technical reasons to protect itself from potential claims and liabilities. It contested the credibility of the test reports cited by PIL, alleging bias and lack of third-party verification. LG also accused PIL of being a defaulter with ongoing litigations, using legal means to settle personal grudges, and engaging in unnecessary litigation against LG. Additionally, LG highlighted that its VRV/VRF AC systems have not undergone testing with solar panels in India, and integrating solar or hybrid panels with these ACs is not a common industry practice.

PIL responded to LG's statement, reiterating the significant electricity savings of 30-40% achieved by their HTS solar panels. It emphasized the absence of any reported harm caused by the panels to air conditioners. PIL also restated its offer to indemnify LG and consumers during the warranty period and highlighted the approvals received from other AC manufacturers for their HTS panels.

Observations of CCI:

The CCI Corum consisting of Chairperson Ravneet Kaur and Members Sangeeta Verma and Bhagwant Singh Bishnoi observed that the characteristics and advantages of VRF/VRV AC systems were highlighted by LG, indicating their superiority over traditional air conditioning systems. Considering the homogeneous conditions of competition across India, the entire country can be deemed the relevant geographic market. Thus, the relevant market, in this case, is defined as the "market for manufacture and sale of VRF HVAC Air conditioners in India."

Assessing LG's dominance in the relevant market, CCI noted the presence of several VRF/VRV HVAC AC manufacturers and suppliers and found that LG does not exhibit dominance in the market due to the presence of numerous competitors, providing consumers with multiple options and acting as a competitive constraint. Therefore, no contravention of Section 4 of the Act (related to abuse of dominance) is established.

Regarding the alleged violation of Section 3 of the Act (pertaining to anti-competitive agreements), CCI took note that the informant failed to provide information on how LG's conduct falls within the purview of Section 3. Nevertheless, considering the market structure and the nature of the allegations, the Commission ruled out any contravention of Section 3(1) of the Act.

Case: Perfect Infraengineers Limited vs L. G. Electronics India Pvt. Ltd.

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