India: CCI Finds No Evidence Of Resale Price Maintenance By KAFF Appliances

Last Updated: 20 May 2019

Specific Questions relating to this article should be addressed directly to the author.

Article by MM Sharma, Head Competition Law & Policy Practice, Vaish Associates, Advocates, New Delhi, India

The Competition Commission of India ("CCI/Commission") vide order dated 15.01.2019 under Section 26(6) of the Competition Act, 2002 ("the Act"), has dismissed allegations of Resale Price Maintenance("RPM")1 against Kaff Appliances (India) Pvt. Ltd. ( "KAFF/ OP").The information was filed by Jasper lnfotech Private Limited ( "Snapdeal / Informant") in 2014 under Section 19(1)(a) of the Act alleging contravention of the provisions of Section 3(4) of the Act, wherein, CCI vide its prima facie order dated 29.12.2014 had directed investigation by the Director General ( DG) after noticing that the practice of RPM adopted by KAFF appliances , with a market share of 28% , may have an adverse effect on competition in India.


Snapdeal owns and operates, an online market place which provides a medium for buyers and sellers to meet and transact. It was alleged that KAFF being aggrieved by the sale of its products at discounted prices on Snapdeal, displayed a caution notice on its website , sent a legal notice to Informant and an email to Informant indicating that the product sold on Snapdeal were counterfeit , infringing its trademark , deceiving the public by trading on the goodwill of Kaff and were also undercutting the prices of authorized dealers. Further, it was also alleged that KAFF mentioned in the notice that it will not honor the warranties of the products sold in its brand name through Snapdeal. Therefore, CCI noted that the Opposite Party was having an arrangement/agreement with its authorized dealers under which the dealers were given the 'Market Operating Price (MOP) price list' for its product. Such an agreement hinders the ability of dealers/distributors to compete on the price of the product. The Commission noted that such prescription of MOP by the Opposite Party to its dealers and insistence to follow MOP pricing regime , prima facie, seems to be in contravention of section 3(4)(e) read with section 3(1) of the Act. It is apposite to note here that RPM and other vertical restraints under Section 3 (4) of the Act are not per se anti-competitive but the onus would lie upon the Informant to demonstrate that the RPM has an Appreciable Adverse Effect on Competition ("AAEC"). Noticeably, in the present case, the CCI , in its prima facie order had not identified AAEC but instead opined that RPM 'may' have an impact on consumers and is 'likely' to have an AAEC.

DG Investigation

The DG in its investigation report ("Main DG report), observed that the relevant markets i.e. market for chimneys and hobs in India are very competitive with approximately 30 active players. Faber, a renowned player in the relevant market, was found to be the leader with the highest market share on the basis of turnover in last 5 years followed by the OP. Their respective market shares in the market for chimneys and hobs for 2014-15 was found to be Faber: 26.4% in Chimney and 31.2% in Hob and the OP: 19.7% in Chimney and 25.2% in Hob. Each player in the relevant market was found to be having several dealers in each district and town and most of the dealers were found to be multi-brand dealers. Based on these factors, the DG concluded that the OP did not possess sufficient market power to cause AAEC as provided under Section 19(3) of the Act. DG observed that since the OP does not possess enough market power to cause AAEC. Accordingly, contravention of the provisions of Section 3(4)(e) read with Section 3(1) of the Act could not be established. Curiously, though the DG did not find any contravention by the OP, still the DG identified 3 officials, namely Mr. Deepak Anand, Mrs. Kamlesh Anand and Ms. Malvika Anand, responsible for the management of OP for the purposes of Section 48 of the Act, in the event of Commission finding the OP in contravention.

However, the Commission observed that to enquire whether the OP imposed a price restriction, it needs to be ascertained whether OP had instructed to send the impugned E-mail dated 04.02.2014. Accordingly, further investigation was directed by the Commission in the matter under Section 26(7) of the Act vide its order dated 30.10.2017. In pursuance of the said directions, the DG carried out supplementary investigation. Accordingly, the DG in its "Supplementary report" opined that since the Informant was only a market platform and not a purchaser of the product, as per the definition under Section 3(4)(e) of the Act, RPM could not be imposed by the OP on the Informant and as such the present information filed by the Informant is questionable.

CCI observation and Conclusion

CCI dealt with the primary issue of the applicability of Section 3(4) of the Act to the facts of the case, given that the DG has opined that since the Informant is only a market platform, it does not form part of the vertical chain and hence, cannot be subjected to a vertical restraint by the OP under Section 3(4)(e) of the Act. CCI found the aforesaid observation of the DG inconsistent with the working of the technology driven markets. CCI observed that the online portals or platforms often provide various value added services e.g. logistics (inbound as well as outbound), warehousing, marketing and sales including provision of assistance to consumers in sorting and buying products, return/replacement services, tracking services for orders placed etc. online portals act as a parallel distribution chain along with the off-line distribution channels. The customer/buyer also, when purchasing the products online, perceives the online portal as a valuable link between such customer and the seller. Therefore, observation of the DG that the Informant/online portal does not perform any function which could make it a part of vertical/supply chain seems illusory in context of a technology driven markets, as opposed to traditional markets. Further, the inference of the DG, that the Informant not being the buyer/purchaser of goods in the distribution chain, the basic ingredient for sustaining allegation of RPM (i.e. presence of purchaser and seller) is not tenable. Any entity/firm contributing value to product/service will be deemed to be a part of the value chain. The ownership of such product to pass through every stage/entity cannot be considered as a prerequisite in the value addition process. The argument regarding absence of seller-purchaser relationship in case of online platforms is premised on 'form' rather than 'substance'. The definition of RPM under the Act is inclusive and the basic ingredients are 'resale' and seller's determination of the resale price. RPM essentially refers to agreements among enterprises at different levels in a distribution channel, wherein the resale price at which a product or service must be sold by a distributor is pre-determined by the seller in some manner. Thus, regardless of the identity of the direct purchaser, the resale of the product is effected through the platform and thus, the essential ingredients of resale price maintenance are fulfilled. Thus, to say that the Informant/online portals have no role or influence over the prices may not be correct. In view of foregoing reasons, the Commission disagreed with the DG's observation and observed that the agreements between manufacturers/distributors and e-commerce players can be looked into under Section 3(4) read with Section 3(1) of the Act.

CCI analysis of RPM

CCI while providing some light on literature on RPM observed that an RPM agreement is recognized under Section 3(4)(e) of the Act , which is a vertical imposition , whereby, a manufacturer/seller dictates the price at which the product can be resold by the downstream distributor/wholesaler/retailer . An RPM can be of various forms, but the Act generally prescribes a price prescription/agreement when the agreement imposes a restriction on a resale at a price below the price stipulated in the agreement between manufacturer and downstream distributor. The purpose of such stipulation is to set a floor price so as to avoid price competition between retailers beyond a certain price. The economic objective of infusing competition at all levels is to ensure efficiency that leads to consumer welfare in the form of reduced prices and wider set of choices. In the light of the aforesaid , CCI observed that an agreement falling under Section 3(4) of the Act requires to be analyzed under the "rule of reason" to gauge whether such an agreement has the potential to cause an AAEC and thus can be held as an anti-competitive agreement under Section 3(1) of the Act. Thus, to establish a contravention under Section 3(4) read with Section 3(1) of the Act, two conditions need to be fulfilled – (i) the agreement /understanding ought to exist (ii) such agreement/understanding has caused or has the potential to cause AAEC. Section 19(3) lays down the analytical framework to examine whether an agreement/understanding has or is likely to have an AAEC. Only those agreements/understanding whose net effect is anti-competitive i.e. if the anti-competitive effects exceeds the pro-competitive effects, are prohibited by the Act.

In the above context, CCI noted that neither the Main Investigation Report nor the Supplementary Investigation Report revealed the existence of any RPM practice vis-à-vis the dealers of the OP. The DG surveyed 211 dealers/distributors of the OP. However, the said survey did not bring out the existence of any agreement/understanding, on being asked whether dealers were getting any price or discount prescriptions/instructions from the OP. The dealers/distributors denied any such imposition and categorically stating that they never sold their products below net landing prices and there was no prior approval required for online selling. The survey further revealed that the dealers used to offer their respective prices for products displayed on the online portal of the Informant or other online portals, and any extra discount/cash-back was funded by those online retailers themselves. Thus, vis-à-vis the dealers, CCI could not find any evidence of an imposition of a minimum RPM by the OP.

Further, as far as 3 pieces of evidence , the E-mail dated 04.02.2014, the Caution Notice dated 16.04.2014 and the Legal Notice dated 18.04.2014 are concerned, the OP has not denied the issuance of the Caution Notice and the Legal Notice. Rather, the OP has sought to justify them. The OP has 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 an opportunity to the Informant to remove the products of OP from its online portal as the same were counterfeit and were procured from unauthorized/unverified sources. With regard to the E-mail dated 04.02.2014 sent by Mr. Mohit Seth, wherein a warning was given that the company (the OP) will not allow sale of products on Informant's portal if MOP is not maintained,the Commission observed that this E-mail was sent 2 months prior to the 'Caution Notice' dated 16.04.2014, which was displayed by the OP on its website. Through the said caution notice, the OP was alerting the customers of kitchen appliances to not purchase the OP's products from Informant's portal as the e-commerce platforms like Snapdeal of the Informant and 'NAAPTOL' were stated to be selling various counterfeit products of OP. The OP concluded by stating that it never hindered the sale of its products on online portals and the E-mail, Caution Notice and Legal Notice were not followed by any concrete action on its part and hence, there was no impact on the online sale of OP's products, much less on the online portal of the Informant.

In view of the aforesaid , "Commission observed that though the existence of the E-mail, Caution Notice and Legal Notice are established in the present case, the justifications offered by the OP in the context of the Caution Notice and Legal Notice cannot be completely disregarded. A right of the manufacturer to choose the most efficient distribution channel ought not to be interfered with, unless the said choice leads to anti-competitive effects. The Commission finds merit in the justifications offered by the OP. Further, the Commission observes that the evidence on record does not demonstrate that the conduct/practice of the OP led to any AAEC".

Further, the data collected by the DG did not show any decrease in the volume of sales after the issuance of Caution Notice which was issued two months after the impugned E-mail, and on the contrary, there has been an increase in the sale. Thus, the data on record shows that the adverse impact of Caution Notice, if any, was not sufficient enough to meet the criteria laid down under the Act i.e. AAEC. The DG also found that the impugned E-mail dated 04.02.2014, which formed the gravamen of the present matter, was not followed by any real action from OP. Therefore, CCI concluded that there was no AAEC in the present case. Further, the presence of a large number of dealers who were competing with each other suggests a fair degree of intra-brand competition. The data collected by the DG showed that there were 1422 dealers selling OP's kitchen appliances all over India during the relevant time period who were found to be competing for the turnover linked incentives. Discounts were variable in nature and linked to the target being achieved. Since incentives were variable, the net landing price for each dealer was also different. This enabled different dealers to offer different prices to customers for the same product. Moreover, competition among distributors was found to be even stiffer as they were exclusively dealing with the OP's products. Thus, the Commission noted that vis-à-vis the dealers the evidence did not reveal the existence of any price restriction or minimum RPM. As regards the Informant, though the existence of Caution Notice, Legal Notice and Email has been established, it has not been conclusively established that they were used as instruments for imposing RPM on the Informant. Further, since vertical agreements falling under Section 3(4) read with Section 3(1) are subjected to rule of reason analysis, even if there exists a price restriction by the OP, AAEC needs to be established. However, the actual impact of the conduct of OP did not demonstrate any adverse effect on competition. Furthermore, the existence of intra-brand competition among dealers/distributors negate the anti-competitive impact of the OP's alleged conduct. Thus, no contravention of the provisions of Section 3(4)(e) of the Act was found against the Kaff/OP.

Note: This article first appeared on the Antitrust & Competition Law Blog

On 19th January 2019 .

1 Enforcement of minimum or recommended retail prices by suppliers/ manufacturer or setting of floor price.

© 2018, Vaish Associates Advocates,
All rights reserved
Advocates, 1st & 11th Floors, Mohan Dev Building 13, Tolstoy Marg New Delhi-110001 (India).

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions