Introduction

By way of a 24 May 2018 order, the Competition Commission of India (CCI) closed its investigation into the Kerala Cement Dealers' Association (KCDA) and Ramco Cements Ltd. The director general had initiated an investigation based on three allegations filed before the CCI (ie, Case 75/2012, Case 56/2013 and Case 106/2013). The informants had alleged that Ramco had been prevented from supplying them with cement after refusing to follow the KCDA's instructions to do so at an unfair price.

Director general's investigation

The director general's investigation found that the informants' allegations were unsubstantiated, as there were significant variations in the KCDA's cement prices, even over the course of one day. Further, he noted that:

  • the market for the sale of cement in the state of Kerala was extremely competitive; and
  • competition would not be curtailed if one cement manufacturer stopped supplying one or two dealers.

However, the director general's report contained discrepancies. As such, he was directed to submit a supplementary investigation report, which suggested the existence of an anti-competitive agreement between Ramco, Dalmia Bharat Limited and the KCDA to avoid cement being sold below the invoice price.

CCI's analysis

The CCI held that the evidence collected by the director general was insufficient to prove a contravention of Section 3(3) of the Competition Act. The anti-competitive conduct identified by the director general in his report pertained to a one-time request by cement manufactures for dealers not to sell cement below the invoice price.

The cement manufacturers contended that they had merely warned the dealers that they would bear no loss suffered if cement was sold below the invoice price.

Comment

The CCI noted that notwithstanding the advisory notice issued by the cement manufacturers, dealers were free to compete by adopting any price between the respective invoice price and the maximum retail price. Further, the CCI held that a one-off instance of two competitors withdrawing post-sale discounts was insufficient to establish an anti-competitive agreement between them, more so because of the rationale offered in this case.

For further information on this topic please contact MM Sharma at Vaish Associates by telephone (+91 11 4249 2525) or email (mmsharma@vaishlaw.com). The Vaish Associates website can be accessed at www.vaishlaw.com.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.