Snapdeal's complaint against KAFF gets rejected by CCI

The Competition Commission Tuesday dismissed a complaint by e-commerce firm Snapdeal against kitchen appliances maker KAFF with regard to the alleged imposition of minimum resale price maintenance (RPM) on its dealers. The fair trade regulator dismissed the complaint by Jasper lnfotech Pvt Ltd which owns and operates e-commerce platform Snapdeal as it did not find any contravention of the Competition Act. The complaint, filed by Jasper in 2014, alleged that KAFF was attempting to impose a price restriction to make sales at a minimum price and threatened to ban online sales if such prices were not maintained.

The commission had directed its investigation arm director general to investigate whether the minimum resale price imposed by the KAFF on its dealers contravened the Competition Act. The DG defined the relevant market, comprising of the relevant product market and relevant geographic market, to assess whether the restraints imposed by KAFF resulted into any appreciable adverse effect on competition (AAEC), which is a prerequisite for examining vertical restraints.

The director general (DG) submitted the main investigation report and consequently supplementary report and opined that since the Snapdeal is only a market platform, it does not form part of the vertical chain and hence, cannot be subjected to a vertical restraint by KAFF.

Regarding the vertical chain, the regulator noted that in many ways online portals act as a parallel distribution chain along with the off-line distribution channel. Besides, online platforms have the capability to match a very large number of users in a market in order to facilitate an exchange. The observation of the DG that Snapdeal does not perform any function which could make it a part of vertical/supply chain seems illusory in context of a technology-driven market, as opposed to traditional markets, CCI said.

Based on the reports, the commission did not find any evidence of adverse effect on competition as, except one dealer, all dealers denied the presence of any price restraint imposed on them. The regulator observed that even if there exits price restriction by KAFF, AAEC needs to established. However, the activities of the firm did not lead to AAEC, the regulator said in a 28-page order. Further, the presence of a large number of dealers who were competing with each other suggests a fair degree of intra-brand competition, Competition Commission Of India (CCI) noted. Accordingly, CCI dismissed the complaint as it found no contravention of Section 3 of Act. Section 3 pertains to anti-abusive agreements.

(With inputs from agencies.)