CCI dismisses case alleging unfair business practices against Mondelez

Sep 7, 2018

A Maharashtra-based former stockists and distributor of products of Mondelez had purported that the Mondelez had terminated the distribution agreement between the two entities on “frivolous and false grounds” after it had raised the issues of abuse of dominance and anti-competitive practices by the confectionery giant.

But as of now The Competition Commission of India (CCI) has dismissed a case alleging unfair business practices against confectionery giant Mondelez India Foods, the maker of Cadbury chocolates, with regard to termination of a distribution agreement. Noting that “no contravention of either Section 3 or Section 4 of the (Competition) Act” is made out against Mondelez, the fair trade regulator disposed of the matter.

While Section 3 deals with anti-competitive agreements, Section 4 pertains to abuse of dominant market position.

CCI considered the ‘market for chocolate in India’, as the relevant one and also observed that Mondelez was in a dominant position in it.

On the allegation that Mondelez’s requirement that its software be mandatorily used by the distributors for distribution of its products amounted to abuse of dominance, the regulator, in a recent order, said that the “condition appears to be an organised set up for data and inventory management” and is not abusive in nature.

Regarding the other allegations such as resale price maintenance by Mondelez (Opposite Party) and restriction on distributors to come up with their own discount schemes, the regulator observed that “no supporting evidence or communication” has been furnished by the complainant to substantiate them.

“Further, resale price maintenance is not a per se violation of the provisions of the Act and there is nothing to suggest that the conduct of the OP (Opposite Party) has an appreciable adverse effect on competition in the market,” the CCI said.

“Therefore, no prima facie case of violation of the provisions of Section 3 of the Act is made out on this count also,” it added.

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