No Antitrust Violations Found in Online Sales Restrictions and Pricing Policies; Case Closed.

The Commission concluded that there were no violations of the Competition Act in the allegations against the Opposite Parties (OPs) concerning restrictions on online sales, the Market Infiltration Policy (MIP), Minimum Operation Price (MOP) practices, and alleged cartel facilitation at the retailer level. The Commission determined that the restrictions did not adversely affect competition, as Vivo products were available through multiple channels, and the MIP and MOP policies did not lead to an Appreciable Adverse Effect on Competition (AAEC). Furthermore, the cartel allegation lacked evidence. Consequently, the case was closed under Section 26(2) of the Act, with no action taken against the OPs.

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Issues Involved:
1. Restriction on online sales.
2. Market Infiltration Policy (MIP).
3. Minimum Operation Price (MOP) violation.
4. Allegation of facilitating a cartel at the retailer level.

Detailed Analysis:

1. Restriction on Online Sales:
The Informants alleged that the Opposite Parties (OPs) restricted them from selling Vivo branded mobile handsets and accessories online, limiting their freedom of trade and the supply of Vivo products in the market. The Commission observed that Vivo products are readily available online on various e-commerce platforms and the OPs also have a dedicated e-shopping portal. The primary distribution agreement between OP-1 and OP-2 pertains to offline sales, and no rights for online sales were given to OP-1. Therefore, the restriction on online sales by OP-1 does not directly withhold the supply of Vivo products in the market. The Commission found no contravention of Section 3(4)(c) of the Act regarding the restriction on online sales.

2. Market Infiltration Policy (MIP):
The Informants submitted that the OPs enforced a policy of penalizing distributors/retailers for market infiltration, violating Section 3(4)(c) of the Act. The OPs justified MIP as a measure to prevent duplication of smartphones and counterfeits. The Commission noted that no restrictions were placed on the Informants in dealing with other brands either within or outside the allocated territory. The Commission concluded that MIP did not cause or is likely to cause an Appreciable Adverse Effect on Competition (AAEC) in the market for smartphones in India, and thus, no contravention of Section 3(4)(c) of the Act was found.

3. Minimum Operation Price (MOP) Violation:
The Informants alleged that the practice of mandating a MOP resulted in Resale Price Maintenance (RPM), which is anti-competitive and in contravention of Section 3(4)(e) of the Act. The Commission noted that consumers have multiple options to purchase Vivo smartphones, including online platforms at competitive prices. The adverse effect on competition due to MOP was not established by the Informants. The Commission observed that the smartphone market is highly competitive, with many players and frequent launches of new brands, ensuring no AAEC due to MOP policy. Consequently, no contravention of Section 3(4)(e) of the Act was found.

4. Allegation of Facilitating a Cartel at the Retailer Level:
The Informants alleged that the OPs facilitated a cartel at the retailer level under the aegis of the All India Mobile Retailers Association (AIMRA), violating Section 3(3) of the Act. The Commission observed that this allegation was not substantiated with any evidence and was controverted by the OPs, stating that no retailers or AIMRA were impleaded in the matter. In the absence of tangible evidence, no case was made out for contraventions of Section 3(3) of the Act against the OPs.

Conclusion:
The Commission found no competition concerns in the entire matter and ordered the case to be closed under Section 26(2) of the Act. The Secretary was directed to communicate the order to the parties accordingly.

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