2024 (11) TMI 1006 - CCI - Law of Competition

Software company cleared of market dominance abuse allegations under Section 4(2)(c) after investigation finds no evidence of anti-competitive practices

CCI dismissed allegations of abuse of dominant position under Section 4(2)(c) of Competition Act, 2002. The opposing parties were found not to have ... Relevant product market for disposable sanitary pads - relevant geographic market: India - assessment of dominance in the relevant market - abuse of dominant position under Section 4 of the Competition Act, 2002 - prima facie case and closure under Section 26(2) of the Competition Act, 2002Relevant product market for disposable sanitary pads - relevant geographic market: India - Delineation of the relevant market for examining allegations of abuse of dominance. - HELD THAT: - The Commission examined product and substitution characteristics and concluded that sanitary pads (distinguished from reusable cloth pads, tampons and menstrual cups) fall within a relevant product market limited to disposable sanitary pads. Considering the absence of trade, linguistic or regulatory barriers to distribution across India, the relevant geographic market was delineated as India. Accordingly, the relevant market for the purposes of this inquiry was held to be the market for disposable sanitary pads in India. [Paras 23, 24]The relevant market is the market for disposable sanitary pads in India.Assessment of dominance in the relevant market - Whether the OPs occupy a dominant position in the delineated relevant market. - HELD THAT: - The Commission considered market share material relied upon by the Informant (an older Euromonitor report) and more recent public domain information. While P&G (Whisper) has a significant presence, the Commission noted competing multinational brands (notably Johnson & Johnson's Stayfree) with comparable resources. On the record before it, the Commission found that the OPs did not demonstrably possess the ability to operate independently of competitive forces or to materially affect competitors or consumers in their favour, and therefore did not establish dominance in the delineated market. [Paras 26, 27, 28, 29]The OPs are not shown to be in a dominant position in the market for disposable sanitary pads in India.Abuse of dominant position under Section 4 of the Competition Act, 2002 - prima facie case and closure under Section 26(2) of the Competition Act, 2002 - Whether the OPs' conduct of launching the product alleged to incorporate the Informant's idea amounts to abuse of dominance warranting an investigation. - HELD THAT: - Having delineated the relevant market and assessed dominance, the Commission further examined whether the OPs used the Informant's information to develop and launch the product or prevented the Informant from entering the market. The Informant did not furnish evidence that the OPs relied on his submission to develop the product, nor proof that the OPs obstructed the Informant's market access or caused the Informant to lose a demonstrable first-mover advantage. The Commission also observed that the Informant had not shown that first-mover advantage was crucial in this market. In view of these deficiencies, the Commission concluded that the conduct alleged does not constitute abuse of dominant position and that no prima facie case under Section 4 was made out. [Paras 30, 31, 32]No prima facie case of abuse of dominant position is established; matter closed under Section 26(2).Final Conclusion: The Commission delineated the relevant market as the market for disposable sanitary pads in India, found that the OPs are not shown to be dominant in that market, and held that the allegations do not disclose a prima facie case of abuse of dominance under Section 4; the Information is closed under Section 26(2) of the Act. Issues Involved:1. Alleged abuse of dominant position by the Opposite Parties (OPs) under Section 4(2)(c) of the Competition Act, 2002.2. Alleged misuse of the Informant's patented technology and ideas by the OPs.3. Determination of the relevant market and assessment of dominance by the OPs.4. Examination of whether the OPs' conduct constitutes an abuse of dominance.Issue-wise Detailed Analysis:1. Alleged Abuse of Dominant Position:The Informant alleged that the OPs, by launching 'Whisper ultra clean' sanitary pads with herbal oil, engaged in practices that resulted in denial of market access, constituting an abuse of dominant position under Section 4(2)(c) of the Competition Act, 2002. The Informant claimed that the OPs used their dominant power to oust him from the market by commercializing his innovative technology without authorization.The Commission evaluated these claims by adopting a three-pronged approach: defining the relevant market, assessing the OPs' dominance, and determining if the conduct was abusive. The relevant market was identified as the 'market for disposable sanitary pads in India.' However, the Commission found that the OPs did not hold a dominant position in this market, as they did not operate independently of competitive forces or affect competitors or consumers in their favor. Consequently, the allegations of abuse were not examined further.2. Alleged Misuse of the Informant's Technology:The Informant accused the OPs of misusing his patented technology and ideas submitted under the 'P&G Connect + Develop' program. He claimed that the OPs launched a product with similar features without his consent, violating the terms of the program, which required express approval for using shared information.The Commission noted that the Informant's submission was made on a non-confidential basis, and the OPs had declined the proposal under binding terms. The OPs argued that they did not use the Informant's patented process, and the sanitary napkins were treated differently from the Informant's process. The Commission found no evidence that the OPs used the Informant's information to develop their products or prevented the Informant from launching a similar product.3. Determination of Relevant Market and Assessment of Dominance:The Commission defined the relevant market as the 'market for disposable sanitary pads in India,' considering factors such as product characteristics, consumer preferences, and geographical scope. The Informant cited a study indicating the OPs' significant market share. However, the Commission found that the OPs did not have a dominant position, as other players like Johnson & Johnson were close competitors with comparable resources.4. Examination of Abusive Conduct:The Commission concluded that the alleged conduct did not constitute an abuse of dominant position. The Informant failed to provide evidence of the OPs using his information or preventing him from market entry. Additionally, there was no indication that the Informant had a product close to launch or that a first-mover advantage was crucial in this market.Conclusion:The Commission determined that no prima facie case of contravention of Section 4 of the Competition Act, 2002, was made out against the OPs. The matter was closed under Section 26(2) of the Act, and all pending applications were disposed of accordingly. The Secretary was directed to communicate the decision to the Informant and the OPs.