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COMPETITION APPELLATE TRIBUNAL, NEW DELHI
G.S. SINGHVI, CHAIRMAN
Global Tax Free - Appellant
Versus
William Grant & Sons Limited & Ors. - Respondents
Appeal No. 17 of 2014
Decided on : 19-01-2015
For the Appellant :Mr. Rohit Sharma, Advocate.
For the Respondent:Mr. A.N. Haksar, Senior Advocate with Mr. Udayan Jain, Ms. Namita Chadha, Ms. Priyanka Sengar and Ms. Sakshi Narula, Advocates.
Headnote:
The Competition Commission of India (CCI) dismissed an information filed by an appellant alleging abuse of dominant position by Respondent Nos. 1 to 3, manufacturers and distributors of single malt scotch whisky, under Section 4(2)(a)(ii) of the Competition Act, 2002 (the Act). The appellant claimed that Respondent Nos. 1 to 3 charged unfair and discriminatory prices, resulting in excessive charging of approximately twelve lakh forty thousand GBP. The CCI held that the term 'relevant product market' should be narrowly construed and confined to single malt whisky manufactured by Respondent No. 3 because the raw material used and the process of manufacturing single malt whisky are totally different from other varieties of whiskies. The CCI further held that there was no question of abuse of dominance by Respondent Nos. 1 to 3 because they were not in a dominant position in the relevant market.
Fact of the Case:
The appellant, an exclusive importer and distributor of single malt scotch whisky manufactured by Respondent No. 3, filed an information with the CCI alleging that Respondent Nos. 1 to 3 had abused their dominant position by charging unfair and discriminatory prices. The appellant claimed that Respondent Nos. 1 to 3 charged lower prices from their Indian subsidiary and allowed import of the products by others at a price lower than one charged from the appellant, amounting to abuse of dominant position within the meaning of Section 4(2)(a) of the Act.
Finding of the Court:
The CCI found that the appellant's definition of the 'relevant product market' was too narrow and ignored the factors enumerated in Section 19(7) of the Act. The CCI held that there may be differences in the raw material used and the manufacturing process of single malt whisky as compared to other whiskies, but these are not the determinants enumerated in Section 19(7). The CCI further held that common consumers perceive all imported whiskies as quantitatively superior to Indian whiskies primarily because of difference in the manufacturing process vis-a-vis Indian whiskies, their characteristics and price. The CCI also found that the appellant had not produced any evidence to prove that the consumers in India show any market preference for single malt whisky in contrast to other imported whisky and they do not consume other imported whiskies in any situation.
Issues: Whether the term 'relevant product market' should be narrowly construed and confined to single malt whisky manufactured by Respondent No. 3.
Ratio Decidendi: The CCI held that the term 'relevant product market' should be narrowly construed and confined to single malt whisky manufactured by Respondent No. 3 because the raw material used and the process of manufacturing single malt whisky are totally different from other varieties of whiskies.
Final Decision: The CCI dismissed the appellant's information, holding that there was no question of abuse of dominance by Respondent Nos. 1 to 3 because they were not in a dominant position in the relevant market.
ORDER :
Mr. Justice G.S. Singhvi, Chairman-Having enjoyed the benefits flowing from the agreements entered with Respondent Nos. 1 to 3 appointing it as exclusive importer and distributor of their products and finding that they will not extend the term of appointment beyond 31.3.2013, the appellant filed information under Section 19(1)(a) of the Competition Act, 2002 (for short, ‘the Act’) alleging abuse of dominant position by Respondent Nos. 1 to 3, but could not convince the Competition Commission of India (for short, ‘the Commission’) to order an investigation into the alleged violation of Section 4(2)(a)(ii) of the Act and to restrain them from selling their products in the Indian market and also pay compensation/costs to the tune of 23,72,297.30 pounds, the appellant has filed this appeal under Section 53B of the Act.
2. Respondent Nos. 1 to 3 belong to William Grant & Sons group of companies. They are engaged in the production, sale, marketing and distribution of various kinds of spirits including single malt whisky throughout the world. On 16.11.2005, Respondent No. 3 appointed the appellant as authorized importer and distributor in India except the States of Maharashtra, Goa and Karnataka in respect of the following products:
• William Grant’s Family Reserve Scotch Whisky.
• Glenfiddich Single Malt Scotch Whisky.
• Balvenie Single Malt Scotch Whisky
3. The tenure of the appellant’s appointment was extended from time-to-time. The last extension was granted vide letter dated 8.8.2011, the relevant portions of which are extracted below:
“By this letter we extend our intent to appoint you as our exclusive importer and distributor in India (the “Territory”) with immediate effect until 31st March, 2013 for the following products-
Brand
GLENFIDDICH 12 YEAR OLD
GLENFIDDICH 15 YEAR OLD
GLENFIDDICH 18 YEAR OLD
GLENFIDDICH 21 YEAR OLD
GLENFIDDICH 30 YEAR OLD
GRANTS FAMILY RESERVE
In addition to the above, we may launch new products from time to time which will also be included in the portfolio after a mutual agreement between us to do so. We may also withdraw from any of the abovementioned brand SKUs as per the strategic directive from the Global team and that shall be communicated to you before the onset of label registration for the corresponding year.
By accepting this appointment you agree to use your best efforts to promote the sale of the Products throughout the Territory. You will not sell our Products outside the Territory or to any customers within the Territory that we inform you are likely to sell the Products outside the Territory.
Your current appointment will continue until 31st March, 2013 and shall automatically terminate.”
4. During the subsistence of its appointment as exclusive importer and distributor of the products of Respondent Nos. 1 to 3, the appellant imported different products at the price specified by the concerned respondent without raising any objection.
5. In August 2012, the appellant’s representative Shri Mukul Mehra contacted the local representative of Respondent Nos. 1 to 3 and requested that keeping in view the investments already made by the appellant, the agreement may be renewed for a period of five years. His request was turned down vide letter dated 25.01.2013 on the ground that the respondents were reviewing their business model in India. It was also mentioned in that letter that the existing agreement shall terminate on 31.3.2013.
6. After March 2013, Respondent Nos. 1 to 3 commenced sale of their products through their Indian subsidiary, namely – Willam Grant & Sons India Limited. The appellant’s representative then collected information from ICD Tughlaqabad, New Delhi about the prices charged by Respondent Nos. 1 to 3 from their Indian subsidiary and found that the same was significantly lower than the prices charged from it between November 2005 to March 2013. He also gathered information about import of the products manufactured by Respondent Nos. 3 through Delhi Duty Free Services and by private com
