COMPAT decides on discriminatory pricing; AZB’s Percival Billimoria for Schott India & Sr Adv A N Haksar for Kapoor Glass

In a recent decision, the Competition Appellate Tribunal (COMPAT) has overturned the Competition Commission of India’s (CCI) decision against Schott Glass India Private Limited (Schott India), a subsidiary of the German specialty glass manufacturer, Schott AG, for abuse of dominance.

In March 2012, the CCI had imposed a penalty of Rs. 56.5 million (approximately $940,000), for abusing its dominant position in the market for “neutral USP-I borosilicate glass tubes” and directed Schott India to cease and desist from the pricing policies held to be discriminatory. The CCI’s decision provided the first glimpse into its interpretation of ‘discriminatory’ pricing as an abusive conduct and cast doubts on the validity of volume linked rebate/discount schemes.

The question of discriminatory pricing and loyalty discounts is complex and crucial differences exist in positions prevailing in the EU and USA.

By reversing the CCI’s decision, the COMPAT has clarified that a rebate/discount scheme would be considered ‘discriminatory’ only when it results in unequal treatment to similar transactions. Additionally, the COMPAT has indicated that while examining target linked discounts offered by an upstream manufacturer of intermediary products to downstream manufacturers of final products, it is important to examine the effect of target linked discounts on prices of the final products.

Various commentators have hailed the decision as setting the right precedent.

AZB & Partners’s Percival Billimoria appeared before the COMPAT representing Schott India while Kapoor Glass was represented by Senior Counsel A N Haksar assisted by Economic Laws Practice.