CCI imposes ₹27.38 crore penalty on Intel for abuse of dominance over PC microprocessor warranty policy

The Competition Commission of India (CCI) has imposed a penalty of ₹27.38 crore on Intel Corporation for abusing its dominant position in the market for boxed microprocessors for desktop PCs in India..The Commission held that Intel’s India-specific warranty policy - in force from April 25, 2016 to April 1, 2024 - was unfair and discriminatory and denied Indian consumers warranty services on genuine processors purchased from authorised distributors outside India..The case arose from information filed by Matrix Info Systems, a Delhi-based parallel importer of Intel microprocessors. Matrix alleged that prior to April 2016, Intel provided worldwide manufacturer warranty in India on its boxed microprocessors. However, with effect from April 25, 2016, Intel amended its policy to provide warranty service in India only for processors purchased from its authorised Indian distributors.Under the revised policy, boxed microprocessors purchased from Intel’s authorised distributors outside India were not eligible for warranty service in India. Customers were required to claim warranty in the country of purchase..In August 2019, the CCI directed an investigation under Section 26(1) of the Act after prima facie observing that Intel appeared dominant in the relevant market and that the warranty policy could be abusive. The Karnataka High Court had subsequently refused to quash the probe and the report was submitted in January 2024.In its order, the CCI delineated the relevant market as the market for boxed microprocessors for desktop PCs in India. It found that Intel held a significantly high market share between 2016 and 2021 and was dominant in the relevant market during the period under examination ..On merits, the CCI held that Intel’s India-specific warranty service policy was unfair and discriminatory because similar restrictions were not imposed in other jurisdictions and because warranty service in India was denied even for genuine products purchased from authorised distributors abroad."On the basis of investigation and examination of the matter and considering all other material available on record, the Commission finds that OP has abused its dominant position by imposing unfair and discriminatory India Specific Warranty Policy in respect of boxed microprocessors imported into India from its authorised distributors outside India in contravention of Sections 4(2)(a)(i), 4(2)(b)(i) and 4(2)(c) of the Act causing AAEC in the Indian market, preventing the Indian consumer from availing after sale warranty service on authentic Intel boxed microprocessors in India from 25.04.2016 till 01.04.2024.".The Commission also examined pricing data and found significant differences between import prices and prices charged by authorised distributors in India for certain models."Despite uniform SDC (Standard Distribution Cost) there is difference between the prices of certain BMP models; and certain models imported into India at lower prices were available through authorised distributors at higher price.".Taking into account that the policy remained operative for eight years, the Commission decided to impose penalty at 8% of the average relevant turnover from sale of boxed microprocessors in India. After considering mitigating factors, including withdrawal of the policy with effect from April 1, 2024, the penalty was fixed at ₹27.38 crore. .Intel has been directed to deposit the penalty within 60 days and to widely publicise withdrawal of the warranty policy..Advocates Khyati Dhupar, Yashwardhan Singh and Swarendu Chatterejee appeared for the informant.Advocates Samar Bansal, Karan Chandhiok, Tarushi Guliani and Aileen Aditi Sundardas represented Intel Corporation.Advocates Karan Chandhiok, Avinash Amarnath and Nicky Collins appeared for Intel India..[Read Judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.