Bajaj’s exclusive distribution agreements and re-sale price maintenance for Almond Hair Oil are not Anti-Competitive

Competition Commission of India (CCI): Business strategy by Bajaj Corporation for its product ‘Almond Drop Hair Oil’ was scanned by the competition regulator on information received by one of the distributors of Bajaj. CCI found that Bajaj had allocated area of business to every dealer and there was a vertical restraint imposed on the distributors to supply the products in the area limited by the company and the arrangement was monitored and enforced by Bajaj Corp. Such the practice of allocation of geographical area to its distributors amounts to exclusive distribution agreement (EDA) under section 3(4)(c) of the Competition Act. Bajaj had also indulged in resale price maintenance (RPM) by prescribing rate at which its products were to be re-sold by the dealers to the retailers. It was alleged by the informant that in order to ensure that there was no intra-brand competition or price competition of its products, Bajaj imposed RPM type vertical restrictions upon its dealers.

CCI observed that there are many players in the FMCG market in India providing consumer products and services in the areas of Health and Beauty, which indicates that the market of hair oil is wide and consumers have various brands as options to choose from. Bajaj does not have position of strength in this sector in comparison with other brands in market structure of FMCG products and particularly the hair oil segment in India. CCI opined that in the presence of several companies and considering the dynamic nature of the sector, conducts of Bajaj are unlikely to affect the inter-brand competition in the market. After considering effect of the impugned conducts of Bajaj on the touchstone of factors elucidated under section 19(3) of the Act, CCI opined that vertical restraints imposed by Bajaj upon its distributors have not been shown to have caused appreciable adverse effect on competition (AAEC) nor is there any appreciable effect on the benefits accruing to the ultimate consumers. On RPM the Commission noted the price suggestion was merely recommendatory in nature and that a bulk purchaser was free to sell the product at lower price. [In Re: Ghanshyam Dass Vij and Bajaj Corp. Ltd., [2015] CCI 155 decided on 21.10.2015]

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