Exclusive trading channels challenged under Competition law

By February 17, 2015 December 20th, 2019 No Comments
Mr. Ashish Ahuja (informant) [1]
had filed an information under Section 19 (1) (a) of the Competition Act, 2002
(the Act) in the Competition Commission of India against (Opposite
Party 1) and SanDisk Corporation (Opposite Party 2) that both of them were
acting jointly to create a monopoly on the online marketplace. The informant is
engaged in selling various storage products like pen-drives, hard disks,
laptops etc. at very competitive prices for which he had entered into an online
agreement on 28.11.2013 with which is an online portal. Upon a
letter containing the list of authorized distributor (the details of which were
kept confidential from the informant) from the Indian sales office of SanDisk
Corporation, USA the selling of the products of the informant were stopped
without notice by Thereafter, and SanDisk asked the
informant to enter into an Authorized Distributor Agreement with SanDisk. The
informant alleged this act as a connivance to hinder his competitive prices which
were lesser than those offered by other sellers. It was also noted by the
informant that other sellers were still being allowed to sell their respective
SanDisk products on Issues were as follows:

Whether the insistence of SanDisk Corporation to get its
product sold on online portals from its authorized distributor is abusive and
in violation of Section 3 and Section 4 of the Act?
Whether is in contravention of Section 3 and 4
of the Act?
Whether SanDisk Corporation and are conniving
against the informant because of the low prices offered by him?

The Commission observed in the present
case that SanDisk’s insistence that its devices be sold on online portals
should be bought only from its authorized distributors and therefore seeking a
like agreement from the informant cannot by itself be considered as abusive as
it has the right to protect the sanctity of its distribution channel and
safeguard its brand image and goodwill. Hence, the act of SanDisk to get its product
sold on online portals from its authorized distributor is not abusive or in
violation of Section 3 or 4 of the Act. is also not at fault as it
is not engaged in the purchase or sale of storage devices rather it
owns/manages the web portal and is not even a dominant player in its sector.
Hence, it cannot be held that it is in contravention of Section 3 or 4 of the

The allegation by the informant that
other sellers are still allowed to sell their SanDisk products on the portal
fails to prove that the other sellers’ products are not sourced from authorized
distributors. Hence, there is nothing to show any connivance against the
particular informant. No case of contravention of the sections of the Act was
made out against the opposite parties and the information was ordered to be
closed as per Section 26 (2) of the Act.

ORS CASE NO. 17 OF 2014, CCI

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