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Business Standard
13-05-2025
- Business
- Business Standard
Volume-based discounts do not amount to discriminatory pricing: SC
The Supreme Court (SC) on Tuesday ruled that offering volume-based discounts does not amount to discriminatory pricing under the Competition Act, 2002, unless such discounts are applied differently to equivalent transactions. A Bench of Justices Vikram Nath and Prasanna B Varale upheld a decision of the now-defunct Competition Appellate Tribunal (Compat). 'The order of the Compat is affirmed. A cost of ₹5 lakh is imposed on Kapoor Glass for prolonged litigation,' the court said. A volume-based discount, also known as a quantity discount or bulk discount, is a pricing strategy where the price per unit of a product or service decreases as the total purchase quantity increases, encouraging customers to buy more by offering a lower price for larger orders. This will have a significant impact on the competition law landscape and market dynamics, experts said. 'The judgment provides legal certainty for companies, particularly dominant enterprises, to design pricing models that reward bulk buyers without risking Competition Commission of India (CCI) scrutiny. This is relevant for industries like pharmaceutical, fast-moving consumer goods, and industrial supply, where volume discounts are common,' said former Additional Solicitor General and senior advocate Sanjay Jain. The apex court verdict came 11 years after the appeal was filed in 2014. Kapoor Glass, a manufacturer of glass ampoules and vials, had filed a complaint saying that a dominant supplier of neutral borosilicate glass tubes was engaging in discriminatory pricing. It alleged that the supplier extended preferential discounts and commercial terms to its joint venture entity, which was disadvantageous to other buyers in the market. CCI had found the supplier, Schott, guilty of abusing its dominant position under the Competition Act, 2002, imposed a fine of ₹5.66 crore, and passed a cease-and-desist order. Schott appealed the decision before Compat, which reversed the CCI's order, saying that volume-based discounts do not automatically qualify as discriminatory unless they are applied unequally to similarly situated buyers in comparable transactions. The now-defunct Compat had also imposed a fine of ₹1 lakh on Kapoor Glass, which has now been enhanced by the SC to ₹5 lakh. 'The decision is a pragmatic step that prevents over-regulation of legitimate business practices and ensures that competition law does not stifle commercial incentives which benefit consumers through lower prices. Upholding the validity of volume-based discounts will enable companies to structure discount schemes with confidence, provided they maintain transparency and uniformity,' Jain said. Alay Razvi, managing partner of law firm Accord Juris, said after the verdict, 'Companies can confidently use incentives like bulk discounts, tiered pricing, and loyalty schemes so long as they are fair and accessible to similarly situated buyers.' Jain said the verdict will strengthen the threshold for CCI investigations, which may extend the benefit to consumers. 'The Commission may adopt a more cautious approach to initiating probes into pricing practices and focus on cases with clear evidence of market foreclosure or consumer harm,' he said. The judgment brings Indian competition law closer to international standards, where volume-based discounts are permitted unless they create exclusionary effects in the form of predatory pricing, loyalty rebates, etc., Jain said. 'This enhances India's attractiveness as a business destination. In the EU, the Intel case (2017) clarified that rebates are lawful unless they foreclose competitors—a principle echoed in the ruling. Similarly, US antitrust law under the Sherman Act permits volume discounts absent anti-competitive intent,' he said. Jain, however, cautioned that the CCI's ongoing probes into technology giants like Google and Amazon may be influenced by this newly set judicial precedent. 'Legalising bulk discounts may further lead to new disputes over complex pricing models, particularly in digital markets (e-commerce, app stores), where discounts are often tied to exclusivity or platform policies,' he said.
Time of India
13-05-2025
- Business
- Time of India
SC overturns CCI ruling against Schott Glass India after a decade
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel After over a decade, the Supreme Court on Tuesday finally rejected the Competition Commission of India 's decision that held Schott Glass India , a dominant supplier of neutral borosilicate glass tubes, guilty of abusing its dominant position by offering exclusionary volume-based discounts, imposing discriminatory contractual terms, and, on occasions, refusing ampoules and vials manufacturer Kapoor Glass , the complainant in the case, had alleged that Schott Glass had violated competition laws by resorting to discriminatory pricing and using its market dominance that disadvantaged downstream buyers like a now defunct Competition Appellate Tribunal's April 2014 decision that set aside the CCI's order imposing a fine of Rs 5.66 crore and asking Schott Glass to cease-and-desist from discriminatory practices, a Bench of Justices Vikram Nath and Prasanna B Varale held the CCI had relied on untested statements and pre-2009 correspondence and had not undertaking any 'credible assessment of harm.''…the omission of a proper harm analysis vitiates the CCI's order in limine. Because each of the alleged abuses has already been negatived on the facts, the appeals (filed by CCI and Kapoor Glass) must fail on this additional ground as well, the apex court held, adding that '…no appreciable adverse effect on competition is shown on the evidence marshalled by the COMPAT, converter growth, stable downstream prices, absence of foreclosure.'The SC enhanced the fine of Rs one lakh (imposed by COMPAT) to Rs five lakh on Kapoor Glass for its 'wholly unsubstantiated nature of the allegations and the prolonged litigation.' The costs have to be paid to Schott India within eight the judgment, senior counsel Percival Billimoria, who represented Schott India, 'Significantly, the judgment sets out the principle that an 'effects based' approach would be followed for Section 4 abuse of dominance cases. It is the first pronouncement on the law in such cases.'The bench said that the competition law is not designed to humble the successful or to clip the wings of enterprises that have, through industry and innovation, secured a commanding share of the true purpose of antitrust laws is to preserve the process of competition, i.e., to ensure that rivals may challenge the incumbent on the merits, that consumers enjoy the fruits of efficiency, and that technological progress is not stifled by artificial barriers, the judgment stated, adding that in today's global economic climate, prudence is vital.'If mere size or success were treated as an offence, and every dominant firm exposed to sanction without tangible proof of competitive harm, the law would defeat itself: it would freeze capital formation, penalise productivity, and ultimately impoverish the very public it is meant to protect,' according to Justice Nath, writing the judgment for the case had its genesis in a complaint lodged by Kapoor Glass in May 2010 alleging that Schott India, then the principal domestic manufacturer of neutral USP-I borosilicate glass tubing, had abused its dominant the CCI directed Director General's investigation in March 2011 had concluded that Schott India had violated Section 4 of the Competition Act, the Commission by a majority order of March 29, 2012 levied a penalty equal at a rate of 4% of Schott India's average of three years turnover equivalent to about Rs 5.66 crore and also issued a cease-and-desist order against Schott India from doing any discriminatory practices to any of the Schott India and Kapoor Glass challenged the appellate tribunal's order, with the latter reiterating its refusal-to-supply grievance. However, the COMPAT annulled the penalty on Schott India and held that the evidentiary material did not establish any abuse of dominant position.
