XYZ Vs. Saint Gobain India Pvt. Ltd. and Other

Case No. 16 of 2023 Page 1 of 12 COMPETITION COMMISSION OF INDIA Case No. 16 of 2023 In Re: XYZ (Confidential) Informant AND Saint Gobain India Pvt. Ltd. Achi Building, Floor No. 7 18/3, Rukmini Lakshimipathy Road, Egmore Chennai –600008 Tamil Nadu Opposite Party No. 1 Compagnie De Saint-Gobain Saint-Gobain 12 place de l’Iris 92096 La Défense Cedex France Opposite Party No. 2 CORAM Ms. Ravneet Kaur Chairperson Ms. Sweta Kakkad Member Mr. Deepak Anurag Member Order under Section 26(2) of the Competition Act, 2002 1. An Information was filed under Section 19(1)(a) of the Competition Act, 2002 (hereinafter, ‘Act’) alleging certain anti-competitive practices in violation of Section 3(4) and Section 4 of the Act by Saint Gobain India Pvt. Ltd. (‘OP-1’) and Compagnie De Saint- Gobain (‘OP-2’). Facts and allegations as stated in the Information 2. The Informant is stated to be a public-spirited person. Case No. 16 of 2023 Page 2 of 12 3. As stated in the Information, Saint Gobain Group comprises of OP-2 (a France-based parent entity) and companies/ entities affiliated to it. OP-1 is engaged in the business of designing, manufacturing and distributing materials and services for construction and industrial markets. It is stated to have a pan-India presence with 26 manufacturing sites, sales offices in all cities & major industrial towns, and an extensive dealer network. On its website, OP-1 has listed names of over 90 establishments as its processors and over 200 establishments as its fabricators. The Informant has stated that OP- 2, directly or indirectly, owns 99.03 percent shares of OP-1. 4. The Informant has averred that the conduct of OP-1 has previously been examined by the Commission in case no. 51 of 2011 [HNG Float Glass Ltd. vs Saint Gobain Glass India Ltd.] wherein, the Commission had passed an order under Section 26(1) of the Act directing investigation into the alleged anti-competitive conduct by OP-1 in the clear float glass market in India during the period 2010-11. Eventually, the Commission, based on the report by the DG, had passed an order under Section 26(6) of the Act on finding that OP-1 had not contravened the provisions of the Act. 5. In the present Information, it is alleged that the OP-1 has entered into agreements with the processors/ fabricators/ distributors, through which certain conditions have been imposed upon these players in the distribution network of glass products. These conditions are stated to be resulting into violations of Section 3(4) and 4 of the Act. 6. The Informant has stated that he has found an agreement which is allegedly proposed to be entered between OP-1 and one of its processors. The said agreement titled ‘Propel Project Participation Agreement’ (‘Propel Agreement’) imposes exclusive supply and forced co-branding obligations on processors. The Informant has alleged that OP-1 has entered into similar agreements with its various, if not all, processors. 7. Based on the said Propel Agreement and oral directions/ guidance, the Informant has alleged that the following practices are contravening Section 3(4) as well as Section 4 of the Act: Case No. 16 of 2023 Page 3 of 12 a) Exclusive supply obligation: Clause 3.1 and 3.3 of the Propel Agreement required the processor to obtain all its purchase of glass exclusively from OP-1. As per Clause 11.2, OP-1 may terminate the Agreement, and thus stop supplies, if the exclusive supply obligation is not fulfilled by processor. These clauses allegedly fall foul of Sections 3(4)(b) and 3(4)(d) as well as Sections 4(2)(a)(i), 4(2)(b)(i) and 4(2)(c) of the Act. b) Forced co-branding: Clause 3.3 of the Propel Agreement includes co-branding requirement whereby OP-1 has obligated the processor to undertake all its purchases of glass products from OP-1 and in consideration of the same allows the processor to use OP-1’s branding. This clause allegedly falls foul of Section 3(4)(b) and 3(4)(d) as well as Sections 4(2)(a)(i), 4(2)(b)(i), 4(2)(c) and 4(2)(e) of the Act. c) Refusal to deal: Processors/ distributors are being offered significant discounts if they purchase exclusively from OP-1; however, processors who deal with competitors of OP-1 are not given the products by OP-1. This allegedly falls foul of Section 3(4)(d) as well as Sections 4(2)(a)(i), 4(2)(b)(i) and 4(2)(c) of the Act. d) Resale price maintenance: In certain cases, OP-1 directly approaches large customers (real estate companies) and negotiates prices directly with them. The processors and distributors are then forced to issue invoices at these prices. This allegedly falls foul of Section 3(4)(e) as well as Section 4(2)(a)(ii) of the Act. 8. In furtherance of the aforesaid allegations, the Informant has proposed two relevant markets: (i) Market for ‘production and sale of clear float glass in India’ and (ii) Market for ‘production and sale of coated glass in India’. The Informant has requested the Commission to conduct assessment and investigation in the said relevant markets. 9. As regard the first relevant product market, i.e., ‘market for production and sale of clear float glass’, the Informant has submitted that the Commission has already accepted this market as a separate product market in Case No. 51 of 2011, wherein, the dominant position of OP-1 was examined. Further, the Informant has also submitted that the market for coated glass, based on factors such as physical characteristics, production Case No. 16 of 2023 Page 4 of 12 process, end-use of goods, consumer preferences and prices of goods or services, has been considered to be a separate relevant product market by competition authorities in other jurisdictions. In this regard, the Informant has cited a case of European Commission titled COMP/M.6557- AGC Glass Europe/ Interpane International Glas. 10. With regard to the relevant geographic market, the Informant has proposed it to be the ‘whole of India’, as trading conditions, regulations, consumer preference etc. do not vary significantly enough across the country, with respect to sale and distribution of coated glass and clear float glass in India. 11. The Informant, based on factors enumerated in Section 19(4) of the Act such as market share, size and resources/economic power, dependence of consumers and entry barriers etc. has stated that OP-1 occupies a dominant position in the ‘market for production and sale of clear float glass in India’. 12. With regard to the second relevant market, the Informant has submitted that OP-1 is market leader having close to 19% market share, based on a market study report of TechSci Research of 2022. The Informant has stated that all other competitors have market shares significantly less than that of OP-1 in the coated glass market. The Informant has further stated that even if dominance of OP-1 is not established in the coated glass market, it enjoys significant market power. 13. As regards abusive conduct, the Informant has submitted that the OP-1 is exploiting its influence in the relevant markets by forcing, directly or indirectly downstream market players to deal exclusively with OP-1 and to the exclusion of other competitors. Additionally, OP-1 is using its dominant position in the market for ‘production and sale of clear float glass in India’ to enter into and protect its influence in the market for ‘production and sale of coated glass in India’. 14. Based on the aforesaid allegations, the Informant has sought relief, praying for an investigation, under Section 26(1) of the Act, into the conduct of OP-1. Further, confidentiality over the identity of the Informant has also been requested under Section 57 of the Act read with Regulation 35 of the Competition Commission of India