Supreme Court Ruling on Volume-Based Discounts
The Supreme Court of India ruled that offering volume-based discounts does not constitute discriminatory pricing under the Competition Act, 2002, unless such discounts are unevenly applied to similar transactions.
Case Background
- A Bench of Justices Vikram Nath and Prasanna B Varale upheld a decision of the now-defunct Competition Appellate Tribunal (Compat).
- Kapoor Glass filed a complaint against a dominant supplier of neutral borosilicate glass tubes for discriminatory pricing.
- The Competition Commission of India (CCI) initially found the supplier, Schott, guilty of abusing its dominant position.
- Compat reversed CCI's decision, stating volume-based discounts aren't discriminatory unless unequally applied.
Impact on Business Practices
The ruling provides legal clarity for companies to use volume discounts without fearing CCI scrutiny, benefiting industries like pharmaceuticals, FMCG, and industrial supply.
Legal and Market Implications
- Legal Certainty: Allows companies to design pricing models rewarding bulk buyers.
- Consumer Benefit: Encourages transparent and uniform discount schemes.
- Brings Indian competition law closer to international standards, aligning with EU and US precedents.
- Cautious CCI approach to probes, focusing on market foreclosure or consumer harm evidence.
Future Considerations
Ongoing CCI probes into tech giants like Google and Amazon may be influenced by this precedent. There may be new disputes in digital markets regarding complex pricing models tied to exclusivity or platform policies.