Performance linked incentive program is not tying in agreement but a business strategy, CCI rejected case against chocolate giant Craft Food Inc

Competition Commission of India: The competition watchdog in the country, CCI, rejected a case filed against Mondelez India Foods (of Craft Food Inc) alleging abuse of dominant position and tying in agreement in chocolates and confectionery business. CCI found Mondelez dominant in the market for chocolate in Karnataka but ruled that the cause of the informant, a stockist, is the case of business feud and breach of contract between them. It found nothing on record to suggest that Mondelez is imposing condition on stockists, which can be considered as unfair in violation of the provisions of section 4 of the Competition Act, 2002.

On the allegation that Mondelez used its dominant position in the relevant market to enter the market of  “instant fruit flavored drinks and biscuits” and to protect the market of “chocolate malt beverage” by tying in agreements in the garb of “Performance Linked Incentive Program (“PLIP”). The Commission observed that there is no evidence suggesting that the Mondelez is forcing stockists to buy the new range of products or is making the supply of chocolates conditional on the purchase of such other product. Prima facie, PLIP is not in the nature of tying- in arrangement but only a business strategy, which seems to be aimed at triggering the growth of new range of its products. The Commission opined that there exists no prima facia case of violation of S. 3(1); read with 3(4) of the Act. Thus, the case stands closed under S. 26(2) of the Competition Act, 2002. Sri Rama Agency v. Mondelez India Foods Private Limited, (2015) CCI 20, decided on 11.08.2015

 

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