Fair trade regulator CCI has dismissed a plea filed by global wine firms’ body ISWAI against Andhra Pradesh State Beverages Corp Ltd (APSBCL) and the state’s excise department, alleging discriminatory procedure in the procurement of alcoholic beverages.
In an order dated September 19, Competition Commission of India (CCI) said no prima facie contravention of the provisions of section 4 of the Competition Act is made out against the APSBCL and Prohibition & Excise (P&E) Department of Andhra Pradesh.
Accordingly, the anti-trust regulator disposed of the complaint filed by the International Spirits and Wines Association of India (ISWAI) — an association of international spirit and wine companies having business operations in India.
APSBCL and the excise department of Andhra Pradesh are collectively referred to as Opposite Parties (OPs) while ISWAI is the informant, as per the CCI order.
ISWAI’s main allegation relates to arbitrary procurement of alcoholic beverages and imposition of unfair and exploitative terms set by APSBCL and excise department on suppliers/manufacturers of alcoholic beverages, who are members of ISWAI in Andhra Pradesh.
It also alleged that APSBCL and P&E department discriminated against the members of ISWAI by not procuring branded alcoholic beverages on an objective basis, which leads to commercial losses for the members of the informant.
Also, ISWAI alleged that APSBCL’s conduct has resulted in the replacement of branded alcoholic beverages of the informant members with brands of manufacturers who had insignificant or no demand.
Section 4 of the Competition Act deals with anti-competitive agreements and abuse of dominant market positions, respectively.
In its 32-page order, the commission notes ISWAI alleges that one of the OPs was not placing any orders even though purchase orders were raised.
However, in the present case the offer for supply (OFS) were duly raised by OPs for a substantial period and it was the ISWAI members who could not supply the OFS quantity in several months.
Thus, this allegation of ISWAI lacks credence in the prima facie view of the commission.
About the allegations of arbitrary payment guidelines imposed by the OPs on the informant’s members for withholding payments, the commission noted that APSBCL and P&E Department would endeavour to clear the dues of the manufacturers expeditiously as stated by them, and thus the regulator does not wish to delve further into this aspect.
Also there were allegations of imposition of penalty by OPs upon slow moving of goods.
However, the commission said it did not have any misgivings in relation to the slow movement of stock, and it would suffice to say that OPs ought to exercise the clause uniformly in a non-discriminatory manner and with abundant care and caution.
There were also allegations that various clauses of Rate Contract Agreements (RCA) are unilateral and were unfair to ISWAI.
However, CCI noted that APSBCL and P&E Department have stated that conditions in the RCA are not unilateral and they cannot control and artificially manipulate the demand and supply conditions of alcoholic beverages in Andhra Pradesh.
Therefore, the main allegation relating to violation of competition law made against the opposite parties has not been found and it does not deem it necessary to deal with the allegations qua other clauses of RCA.
Subsequently, the regulator said that allegations of abuse by ISWAI are not found to be validated and no case of contravention of provisions of section 4 of the Act can be stated against the opposite parties.