Sardar Ali, Member -
(1.) THIS order will dispose of an enquiry initiated upon an application filed by the All India Plastic Industries Association (hereinafter referred to as "the complainant"), under Section 10(a)(i) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as "the Act"), against Polyolefine Industries Ltd. (hereinafter referred to as "the respondent"). The aforesaid complaint accompanied by an affidavit was filed before the Commission on February 26, 1986, which was considered by the Commission on March 5, 1986, and notice of enquiry was directed to be issued against the respondent because in the view of the Commission it was necessary to start enquiry forthwith.
(2.) Briefly stated the charges in the notice of enquiry, which are based on the application of the complainant, an association of manufacturers and traders in various plastic materials having a membership of 384, are that the respondent has indulged in the trade practice of offering a huge discount to selected major units at Rs. 2,500 per metric tonne on extrusion grade and Rs. 3,500 per metric tonne on injection moulding grade and the respondent had denied the aforesaid rebate to all other small consumers, though they happen to be the respondent's consumers for the past several years and are dependent on their material. In this process, the respondent has manipulated the prices and supply of its products to small consumers, imposing unjustified costs and restrictions on them and the said discriminatory trade practice distorts, prevents and restricts competition between the large/major units and small-scale units. Thus, the Commission was prima facie of the view that the respondent-company is indulging in activity of restrictive trade practice as defined under Section 2(o) of the Act and the said restrictive trade practice is prejudicial to the public interest.
The complainant also alleged in its complaint that the respondent is the sole indigenous manufacturer of high density polyethylene (hereinafter referred as "HDPE"), which the members of the complainant are using as their raw material for manufacturing their products ; that the production of the respondent is stated to be about 45,000 tonnes per annum as against the country's demand of over 1 lakh tonnes per annum and the balance demand is met through imports, which only the major manufacturer can do directly ; that the respondent has been selling their raw material at a high margin of profit and instead of reducing their rate to lessen the gap between their prices and the international prices, they have adopted the system of offering huge discount/rebate to selected major units ; that the aforesaid rebate, is denied to all small consumers, who are suffering in their production and their market is now usurped by the major units and the small-scale units are, thus, being ruined as they cannot compete with large units, who get substantial rebates ; that the consequences of this system of discriminatory rebate to large units is that they would draw large quantities and as a result during tight supply positions when imports are restricted, the respondent would supply their material to the large units on the basis of past offtake.
(3.) PURSUANT to the issuance of the notice of enquiry dated March 10, 1986, the respondent filed a reply to the said notice in May, 1986, after the matter was adjourned twice and subject to payment of Rs. 300 as cost, which was awarded on April 25, 1986. An objection was raised in the reply that the facts as disclosed in the complaint did not constitute any restrictive trade practice within the meaning of Section 2(o) of the Act and that under the circumstances there is no question of making any enquiry under the Act. The respondent had stated that the complaint is mala fide and is an abuse of the process of law. The respondent is the manufacturer of plastic, viz., HDPE, manufacturing injection, blow moulding and extrusion grade material. In the year 1984, the production of HDPE was 39,245 tonnes and almost an equivalent quantity in the year 1985 as against the country's total demand of 1,20,000 tonnes. The remaining gap of the material in the Indian market is entirely met by import of HDPE, which was available in the market at a cheaper rate in comparison to the product of the respondent on account of excessive imports. The complainant and their members have been purchasing for their own requirements from the imported material available to them by totally ignoring their quota on the basis of their past/previous offtake, which they should have bought from the respondent, which resulted in accumulation of huge stocks of HDPE with the respondent during the relevant period and to reduce its production of HDPE to almost half that it manufactured in the immediate past. The respondent-company, therefore, with a view to survive offered a discount on December 9, 1985, to those consumers, who would purchase minimum quantity of 100 metric tonnes per month of HDPE on a uniform basis. The respondent has stated that from March 9, 1986, it had discontinued the giving of any discount to those consumers, whose purchase was a minimum of 100 metric tonnes per month. The respondent emphatically denied that the offering of trade discount by the respondent is a restrictive trade practice and contended that the same does not directly or indirectly restrict or discourage competition to any material degree in the relevant trade or industry and was not likely to do so and that the restriction was not unreasonable having regard to the complaints between the circumstances in detriment to the public (sic) and in any event the alleged restrictive trade practice is not in any way prejudicial to public interest.;