DIRECTOR GENERAL INVESTIGATION AND REGISTRATION Vs. HARYANA DISTILLERY
MONO POLIES AND RESTRICTIVE TRADE PRACTICES COMMISSION
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A.N. Varma, J. (Chairman) -
(1.) THIS order will dispose of the above-mentioned three enquiries which have been instituted on the application of the Director-General under Section 10(a)(iii) and Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969, against the same respondent, Haryana Distillery. They are being disposed of by a common order as the facts are materially similar.
(2.) Haryana Distillery is engaged in the business of manufacture and sale of wines. For the purpose of sale and distribution of the aforesaid products, the respondent had appointed several stockists on the terms and conditions contained in the agreement entered into between the respon dent and the stockists. The relevant part of the agreement challenged in the present proceedings relates to the grant of rebates by the respondent to its distributors and the same are extracted in the Director-General's applications as well as in the notices of enquiry issued against the respondents. By way of illustration, the discounts/rebates allowed in RTPE No. 58 of 1990 based on turnover are reproduced below :
" 1. Special rebate Rs. 10 per case on Knight King whisky, Champion dry gin, Champion brandy and Champion whisky.
2. Old Barrel whisky-Rs.20 per case.
Benson whisky--On lifting of 25 cases and above in a single invoice Rs. 15 per case.
(3.) UNIQUE Fine whisky--On lifting of 25 cases and above in a single invoice Rs. 10 per case."
3. Similar patterns of discounts/rebates exist in the other two enquiries and are hence not being reproduced herein. The discounts/rebates were assailed by the Director-General as restrictive trade practices within the meaning of Section 33(1)(e) of the Monopolies and Restrictive Trade Practices Act. The Director-General submitted that such discounts/rebates are per se restrictive trade practices prejudicial to the public interest as it is ex facie discriminatory based on the quantum of offtakes by the distributors. The higher the lifting, the greater the discount thereby discriminating between bigger distributors and smaller distributors resulting in distortion of inter-brand competition is the charge.
4. In response to the notice of enquiry, the respondent submitted its version refuting the charge alleged against it on a variety of grounds. It was said that as the special rebates were given to all the dealers regardless of the number of cases lifted by them, there was no question of any discrimination. Likewise, rebate was also granted to all the dealers in the case of Old Barrel whisky regardless of the offtake. The rebates were also sought to be justified under Section 38 on the ground that the offtake of larger quantities resulted in considerable cost saving, which was eventually passed on to the consumers. Another ground on which the discounts/ rebates were sought to be justified was that such rebates were a common feature of this trade. Most of the manufacturers are granting similar rebates to their wholesalers. Carew's Products, Forbes Forbes Campbell and Co. Ltd., Jagjit Industries Ltd. and Panipat Co-operative Sugar Mills Ltd., all leading names in this trade, for example, are also granting discounts based on offtake. In RTPE No. 58 of 1990, the plea of the respondent also is that there was only one dealer in Chandigarh, namely, Chandigarh Wine Traders which lifted the stocks of the respondent from July 13, 1985, to December 31, 1985. In all its purchases, it lifted more than 25 cases in one invoice and availed of discount each time. Being the lone operator in the market, there was hardly any question of an anti-competitive effect as a result of the discounts/rebates based on the offtakes. The respondent also pleaded that during the period in question, there was no sale of Benson whisky in Himachal Pradesh and in Chandigarh, there was only one dealer which lifted the said whisky in negligible quantities. The overall impact of the impugned discounts was thus so insignificant as was liable to be ignored in terms of the gateway envisaged by Section 38(1)(h) of the Act.;
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