DIRECTOR GENERAL INVESTIGATION AND REGISTRATION Vs. RAJASHREE CEMENT
MONO POLIES AND RESTRICTIVE TRADE PRACTICES COMMISSION
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Dr. S. Chakravarthy, Member -
(1.) THIS is an application under Section 10(a)(iii) of the Monopolies and Restrictive Trade Practices Act, 1969, preferred by the Director-General (Investigation and Registration) alleging that the respondent, Rajshree Cement, a division of Indian Rayon and Industries Limited, Bombay, has been indulging in certain restrictive trade practices falling under Section 33(1)(e) and Section 33(1)(g) of the Monopolies and Restrictive Trade Practices Act,
(2.) The respondent is engaged in the business of manufacture and sale of ordinary Portland cement, Portland Pozzolana cement and special cement. For its marketing arrangement, the respondent besides selling its products to consumers directly has been appointing stockists charging them with the responsibility of purchasing, stocking and selling cement produced by the respondent. The respondent enters into a standardised agreement with the, stockists.
On a perusal of the standard agreement and a letter written by the respondent to the applicant bearing date December 31, 1987, the applicant moved this Commission citing two restrictions clamped by the respondent on its stockists as restrictive trade practices. The first of the two restrictions relates to the earmarking for each stockist of a territory, attracting Section 53(1)(g) of the Monopolies and Restrictive Trade Practices Act. The other restriction relates to the quantity discount allowed by the respondent to stockists attracting Section 33(1)(e) of the Monopolies and Restrictive Trade Practices Act.
3. Upon this, a notice of enquiry was issued by this Commission on April 4, 1988, calling upon the respondent to file its reply to the same. The application of the Director General was enclosed with the notice of enquiry to facilitate the respondent to reply to it.
(3.) THE respondent gave a detailed reply to the notice of enquiry contending, inter alia, that :
(a) None, of the alleged trade practices constitutes a restrictive trade practice ;
(b) the allegations in the notice of enquiry are "vague and ambiguous" and do not contain necessary material particulars ;
(c) none of the alleged trade practices has or may have the effect of preventing or distorting or restricting competition in any manner or of bringing about manipulation of prices or conditions of delivery or of imposing on the consumers unjustified costs or restrictions or is prejudicial to public interest ;
(d) there are a number of manufacturers in the country of the same products as the respondent is manufacturing and therefore the trade practices adopted by the respondent are "to be introduced in order to meet its competitors in the market on an equal footing" ;
(e) in order to provide service to the customers, the respondent has appointed stockists in different areas ;
(f) the quantity discount offer is not a part of the standard agreement ;
(g) the quantity discount offer is not a restrictive trade practice as it does not restrict competition "but on the other hand is intended "to introduce and generate healthy competition" ;
(h) the quantity discount offer is a common practice in trade and commerce as it helps the consumers to secure cement at a reasonable price ;
(i) the quantity discount offer ensures lifting of large quantities of cement by the stockists and thus serves public interest and thus attracts the gateway in Section 38(1)(a) of the Monopolies and Restrictive Trade Practices Act;
(j) if the respondent is restrained from continuing the alleged practices, its stockists would cease to purchase cement which will be against the consumer interest ;
(k) the quantity discount offer is intended to compensate the large stockist for the extra expenditure for storage and handling large quantities of cement ;
(l) the quantity discount offer is not a "constant feature" but is available only during periods of "demand shrinkage" ;
(m) the alleged restrictions are necessary in terms of the gateway provided in Section 38(1)(c) of the Monopolies and Restrictive Trade Practices Act ;
(n) the stockist in terms of the agreement has to concentrate his sale efforts mainly in the area for which his appointment is made which implies that he is free to sell cement in other areas of his choice ;
(o) the identification of the address/locality of the stockist in the standard agreement does not amount to territorial restriction ;
(p) the alleged trade practices are not prejudicial to public interest in terms of Section 38(1)(b) and Section 38(1)(h) of the Monopolies and Restrictive Trade Practices Act and are also not unreasonable and do not cause any detriment to the public having regard to the balance between the circumstances and the alleged detriment.;
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