CCI dismisses unfair business practice charge against Vivo distributor

The Competition Commission of India (CCI) dismissed a complaint alleging unfair and discriminatory trade practices against Haicheng Vivo Mobile (India) Pvt Ltd with regard to distributorship agreement.

Haicheng is engaged in business of trading and distribution of 'Vivo' mobile handsets in India, as per the CCI order.

The complaint was filed by New Delhi-based Karni Communication Pvt Ltd and Karni Telnet Pvt Ltd which were appointed as distributors for the region of South Delhi Part-I, II, III and IV for Vivo mobile handsets in 2017.

The complainant alleged that pursuant to distributorship agreement, Haicheng placed restrictions on it for online sale and levied penalties on it in case sales were made via online marketplace.

Besides, Haicheng imposed penalties on it for violation of Market Infiltration Policy (MIP), whereby it is mandated that no sales will be made beyond the authorised distributor zone, the complainant alleged.

By doing so, Haicheng contravened Section 3 of the Competition Act which pertains to anti-competitive agreement, the complainant alleged.

However, CCI observed that restriction on online sales does not directly withhold the supply of Vivo products in the market, and consumers have the option to buy such products through online retail platforms as well, hence the agreement is not likely to cause appreciable adverse effect on competition (AAEC).

In case of imposing MIP on the distributors, the "Commission observes that in the instant matter the MIP does not appear to have caused or is likely to cause AAEC in the market for sale and distribution of smart phones in India and consequently, no case is made out for contravention of Section 3(4)(c) of the Act," the fair trade regulator said.

Accordingly, "the Commission finds no competition concern in the entire matter", CCI said in an order dated June 19 and ordered the matter to be closed.

Apart from Haicheng, Vivo Mobile India Pvt Ltd and Vivo Communication Technology Co Ltd were also made parties in the matter.