CCI rejects complaint against Harman

The Competition Commission has dismissed allegations of unfair business practices against audio products maker Harman International (India) with regard to tender for procurement of services for maintenance of the sound system at Thyagraj Stadium here.
The complaint against the firm was filed by the Delhi government's Public Works Department (PWD).
Harman makes high quality sound and high-fidelity audio products and has a range of brands including Harman Kardon, JBL, Mark Levinon.
In an order passed on September 6, the Competition Commission of India (CCI) noted that a "highly sophisticated and state-of-the-art" sound reinforcement system manufactured by the firm was installed at the Thyagraj Stadium for the 2010 Commonwealth Games.

For operation and maintenance of the sound system, a tender was floated by the PWD calling bids from the original equipment manufacturers (OEMs) or authorised distributor agents of the audio products manufacturer.
However, it had to be cancelled four times, either on the ground of not meeting the conditions or because of quotation of high rates by bidders.

CCI also observed that in the third tender, two firms -- Hi-Tech Audio Systems and Pragati Engineers -- had participated as authorised agents of Harman in which Pragati Engineers was selected.
However, Harman informed PWD that only Hi-Tech was its authorised agent and the authorisation letter of Pragati Engineers stands nullified.

After that, only Hi-Tech participated in the fourth tender.
However, the fourth tender had to be yet again cancelled on account of high rate quoted by Hi-Tech in comparison to the rate quoted by Pragati Engineers in the third tender.
The complainant had alleged that by withdrawing the authorisation letters issued to other firms to participate in the tenders floated by the PWD and giving undue advantage to Hi-tech Audio Systems, Harman has contravened the provisions of Section 3 of the Competition Act.
Section 3 pertains to anti-competitive agreements.
CCI observed that PWD has neither placed any document on record from which an agreement between Harman and Hi-Tech can be inferred either explicitly or by implication.

The regulator also noted that nothing has been placed on record to suggest that other firms were competent to execute the contract of servicing the highly sophisticated sound reinforcement system without endangering the products installed as well as public safety.
It said the alleged conduct of Harman be construed to be in violation of any of the provisions of Section 3.
CCI also noted that in the fourth tender, Harman asked PWD to consider the bid of only Hi-Tech, stating that all the other firms are not getting their manpower or engineers trained or certified from audio products manufacturer.
The regulator said that the reason of audio products manufacturer for not giving authorisation letters to other bidders cannot be said unreasonable considering the fact that only trained professionals can execute the operation and maintenance of the complex and sophisticated digital audio systems manufactured by Harman.

It is pertinent to note that it is only Harman which knows as to how its products are to be maintained and operated upon appropriately, CCI said.
It is important that brand name, quality and goodwill in the market be maintained by providing efficient services by trained personnel, it said.
The Commission finds that "no prima facie" case of contravention of the provisions of Section 3 of the Competition Act is made out against Harman International (India), CCI said.