Performance linked incentive program is not tying in agreement but a business strategy, CCI rejected case against chocolate giant Craft Food Inc

Competition Commission of India: The competition watchdog in the country, CCI, rejected a case filed
against Mondelez
India Foods (of Craft Food Inc) alleging abuse of dominant position and tying
in agreement in chocolates and confectionery business. CCI found Mondelez dominant
in the market for chocolate in Karnataka but ruled that the cause of the
informant, a stockist, is the case of business feud and breach of contract
between them. It found nothing on record to suggest that Mondelez is imposing
condition on stockists, which can be considered as unfair in violation of the
provisions of section 4 of the Competition Act, 2002.

On the
allegation that Mondelez used its dominant position in the relevant market to
enter the market of  “instant fruit flavored
drinks and biscuits” and to protect the market of “chocolate malt beverage” by
tying in agreements in the garb of “Performance Linked Incentive Program”
(“PLIP”). The Commission observed that there is no evidence suggesting that the
Mondelez is forcing stockists to buy the new range of products or is making the
supply of chocolates conditional on the purchase of such other product. Prima facie, PLIP is not in the nature
of tying- in arrangement but only a business strategy, which seems to be aimed
at triggering the growth of new range of its products. The Commission opined
that there exists no prima facia case
of violation of S. 3(1) read with 3(4) of the Act. Thus, the case stands closed
under S. 26(2) of the Competition Act, 2002. [Sri Rama Agency v. Mondelez India Foods Private
Limited,  Case No. 58 of 2015, decided on 11.08.2015]

Source: Legal news India

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