As per case facts, the manufacturer of an essential glass tubing (dominant in the upstream market) was penalised by the Competition Commission for abusing its dominant position through practices like ...
2025 INSC 668 CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 1 of 52
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5843 OF 2014
COMPETITION COMMISSION OF INDI A …APPELLANT(S)
VERSUS
SCHOTT GLASS INDIA PVT. LTD. & ANR. …RESPONDENT(S)
WITH
CIVIL APPEAL NO. 9998 OF 2014
KAPOOR GLASS INDIA PVT. LTD. …APPELLANT(S)
VERSUS
SCHOTT GLASS INDIA PVT. LTD …RESPONDENT (S)
J U D G E M E N T
VIKRAM NATH, J.
1. India’s economic ascent rests on a delicate but decisive
equilibrium. On the one hand, markets must remain
contestable: no undertaking may extinguish rivalry by
stratagems foreign to fair, merit-based competition. On the
other hand, genuine achievement whether expressed in scale,
efficiency or technological advance, must be rewarded and not
punished, for it is the impetus for investment, innovation and
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 2 of 52
consumer welfare. The Competition Act, 2002
1, is the charter
that secures both pledges. It equips the Competition
Commission of India with wide-ranging powers of inquiry and
remedy, yet it permits intervention only where hard evidence
shows that the impugned conduct has caused, or is likely to
cause, a demand rigorous fact-finding, adversarial testing of
testimony and, above all, an effects-based appraisal that
balances commercial justification against proven harm.
Preserving this symmetry between discipline and
encouragement is essential if the statute is to nurture robust
rivalry while sustaining the confidence of domestic and global
investors who increasingly view India as a premier destination
for enterprise and innovation.
I. Background of the Case
2. These statutory appeals, preferred under Section 53T of the Act,
challenge a common order dated 2 April 2014 passed by the
Competition Appellate Tribunal
2 in Appeal Nos. 91 and 92 of
2012. Civil Appeal No. 5843 of 2014 has been filed by the
Competition Commission of India
3. Civil Appeal No. 9998 of
2014 has been filed by Kapoor Glass India Pvt. Ltd.
4. In both
the matters, Schott Glass India Pvt. Ltd.
5 is the contesting
respondent.
1
In short, the “Act”
2
In short, “COMPAT”
3
In short, “CCI”
4
In short, “Kapoor Glass”, the original informant
5
In short, “Schott India”
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 3 of 52
3. The proceedings have their genesis in an information lodged on
25 May 2010 by Kapoor Glass under Section 19 of the Act.
Kapoor Glass alleged that Schott India, then the principal
domestic manufacturer of neutral USP -I borosilicate glass
tubing, had abused its dominant position by offering
exclusionary volume-based discounts, imposing discriminatory
contractual terms, and, on occasions, refusing supply.
4. Forming a prima-facie opinion under Section 26(1) of the Act,
CCI directed the Director General (Investigation)
6 to inquire into
the matter. The DG’s report dated 14 March 2011 concluded
that Schott India had violated Section 4 of the Act. After hearing
the parties, CCI by majority order dated 29 March 2012 levied
a penalty equal at a rate of 4 per cent of Schott India’s average
of 3 years turnover equivalent to about Rs 5.66 crores and also
issued a cease-and-desist order against Schott India from doing
any discriminatory practices to any of the converters.
5. Schott India challenged that order before COMPAT by Appeal
No. 91 of 2012. Kapoor Glass also preferred a separate appeal
by Appeal No. 92 of 2012 seeking a broader relief and reiterating
its refusal-to-supply grievance. By the impugned order
COMPAT:
a) allowed Schott India’s appeal, annulled the penalty, and
held that the evidentiary material did not establish any
abuse of dominant position; and
b) dismissed Kapoor Glass’s appeal with costs of ₹
1,00,000/-.
6
In short, “DG”
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 4 of 52
6. Vide these appeals, CCI seeks revival of its original order and
Kapoor Glass supports CCI on the liability of Schott India but
contends that COMPAT erred in refusing effective relief and in
discounting the alleged “mixing risk”. Schott India, the
contesting respondent herein, on the other hand, defends the
COMPAT decision in its entirety.
II. A Primer on the relevant Competition Law principles:
7. Before moving ahead, we believe it would be helpful to briefly
explain the chief statutory provision and certain competition-
law principles that recur throughout these appeals and are key
to understand this case.
8. Section 4 of the Act is at the heart of the present dispute. It has
been reproduced hereunder for ease of reference:
“Section 4 – Abuse of dominant position.
(1) No enterprise or group shall abuse its dominant
position.
(2) There shall be an abuse of dominant position under
sub-section (1) if an enterprise or a group—
(a) directly or indirectly imposes unfair or discriminatory—
(i) condition in purchase or sale of goods or service; or
(ii) price in purchase or sale (including predatory price)
of goods or service;
(b) limits or restricts —
(i) production of goods or provision of services or market
therefor; or
(ii) technical or scientific development relating to goods
or services, to the prejudice of consumers;
(c) indulges in practice or practices resulting in denial of
market access in any manner;
(d) makes conclusion of contracts subject to acceptance by
other parties of supplementary obligations which, by
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 5 of 52
their nature or according to commercial usage, have no
connection with the subject of such contracts;
(e) uses its dominant position in one relevant market to
enter into, or protect, another relevant market.
Explanation.—For the purposes of this section,
(a) “dominant position” means a position of strength
enjoyed by an enterprise in the relevant market in India
which enables it to (i) operate independently of
competitive forces prevailing in the relevant market, or
(ii) affect its competitors or consumers or the relevant
market in its favour;
(b) “predatory price” means the sale of goods or provision
of services at a price below cost, as may be determined
by regulations, with a view to reduce competition or
eliminate competitors;
(c) “group” shall have the same meaning as assigned to it
in clause (b) of the Explanation to Section 5.”
9. A bare perusal shows that the provision has two moving parts.
First, it forbids only abuse, not dominance as such. Secondly,
it gives five illustrations of the abuse of dominant position which
are (i) price or contract discrimination, (ii) limiting output, (iii)
blocking entry, (iv) tying or bundling, and (v) leveraging power
from one market into another. If a dominant firm engages in any
one of these practices, and cannot justify it as a legitimate
business response to competition, the conduct is prohibited.
10. Section 4, sub-Section (1) of the Act states that “no enterprise
or group shall abuse its dominant position.” Thereafter, sub-
Section (2) then lists, in clauses (a) to (e), the aforementioned
five ways in which abuse may occur. Put shortly, an enterprise
may not
(i). impose unfair or discriminatory prices or conditions,
(ii). limit production or technical development,
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 6 of 52
(iii). block others from the market,
(iv). force a buyer to accept an unrelated product or obligation,
or
(v). use power in one market to muscle into, or protect,
another.
11. Apart from Section 4 of the Act, in order to aid comprehension
of the discussion that follows, we are outlining the relevant
competition-law concepts that recur throughout the pleadings
and the analysis that follows:
(i). Relevant market: Competition is measured within a field
large enough that buyers can, at a reasonable cost, turn
to alternative suppliers. In the present dispute, two layers
of trade must be kept distinct yet viewed together:
o Upstream market – the manufacture and sale of
neutral USP-I borosilicate glass tubing, whether clear
or amber.
o Downstream market – the sale of pharmaceutical
containers—ampoules, vials, cartridges and
syringes—made by converters.
The first market supplies the raw material; the second
transforms it into finished goods. Because the output of
the upstream market is the indispensable input of the
downstream market, the two are conventionally described
as “upstream” and “downstream” respectively.
(ii). Dominant Position: A firm is dominant when its economic
strength lets it act largely on its own terms. A town with a
single water utility, or a manufacturer whose patented
device has no practical substitute, offers the everyday
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 7 of 52
picture. Dominance is lawful; the question is how the
power is used.
(iii). Volume or “Target” Discounts: These are price
reductions that grow purely with the quantity a buyer
takes over an agreed period. For example, a supermarket
chain that orders ten thousand sacks of rice may pay less
per sack than a corner shop that orders ten. Such scale
rebates are benign when offered to every purchaser on
identical volume thresholds.
(iv). Functional discounts: Sometimes the buyer performs an
extra function—say, warehousing, local advertising, or
after-sales service. A seller may repay a buyer for
performing that extra task like storing stock, advertising
the brand, or providing repairs. Airlines, for example, pay
travel agents a commission for marketing flights. If the
rebate merely covers the cost of that task and is open to
any buyer willing to do the same, competition law is
usually satisfied.
(v). Margin squeeze: A vertically integrated supplier sells an
essential input to rivals and also competes with them
downstream. If it keeps the input price high and its own
downstream price low, equally efficient rivals may be left
with an unsustainable margin. Telecom operators that
control not only broadband network but also sell retail
internet access provide the classic example.
(vi). Tying or bundling: Where a supplier insists that
customers accept product A as a pre-condition for buying
product B, it is tying; where A and B are sold only as a
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 8 of 52
package, it is bundling. The practice becomes abusive if
the supplier wields dominance in product A to force
unwanted sales of B, thereby foreclosing choice.
(vii). Mixing risk: In the instant case, there is an allegation that
certain converters might blend premium Schott tubing
with cheaper imports and still market the containers as
wholly premium. If true, the practice could endanger
patients and tarnish the reputation of high -quality
suppliers. Whether that risk existed, and how Schott India
responded, will be examined in due course.
(viii). Procedural fairness: Even in an inquisitorial setting, the
parties must see and test the evidence against them.
Cross-examination of a witness is a recognised, though not
in every case, an indispensable safeguard. A serious denial
of that opportunity can itself undermine the findings of the
adjudicating body.
Having explained these basic concepts pertaining to the matter, we
shall now proceed to detail the material facts of the case and the
determinations made at each previous stage of the proceedings.
III. Factual Matrix
12. Schott India, the first respondent, is a wholly-owned subsidiary
of Schott Glaswerke Beteiligungs-GmbH, which in turn is
wholly owned by Schott AG of Mainz, Germany. Its Jambusar
plant in Gujarat, acquired in 1998 from Bharat Glass Tubes,
manufactures neutral borosilicate tubing in the following three
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 9 of 52
grades: Fiolax-clear (for export and domestic sale), Neutral
Glass Clear
7 and Neutral Glass Amber
8.
13. Neutral borosilicate tubing constitutes the upstream market;
converters re-heat and form that tubing into ampoules, vials,
cartridges and syringes, which comprise the downstream
market and are supplied to pharmaceutical undertakings. Of
the five Indian tube-makers that existed prior to 1998, all except
Schott India and Triveni Glass (now Nipro-Triveni) had exited
by 2010 and the balance of demand was met by imports from
Germany, Japan, Italy and, at the low-end, China.
14. In May 2008, a Schott group company entered into a joint-
venture with Kaisha Manufacturers, creating Schott Kaisha Pvt.
Ltd.
9, the country’s largest converter. Schott Kaisha is neither a
subsidiary nor a division of Schott India, but it purchases a
substantial share of the latter’s annual melt.
15. Discount architecture and agreements : To secure economies
of scale and steady furnace utilisation, Schott India offered two
rebate schemes:
a. Target (volume) rebates : slabbed discounts, credited
quarterly, rising with aggregate annual purchases of NGC
and NGA; and
b. Functional rebates: an eight-per-cent allowance extended to
converters that (i) met annual purchase plans, (ii) refrained
from using Chinese tubing, and (iii) adhered to “fair-pricing”
commitments in their container sales.
7
In short, “NGC”
8
In short, “NGA”
9
In short, “Schott Kaisha”
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 10 of 52
16. Long-Term Tubing Supply Agreement
10
: In 2008 Schott India
and Schott Kaisha executed a three -year agreement under
which the converter agreed to source at least eighty per cent of
its requirements, approximately thirty per cent of Schott India’s
capacity, in consideration of a price concession over the slab
rate, a three-year price freeze and priority dispatch in periods
of tight supply.
17. On 20 May 2009, the principal abuse-of-dominance provisions
of the Act were brought into force. On 25 May 2010, Kapoor
Glass, a Mumbai converter, lodged an information alleging,
inter alia, that:
(i). The target-rebate structure coerced loyalty and tied clear
and amber tubes;
(ii). The functional rebate and its successor Trade -Mark
Licence Agreement
11 foreclosed the use of lower-priced
Chinese tubes;
(iii). The LTTSA conferred on Schott Kaisha an unmatchable
cost advantage; and
(iv). Schott India had rationed supplies to independent
converters whilst fully meeting Schott Kaisha’s demands.
18. Acting on a prima-facie opinion under Section 26 (1) of the Act,
CCI directed the DG to investigate. In a report dated 14 March
2011, the DG gave the following findings:
(i). Schott India enjoyed a market share exceeding sixty per
cent and was dominant in the upstream market;
10
In short, “LTTSA”
11
In short, “TMLA”
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 11 of 52
(ii). The combined effect of the target rebates, functional
rebates and the Long-Term Agreement was to foreclose
rival suppliers, attracting clauses (a), (b) and (e) of Section
4(2) of the Act;
(iii). Aggregating NGC and NGA purchases for rebate purposes
amounted to tying, offending clause (d); and
(iv). Selective supply curtailments denied market access to
certain converters, invoking clause (c).
19. On 29 March 2012, the majority of the Commission
substantially endorsed the DG’s analysis. The Economic
Member of the Commission dissented on the discount issues
and gave various relevant findings which would be important
for the discussions that follow. The majority, however, reasoned
that:
(i). The volume-based “target” rebates, the trademark-linked
“functional” rebates, and the LTTSA, taken together, “tilted
the playing field” in favour of Schott Kaisha and foreclosed
effective competition in the upstream market;
(ii). The aggregation of clear and amber tubing for the purpose
of achieving higher rebate slabs operated, in effect, as a
tying arrangement; and
(iii). The temporary curtailment of supplies to certain
converters reinforced the exclusionary strategy.
Having concluded that the conduct attracted Clauses (a)
through (e) of Section 4 (2) of the Act, the CCI:
(i). Directed Schott India to cease and desist from the
impugned practices with immediate effect; and
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 12 of 52
(ii). Levied a monetary penalty calculated at four per cent of
the company’s average turnover for the three preceding
financial years, amounting to ₹ 5.66 crore.
20. Schott India and Kapoor Glass appealed the matter to COMPAT
by way of Appeal Nos. 91 and 92 of 2012. The COMPAT gave the
following finding in the impugned order:
(i). Appeal of Schott India allowed: The evidence against the
company rested “for the most part on statements never
subjected to cross-examination”; on that footing COMPAT
found no proof of discriminatory rebates, margin squeeze
or tying. It pointed out that, barring one exception, every
converter had grown its output after 2009, a fact at odds
with the charge of foreclosure.
(ii). All sanctions annulled: The penalty of one per cent of
turnover and the attendant cease-and-desist directives
were quashed in toto.
(iii). Appeal of Kapoor Glass dismissed with costs: Kapoor
Glass’s prayer for wider relief was rejected and costs of ₹
1,00,000 were imposed.
(iv). Serious procedural lapse recorded: COMPAT remarked
that the CCI’s refusal to let Schott India cross-examine the
converter-witnesses was a material infraction that gravely
weakened the probative worth of their allegations.
21. In the present appeals against the COMPAT’s order, the parties
seek the following reliefs:
(i). CCI seeks reinstatement of its original order and penalty,
contending that COMPAT misread the evidence and
overstated the impact of the procedural lapse.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 13 of 52
(ii). Kapoor Glass, aligning with CCI on liability, argues that
COMPAT further erred in downplaying the alleged “mixing”
of Schott and Chinese tubes.
(iii). Schott India, being the main respondent, supports the
COMPAT’s decision in full, submits that its rebates were
open to all converters on equal quantitative terms, and
renews its objection that denial of cross-examination
fatally tainted the CCI’s process.
IV. Arguments Advanced
22. Mr. Amit Sibal, learned Senior Counsel for the appellant-CCI,
has advanced the following main arguments:
A. Schott India’s unquestioned dominance : It is submitted that
during the investigation period, Schott India supplied more
than sixty per cent of neutral USP -I borosilicate tubing,
controlled the only large-scale domestic melt tanks and
possessed clear technological and capacity advantages. On any
accepted test, it occupied a dominant position in the upstream
market.
B. Loyalty-inducing “target” rebates: It is argued that the
annual-slab rebate scheme penalised converters who failed to
meet their forecast: a single below-target month dragged the
entire year’s purchases into a lower tier, clawing back earlier
discounts. Converters therefore dared not split orders with
alternative suppliers, while Schott Kaisha, by reason of volume,
always secured the maximum twelve -per-cent rebate. Such
discrimination, Counsel contends, is in violation of clause (a) of
Section 4(2) of the Act.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 14 of 52
C. Exclusionary functional rebates and the LTTSA: Schott
Kaisha’s LTTSA locked in eighty per cent of its requirements for
three years, guaranteed price freezes and monthly “functional”
bonuses and gave it delivery priority. It is submitted that this
package, unavailable to others, further foreclosed rivals and
breached clauses (a), (b) and (e).
D. Tying of clear and amber tubes: Discounts were calculated on
the combined quantity of clear and amber tubing. Because
Schott India held over ninety per cent of amber tubes,
indispensable for light-sensitive formulations, converters had
little choice but to buy clear tubes from it as well. The appellants
characterise this as a tie-in contrary to clause (d).
E. Margin squeeze on independent converters : It is argued that
the preferential input price to Schott Kaisha enabled it either to
sell containers below the cost level sustainable by equally
efficient converters or to harvest abnormal margins, squeezing
rivals out of the downstream market in violation of clauses (a)
and (e).
F. Selective refusals to supply: Instances were cited where
converters who sourced even modest volumes elsewhere found
their subsequent Schott allocations curtailed or delayed. It is
argued that such conduct amounts to denial of market access
under clause (c).
G. “Mixing” rationale a façade: It is submitted that the assertion
that Chinese tubes might be secretly mixed with Schott tubes
is speculative; no concrete incident was proven. The quality
argument therefore serves only to cloak an exclusivity
obligation.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 15 of 52
H. Procedural lapse not fatal: Finally, it is contended that
Regulation 41(5) vests discretion in the CCI to refuse cross-
examination. The converters’ statements, although not tested
orally, were corroborated by documentary evidence, rebate
circulars, purchase data and the LTTSA. The absence of cross-
examination, it is argued, cannot outweigh this substantive
proof of abuse.
I. The learned Senior Counsel has relied upon the following case
laws in support of their arguments:
(i). Excel Crop Care Ltd. v. Competition Commission of India
and another
12,
(ii). Competition Commission of India v. Steel Authority of
India Ltd.
13,
(iii). Competition Commission of India v. Fastway Transmission
Pvt. Ltd.
14,
(iv). K.L. Tripathi v. State Bank of India, (1984) 1 SCC 43
(v). Transmission Corporation v. Sri Rama Krishna Rice
Mills
15,
(vi). United Brands Co. & United Brands Continental BV v.
Commission
16,
(vii). Irish Sugar plc, Commission Decision IV/34.621
(viii). HOV SVZ/MCN, Commission Decision IV/33.941
23. Shri A.N. Haksar, learned Senior Counsel for Kapoor Glass, has
rendered similar submissions to CCI but has also made the
following additional points:
12
(2017) 8 SCC 47
13
(2010) 10 SCC 744
14
(2018) 4 SCC 316
15
(2006) 3 SCC 74
16
Case 27/76, EUCJ
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 16 of 52
A. Two-decade exclusionary course of conduct. Kapoor Glass’s
purchase orders for Schott tubes were first rebuffed in 2000.
From that moment, nine years before Section 4 of the Act came
into force, Schott India treated Kapoor Glass as a non-customer
while continuing to serve other converters, thereby laying the
ground for Schott Kaisha’s later entry. The chronological record
(1996-2010) filed in evidence is said to reveal a pre-meditated
plan to freeze Kapoor Glass out of both upstream and
downstream trade
B. Espionage and intimidation tactics. Kapoor Glass’s internal
paperwork surfaced in Schott India’s possession; key employees
were poached; and Schott Kaisha’s managing director
reportedly “gloated” that Kapoor Glass had been finished (letter
of 23 Jan 2010). These incidents, Kapoor Glass submits, show
that upstream dominance was reinforced by unlawful means
and by threats to converters who awarded job-work to Kapoor
Glass.
C. Absolute refusal to supply means abuse under Section
4(2)(c) of the Act. The boycott began in 2000, years before the
2002 label episode deployed by Schott India as an after-the-fact
excuse. Any private trade-mark grievance expired with
limitation; competition law requires proportionality, not a
perpetual embargo by the sole large-scale amber-tube supplier.
D. Persistent mix-up hazard. Kapoor Glass maintains that a real
and present danger existed of converters mis -labelling
containers by “mixing” premium Schott tubes with lower-grade
imports. The LTTSA and the functional rebate, it is submitted,
were devised not to protect quality but to immunise Schott
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 17 of 52
Kaisha from price rivalry on the pretext of that hazard;
COMPAT, in discounting the risk, ignored contemporaneous
complaints from Ranbaxy, Cadila and other buyers.
E. Quantum of penalty. Finally, Kapoor Glass submits that the
four-per-cent turnover penalty originally imposed by the CCI
was conservative, given both the duration of the abuse (2008-
2012) and the deterrence objective set out in Section 27(b). It
prays for reinstatement of the penalty and for broader
behavioural remedies.
F. The learned Senior Counsel has placed reliance on the following
precedents apart from those relied on by the Counsel for CCI:
(i). Voltas Ltd. v. Union of India
17,
(ii). Coal India Ltd. v. Competition Commission of India
18,
(iii). Samir Agarwal v. Competition Commission of India
19,
24. Mr. Percival Billimoria, learned Senior Counsel, for the
respondent-Schott India, has advanced the following main
arguments:
A. Reliance on un-tested statements vitiates the case: It is
submitted that the Director-General’s report, and consequently
the majority order of the CCI, rest almost entirely on
questionnaires and witness statements procured from a
handful of converters openly adverse to Schott India. None of
those deponents was offered for cross-examination despite the
respondent’s repeated requests. That denial, by itself, renders
the evidentiary foundation infirm and justified the COMPAT’s
rejection of the findings.
17
(1995) Supp (2) SCC 498
18
(2023) 10 SCC 345
19
(2021) 3 SCC 136
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 18 of 52
B. Volume (or “target”) rebates are legitimate and non -
discriminatory: The impugned discount ladder rewarded only
the quantity actually lifted in a financial year; every converter,
large or small, moved up the scale on identical tonnage slabs.
Differential outcomes reflected differential volumes, not the
identity of the purchaser. Such scale rebates, it is argued, are
standard commercial practice and have been treated as lawful
in the CCI’s own earlier decisions.
C. The LTTSA is objectively justified: Neutral USP-I tubing is
produced in continuous-fire tanks that run at about 1600 °C
and requires extremely high investment. To finance capacity
expansion Schott India sought a three-year, eighty-per-cent
offtake commitment from its then largest customer, Schott
Kaisha. The modest extra rebate and price-freeze granted in
return are submitted to be a normal quid pro quo for assured
purchase and not an exclusionary device.
D. Functional rebate covered additional services, not loyalty:
Converters who wished to emboss the “Schott” mark on the
finished container had to meet traceability and marketing
obligations and bore the associated costs. The functional
allowance merely reimbursed those outlays and was open to any
converter prepared to undertake the same function. It neither
required exclusivity nor penalised the use of rival tubing.
E. No margin squeeze was possible or shown : Schott India does
not operate in the downstream market. Schott Kaisha sold
ampoules and vials at prices comparable to, and in many cases
higher than, rival converters. The latter’s own sales volumes
and EBITDA margins rose in the period under enquiry , facts
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 19 of 52
extracted by the Economic Member and by COMPAT. With
margins intact and output expanding, foreclosure is
conceptually impossible.
F. No tying or bundling of clear and amber tubes: NGC and NGA
tubing emerge from the same tank; converters order each
variant in the proportion demanded by their pharmaceutical
customers. The rebate scheme merely aggregated annual
purchases of both variants to compute the slab. Nothing in the
contracts obliged a converter to buy clear tubes as a pre-
condition to obtaining amber (or vice-versa).
G. “Mixing risk” furnished a bona-fide rationale for the no-
Chinese clause later withdrawn: Documentary evidence from
Ranbaxy and other pharma demonstrated that some suppliers
were passing off low-quality imports as premium containers.
The temporary restriction on Chinese tubing, in force only until
March 2010, protected patient safety and Schott’s reputation;
converters were always free to source from Nipro-Triveni or any
approved foreign manufacturer.
H. Absence of competitive harm : No converter exited the
business; imports held a double-digit share; Nipro-Triveni
expanded capacity; and pharmaceutical buyers enjoyed stable
or declining container prices. The respondent submits that
Section 4 of the Act targets only conduct that harms the
competitive process, not vigorous rivalry that benefits
downstream customers.
I. The learned Senior Counsel for Schott India has placed the
following case laws on record in their submissions:
(i). CCI v. Steel Authority of India Ltd. (supra),
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 20 of 52
(ii). Voltas Ltd. (supra),
(iii). Coal India Ltd. (supra),
(iv). Excel Crop Care Ltd. v. CCI (supra),
(v). Rajasthan Cylinder & Containers Ltd. v. Union of India
20,
(vi). Cadila Healthcare Ltd. v. CCI
21,
V. ISSUES FOR CONSIDERATION
25. Having carefully examined the material on record, the
submissions of the parties and the orders of the Court below,
we are of the view that the appeals present the following issues
for adjudication:
I. Whether the target-discount scheme of Schott India amounts
to discriminatory or exclusionary pricing in contravention of
Section 4(2)(a) and Section 4(2)(b) of the Act.
II. Whether the functional-discount / “no-Chinese” scheme
(including the later TMLA arrangement) imposes unfair or
discriminatory conditions under Section 4(2)(a) and Section
4(2)(b) of the Act.
III. Whether the LTTSA with Schott Kaisha produced a margin -
squeeze proscribed by Section 4(2)(e) of the Act.
IV. Whether Schott India tied or bundled NGA and NGC tubes,
thereby breaching Section 4(2)(d) of the Act.
V. Whether an effects-based (harm) analysis is an essential
component of an inquiry under Section 4 of the Act., and, if
so, whether it was omitted in the present case.
20
(2020) 16 SCC 615
21
2018 SCC OnLine Del 11229
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 21 of 52
VI. Whether the investigation and the Commission’s order are
vitiated by denial of cross-examination and allied breaches of
natural justice.
VI. ANALYSIS
26. At the outset, we must clarify that unless the context expressly
indicates otherwise, every factual recital or numerical datum
herein is drawn from, or corresponds verbatim with, the
findings of fact recorded in the DG’s Investigation Report and
thereafter relied on, adopted, or reiterated in substance by the
CCI and/or by the COMPAT. Before dealing with each of the
aforementioned issues, it is essential to ascertain the contours
of the relevant market in the present dispute. The evidence
placed by the DG and accepted, in substance, by the CCI,
discloses that converters treat NGC tubes and NGA tubes as
distinct and non-interchangeable inputs. The physicochemical
attributes of NGA are required where the packed drug is photo-
sensitive, whereas NGC is preferred when no such protection is
demanded. No party has pointed us to any functional substitute
capable of meeting the identical pharmaceutical standard. We
accordingly identify two discrete upstream product markets:
NGC and NGA. Each of them feeding the downstream market
for containers (ampoules, vials, cartridges, syringes) fabricated
from the respective tube.
27. As to geographic scope, the record shows that converters
located across the country source tubes from the same limited
set of manufacturers. The transport cost is marginal compared
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 22 of 52
with the value of the product, import barriers are uniform
nationally, and pharmaceutical end-buyers impose identical
quality specifications regardless of State. Those considerations,
noted both by the DG and by the CCI, warrant treating India as
a single geographic market for present purposes.
28. Having decided on the relevant market, we next examine Schott
India’s position in the same. Market-share data culled from
statutory filings and sales declarations show that Schott India
supplied approximately 61 per cent of NGC+NGA in 2008 -09,
rising to over 80 per cent in 2009-10. These findings have been
endorsed by the DG, CCI and the COMPAT. The only domestic
rival of any consequence, Nipro-Triveni, hovered in low double
digits, while imports, mainly from China, were constrained both
by price sensitivity at the high end and by quality reservations
among major pharmaceutical companies.
29. Market share of the respondent is reinforced by economic
strength. Schott India draws upon the financial and
technological resources of the global Schott group, whose
consolidated turnover exceeded €2.8 billion and workforce
17,500 during the period under review. That scale secures
favourable raw-material procurement and sustained R&D,
advantages that smaller rivals cannot replicate easily. The firm’s
vertical integration amplifies its clout. Through its 50 per cent
participation in the downstream JV, Schott Kaisha, Schott India
enjoys a guaranteed outlet for roughly one-third of its tube
output, while simultaneously influencing a leading converter’s
sourcing decisions. The CCI recorded that the JV was at the
material time the largest Indian ampoule producer.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 23 of 52
30. Finally, as has been observed by the COMPAT, countervailing
buyer power is conspicuously absent in the relevant market.
Converters, barring the JV, are fragmented and purchase
volumes that are individually modest; the evidence shows they
are “heavily dependent” on Schott India because many pharma
customers insist upon its branded tubing to meet USP -I
neutrality requirements.
31. Therefore, weighed cumulatively under Section 19(4) of the Act,
factors in the present case such as commanding and persistent
market share, economic and technological superiority, vertical
integration, high entry barriers and weak buyer power, lead us
to the undeniable conclusion that Schott India holds a
dominant position in each of the two identified upstream
markets during the period relevant to these appeals. With
market definition and dominance thus determined, we turn to
the specific allegations of abuse, taking them seriatim under the
issues framed earlier.
Issue I - Whether the target-discount scheme of Schott India
amounts to discriminatory or exclusionary pricing in
contravention of Section 4(2)(a) and Section 4(2)(b) of the Act.
32. A perusal of Section 4(2)(a) of the Act implies that an abuse
arises only where a dominant enterprise “directly or indirectly
imposes unfair or discriminatory…price in purchase or sale”. As
the words “unfair or discriminatory” import a comparative
enquiry, it must first be established that transactions which are
materially equivalent have been accorded materially different
treatment. If the challenged differentiation rests on an objective
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 24 of 52
commercial justification, or if it is open on identical terms to
every purchaser similarly placed, the price cannot be
stigmatised as abusive. In British Airways plc v Commission
(Court of Justice of the European Union in Case C-95/04 P,
dated 15 March 2007) , it was observed that dominant firm
must not “favour or disfavour” trading partners. However, the
court further held that applying different prices only becomes
abusive when it lacks an objective commercial justification or
when equivalent customers cannot obtain the same terms. In
other words, if the differentiation “rests on an objective
commercial justification, or if it is open on identical terms to
every purchaser similarly placed,” the conduct is not
condemned under Article 102 (c) TFEU. The releva nt paras
where these observations have been made are as follows:
“68. It follows that in determining whether, on the part
of an undertaking in a dominant position, a system of
discounts or bonuses which constitute neither quantity
discounts or bonuses nor fidelity discounts or bonuses
within the meaning of the judgment in Hoffmann-La
Roche constitutes an abuse, it first has to be determined
whether those discounts or bonuses can produce an
exclusionary effect, that is to say whether they are
capable, first, of making market entry very difficult or
impossible for competitors of the undertaking in a
dominant position and, secondly, of making it more
difficult or impossible for its co-contractors to choose
between various sources of supply or commercial
partners.
69. It then needs to be examined whether there is an
objective economic justification for the discounts and
bonuses granted. In accordance with the analysis
carried out by the Court of First Instance in paragraphs
279 to 291 of the judgment under appeal, a n
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 25 of 52
undertaking is at liberty to demonstrate that its bonus
system producing an exclusionary effect is economically
justified.
70. With regard to the first aspect, the case-law gives
indications as to the cases in which discount or bonus
schemes of an undertaking in a dominant position are
not merely the expression of a particularly favourable
offer on the market, but give rise to an exclusionary
effect.”
33. In the present case, the record shows that, for the relevant
period, Schott India circulated a single rebate ladder applicable
to all converters. Four slabs of 2%, 5%, 8% and 12% were
triggered exclusively by the aggregate tonnage of Neutral Glass
Clear and Neutral Glass Amber collected within the financial
year. Every customer who reached a slab, whether by one
purchase order or by several, obtained the corresponding
allowance on the entire year’s turnover. The rebate therefore
rose mechanically with volume and with nothing else; identity
of the buyer was irrelevant. All converters were informed of the
thresholds in advance, and none has suggested that any hidden
concessions existed outside the ladder.
34. Differential outcomes certainly occurred as Schott Kaisha, by
reason of an offtake exceeding three thousand tonnes per
annum, habitually captured the 12% step, whereas smaller
converters realised lower steps. Yet such divergence mirrors the
inequality of quantities, not unequal treatment of like
quantities. The appellants have not demonstrated that any
converter lifting an equivalent tonnage to Schott Kaisha was
refused an identical 12 % abatement.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 26 of 52
35. Moreover, the technical realities of borosilicate production
reinforce the commercial logic of the scheme. Furnace tanks
operate at temperatures around 1600 °C and cannot be
cyclically shut down without inflicting catastrophic refractory
damage. Stable, high-volume orders are therefore indispensable
for efficient utilisation and for amortising the very substantial
capital employed. A volume-contingent rebate transmits a share
of those scale economies downstream, to the ultimate benefit of
pharmaceutical customers. Such an objectively grounded
incentive cannot be condemned as “unfair”.
36. It must also be noted that there is no evidence that the slab
mechanism foreclosed alternative suppliers or throttled output
in order to attract Section 4(2)(b)(i) of the Act. On the contrary,
uncontested data placed by the Economic Member of the
Commission and reproduced by the COMPAT record that,
between 2007-08 and 2011-12, every major converter other
than the informant increased both the tonnage purchased from
Schott India and the tonnage sourced from imports or Nipro-
Triveni. Container prices to pharma companies remained
broadly stable. These market facts are inconsistent with the
argument of exclusion or limitation.
37. The appellants nevertheless submit that the quarterly crediting
of rebates created a “retroactive claw-back” risk which deterred
dual sourcing. This argument is not persuasive. Quarterly
settlement was adopted to ease cash-flow: it neither penalised
nor rewarded purchases from rival mills; it simply reconciled
the running total with the pre-declared annual ladder. No
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 27 of 52
contractual term prohibited converters from buying elsewhere,
and several did so without suffering discrimination.
38. Finally, reliance is placed on the untested declarations of five
converters alleging that Schott Kaisha received “special” terms.
Those statements, taken ex parte and never subjected to cross-
examination, cannot displace the documentary rebate circulars
that bind the company, nor alter the legal test that only unequal
pricing for equal transactions contravenes Section 4(2)(a) of the
Act.
39. For the foregoing reasons we hold that the slabbed target-rebate
scheme:
(i). employs a neutral, volume-based criterion applicable to all
purchasers alike;
(ii). is objectively justified by demonstrable efficiency
considerations; and
(iii). has not been shown to restrict rival output, limit imports
or distort downstream prices.
The charge of abuse under clauses (a) or (b) of Section 4(2) of the
Act fails and Issue I is answered in the negative.
Issue II - Whether the functional-discount / “no-Chinese”
scheme (including the later TMLA arrangement) imposes unfair
or discriminatory conditions under Sections 4(2)(a) and 4(2)(b)
of the Act.
40. It is apparent from the records that Schott India, at the
commencement of FY 2007 -08 (vide the Sale–Purchase
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 28 of 52
Agreement), introduced a uniform “functional rebate” scheme.
For each of the three financial years 2007-08, 2008-09 and
2009-10, a converter that (i) met its annual purchase plan, (ii)
refrained from processing Chinese tubing, and (iii) complied
with traceability-cum-“fair-pricing” obligations became entitled
to a flat rebate of 8 per cent on the invoiced value of NGC, NGA
and Fiolax tubes. With effect from 1 April 2010, the quantum of
the allowance remained unchanged, but the qualifying
conditions were restated in a Trade-mark Licence Agreement
(TMLA) paired with a Marketing-Support Agreement. Execution
of the TMLA conferred a royalty-free right to emboss the
“SCHOTT” mark on finished containers and in exchange the
converter accepted limited inspection rights and furnished a
bank guarantee of ₹ 70 lakh to guard against misuse. Only one
converter chose to execute the TMLA; all others continued on
list price plus the ordinary target-rebate ladder.
41. As already observed in the previous section, to attract Section
4(2)(a) of the Act, it must be shown that transactions which are
equivalent in every commercially relevant respect are
nevertheless subject to dissimilar conditions. The purchase
ledgers for FY 2008-09 to FY 2011-12, collated in the COMPAT’s
own table, disclose no instance in which two converters
performing the same function received different net prices. The
rate (8 per cent) was invariant; the only divergence lay in the
timing of credit, monthly for the joint-venture converter and
annual for the others. That scheduling preference is rationally
tied to the joint-venture’s rolling audit cycle and to its
undisputed order volume, which averaged 30 per cent of the
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 29 of 52
Jambusar melt. It must be emphasized that differential timing,
unaccompanied by differential rates, does not amount to price
discrimination.
42. The appellants contend that the three qualifying conditions
themselves are exclusionary. Therefore, it is necessary to
address each in turn. First, the purchase-plan requirement
secures furnace utilisation in a continuous-fire technology
whose tanks cannot be cyclically idled without grave damage;
the DG in fact accepted the objective necessity of load stability.
Secondly, the temporary “no-Chinese” stipulation rested upon
contemporaneous chemical-analysis certificates showing alkali-
release values above the USP-I threshold in certain Chinese
tubes and was withdrawn altogether on 31 March 2010.
Thirdly, the inspection right extends solely to verifying tubing
origin and is a standard incident of trade-mark licensing, as
observed by the minority Member in CCI’s order after surveying
comparative jurisprudence. Each condition is therefore
objectively connected with the legitimate aim, patient safety and
brand integrity, and is proportionate to it.
43. The allegation of a market-restrictive effect under Section
4(2)(b)(i) of the Act fares no better. Nipro-Triveni’s share of
neutral tubing rose from 12 per cent in 2008 to 14 per cent in
2009. Imports of NGC increased from 620 tonnes to 1000
tonnes during the same interval. Two new container plants,
Parenteral Glass and SVM Glass, comme nced commercial
production in 2011 sourcing mixed tubes. In the Downstream
market, total output of ampoules and vials expanded by 38 per
cent between FY 2008 and FY 2012, while the median EBITDA
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 30 of 52
margin of independent converters improved from 11.4 per cent
to 13.7 per cent. Therefore, practices coincident with increasing
volumes, new entry and rising profitability cannot plausibly be
branded capacity-restrictive.
44. The specific objections of the appellants stand answered by the
evidence on record. The Rs.70 lakh guarantee is payable only
upon adjudicated trade-mark abuse and no converter asserts
having suffered any deduction. Several converters imported
Chinese tubes for un-branded lines during 2009-10 and merely
waived the functional rebate, demonstrating the voluntariness
of the arrangement. The right of inspection is pre-announced,
confined to stock verification, and of brief duration.
45. Therefore, in conclusion, every converter prepared to assume
the same traceability and quality -promotion obligations
received exactly the same economic consideration; the ancillary
conditions are objectively justified; and the evidence shows no
foreclosure of rivals or suppression of output. The functional
rebate and its successor agreements therefore do not offend
either Section 4(2)(a) or Section 4(2)(b)(i) of the Act. Issue II is
answered in the negative.
Issue III - Whether the LTTSA with Schott Kaisha produced a
margin-squeeze proscribed by Section 4(2)(e) of the Act.
46. Having settled the relevant markets and Schott India’s
dominance upstream, we next examine the impugned LTTSA
and the allegation that it enabled Schott India to foreclose
independent converters by compressing the margin between
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 31 of 52
their input cost and the downstream selling price of Schott
Kaisha.
47. The facts are not in dispute that under the LTTSA which Schott
Kaisha undertook, for three financial years commencing 1 April
2008, it would source at least eighty per cent of its aggregate
requirement of neutral tubing, clear, amber and Fiolax, from
Schott India. In consideration, it received (i) a two-percentage-
point rebate over the public slab, (ii) a freeze of base prices till
31 March 2011, and (iii) priority despatch in periods of
constrained furnace capacity. It must be emphasized that no
purchaser other than Schott Kaisha sought or was denied
comparable terms.
48. Section 4(2)(e) of the Act proscribes the use of a dominant
position in one relevant market “to enter into, or protect,
another relevant market.” The classical manifestation of this is
the alleged margin-squeeze: a vertically integrated firm fixes the
wholesale input price so high, and its own downstream price so
low, that downstream rivals, though equally efficient, cannot
earn a viable margin. Three cumulative conditions must
therefore be shown:
(i). The respondent must itself operate downstream;
(ii). The wholesale-to-retail spread must be insufficient for an
equally efficient competitor; and
(iii). The compression must threaten competitive harm.
These conditions have been laid down elaborately in the case of
TeliaSonera Sverige AB v Konkurrensverket (Court of
Justice of the European Union, Case C -52/09, judgment
dated 17 February 2011) in the following paras:
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 32 of 52
“31. A margin squeeze, in view of the exclusionary effect
which it may create for com petitors who are at least as
efficient as the dominant undertaking, in the absence of
any objective justification, is in itself capable of
constituting an abuse within th e meaning of
Article 102 TFEU (see, to that effect, Deutsche Telekom
v Commission, paragraph 183).
32. In the present case, there would be such a margin
squeeze if, inter alia, the spread between the wholesale
prices for ADSL input services and the retail prices for
broad band connection services to end users were either
negative or insufficient to cover the specific costs of the
ADSL input services which TeliaSonera has to incur in
order to supply its own retail services to end users, so
that that spread does not allow a com petitor which is
as efficient as that undertaking to compete for the
supply of those services to end users.
33. In such circumstances, although the competitors
may be as efficient as the dominant undertaking, they
may be able to operate on the retail market only at a
loss or at arti ficially reduced levels of profitability.
34. It must moreover be made clear that since the
unfairness, within the meaning of Article 102 TFEU, of
such a pricing practice is linked to the very existence of
the margin squeeze and not to its precise spread, it is in
no way necessary to establish that the wholesale prices
for ADSL input services to operators or the retail prices
for broadband connection services to end users are in
themselves abusive on account of their excessive or
predatory nature, as the case may be (Deutsche
Telekom v Commis sion, paragraphs 167 and 183).”
49. No downstream participation by Schott India - Schott India
manufactures tubing only; it neither converts nor sells
containers. The downstream entity, Schott Kaisha, is a separate
company in which the global Schott AG holds fifty per cent
stakes, the balance being with the Kaisha promoters. The record
discloses no board overlap, no common management, and
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 33 of 52
separate audited accounts. Section 4 of the Act may of course
reach a group; but leverage still demands proof that the
upstream entity used its dominance to enter or protect the
downstream market. Mere supply to a related undertaking is
insufficient.
50. No demonstrable squeeze of rivals’ margin - The allegation
rests on a price differential: for FY 2009-10 the net LTTSA price
was approximately 5 per cent below the slab price paid by other
converters. A gap is not a squeeze unless the downstream price
of the integrated converter leaves an equally efficient rival in
deficit. The only downstream data before the authorities are the
audited financials of nine converters reproduced in COMPAT
Annex III. Those figures show that, during the entire period of
the LTTSA, every independent converter recorded positive
EBITDA, and seven of the nine improved both tonnage and
margin year-on-year. The price lists of Ranbaxy and Cadila,
produced by Kapoor Glass, further show that Schott Kaisha’s
ampoules and vials were quoted at or above the prices of its
rivals. On that evidence the COMPAT was right in holding that
an equally efficient converter could, and did, operate profitably
notwithstanding the LTTSA.
51. Absence of foreclosure effects- Section 19(3) of the Act
requires consideration of actual or potential effects on
competition. Imports of clear and amber tubing rose from 11
per cent to 18 per cent of domestic consumption during the
enquiry window; Nipro-Triveni doubled its melt capacity; no
converter exited. The structure and conduct indicators thus
refute any suggestion of market foreclosure.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 34 of 52
52. Even if a differential was established, the LTTSA is objectively
explained. Neutral tubing is produced in continuous tanks that
cannot be banked without physical damage and a guaranteed
eighty-per-cent offtake for three years permitted Schott India to
run the furnace at optimal throughput, unlock economies of
scale and justify a €25-million rebuild. Courts have repeatedly
recognised such “take-or-pay” commitments as legitimate
where the pro-competitive efficiencies outweigh any restrictive
tendency.
53. Therefore, in our considered opinion, all three limbs of a
margin-squeeze fail. Schott India is absent downstream; the
wholesale-to-retail spread left rivals with sustainable margins;
and the market exhibited neither exit nor price elevation. What
remains is a commercially rational bulk -purchase rebate,
available in principle to any converter willing to match Schott
Kaisha’s volumes and planning horizon. We therefore hold that
the LTTSA does not contravene Section 4(2)(e) of the Act, and
the finding of CCI on this head cannot be sustained. Issue III
is answered in the negative.
Issue IV - Whether Schott India tied or bundled NGA and NGC
tubes, thereby breaching Section 4(2)(d) of the Act.
54. Section 4(2)(d) of the Act is attracted only where a dominant
enterprise:
• supplies two distinct products,
• makes the supply of the tying product conditional upon
acceptance of the tied product, and
• thereby forecloses competitors in the tied-product market.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 35 of 52
The aforementioned conditions have been echoed in the
landmark case of Microsoft Corp. v. Commission of the
European Communities (General Court of the European
Union, Case T-201/04, judgment dated 17 September 2007)
in the following paragraph:
“15. In order to determine whether the conduct of the
dominant undertaking constitutes abusive tying, the
Commission is entitled to base its finding on the
following factors: first, the tying and tied products are
two separate products; second, the underta king
concerned is dominant in the market for the tying
product; third, the undertaking concerned does not give
customers a choice to obtain the tying product without
the tied product; and fourth, the practice in question
forecloses competition. The Commission also takes into
account the fact that the tying is not objectively justified.
Such justification may not be inferred from the
advantages arising from the fact that tying ensures a
uniform presence of the product on the market. Such a
result cannot be allowed to be imposed unilaterally by
an undertaking in a dominant position by means of
tying Since the list of abusive practices set out in the
second paragraph of Article 82 EC is not exhaustive,
bundling by an undertaking in a dominant position may
also infringe Article 82 EC where it does not correspond
to the example given in Article 82(d) EC. Accordingly, in
order to establish the existence of abusive bundling, the
Commission is entitled to rely on Article 82 EC in its
entirety and not exclusively on Article 82(d) EC.”
55. Therefore, in the instant case, the threshold question is whether
NGA and NGC are, in economic terms, separate products. Both
variants are drawn from the same continuous -melt furnace;
NGA achieves its amber hue solely by the addition of iron oxide
to the common batch. Converters order whichever variant the
downstream pharmaceutical customer specifies, there being no
independent demand for NGA unconnected with that photo -
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 36 of 52
sensitivity requirement. On that uncontested evidence, it can be
inferred that the two grades are best regarded as alternative
specifications of one input rather than as independent
products.
56. Assuming arguendo that they are distinct, Schott India’s share
exceeded 90 per cent in NGA and averaged above 60 per cent in
NGC during the enquiry window; dominance is therefore
present in each alleged product market and the enquiry must
turn to coercion. The CCI relied on three witness statements
asserting that Schott India “insisted” on purchases of both
grades, and on a circular dated 18 August 1999 stating that
quantity rebates were “applicable only on mix purchases of clear
and amber”. Those materials are inadequate for four reasons:
(i). The deponents, Kishore Industries, Adit Containers and
Mak Ampoules, were not offered for cross-examination
despite Schott India’s repeated requests; COMPAT has
already held that the denial of that opportunity materially
weakens the evidentiary value of their allegations.
(ii). The circular dated 20.05.2009 predates the
commencement of Sections 3 and 4 of the Act by nearly a
decade and therefore cannot ground liability for the period
covered by these proceedings.
(iii). No converter produced a purchase order, invoice or
contract clause making the supply of NGA contingent
upon an order for NGC. The only linkage is that, for the
purpose of computing volume rebates, annual tonnages of
both grades are aggregated; any converter remains free to
purchase a single grade at the published list price.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 37 of 52
Recognised commentary treats such aggregation as a
multi-product volume discount, not tying.
(iv). The minority opinion of the Economic Member assembled
converter sales data for FY 2007-08 to FY 2011-12 and
found that every converter increased output while imports,
especially of NGC, rose steadily. None of rival tube makers
exited the business. The indispensable element of
foreclosure is therefore absent.
57. Objective justification, even if coercion was made out, is evident.
NGA and NGC draw from a common furnace operating at
1600°C. Sharp month-to-month swings in the ratio jeopardise
furnace integrity. Aggregating the two grades when calculating
rebates, as Schott India explained and the CCI recorded,
smooths demand and secures continuous load. Manufacturing
efficiency is a legitimate business consideration and has not
been shown to harm consumers.
58. In these circumstances, the essential elements of Section 4(2)(d)
of the Act are not proved as NGA and NGC are not independent
products; converters were never compelled to buy both; no
foreclosure was demonstrated; and, in any event, the rebate
design is objectively justified. The finding of tying cannot
therefore stand, and Issue IV is answered in the negative.
Issue V - Whether an effects-based (harm) analysis is an essential
component of an inquiry under Section 4 of the Act, and, if so,
whether it was omitted in the present case.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 38 of 52
59. Section 4 of the Act does not per se prohibit dominance; it
prohibits the abuse of dominance. Abuse, by definition, is
conduct that distorts the competitive process or harms
consumers. The statute therefore contemplates two logically
separate findings:
(i). that the impugned practice falls within one of the
descriptive clauses (a)–(e) of sub-Section (2), and
(ii). that it results in, or is likely to result in, an appreciable
adverse effect on competition (“AAEC”).
To collate the second enquiry into the first would equate
description with proscription and convert the provision into a
strict-liability offence.
60. We believe that three legislative signposts in the Act make the
“effects requirement” explicit. Firstly, the Preamble records that
the Act is enacted “to prevent practices having adverse effect on
competition” (emphasis supplied). Secondly, a dominant
position is defined in the Explanation to Section 4 of the Act as
power that enables the enterprise “to affect … the relevant
market in its favour”; the inquiry is purposeless unless the
decision-maker asks whether the challenged conduct has in
fact been exercised to that effect. Thirdly, Section 19(4)(l) of the
Act obliges the CCI, in analysing dominance, to consider the
“relative advantage, by way of contribution to economic
development,” thereby recognising that conduct which
enhances consumer welfare may co -exist with market power
and should not be condemned.
61. The legislative history of the Act confirms the requirement. The
Raghavan Committee Report (2000), which is the blueprint
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 39 of 52
for the Act, framed the “key questions for adjudication on abuse
of dominance” in terms that are unmistakably effects -
orientated:
“How will the practice harm competition? Will it deter entry? Do
consumers benefit from lower prices and greater availability?”.
Parliament adopted that approach and nowhere does the
enacted text suggest an irrebuttable presumption. This Court
has also rejected rigid deeming rules even where the statute
expressly presumes harm. In Rajasthan Cylinders v. Union
of India
22, this Court held that the “presumption” of AAEC in
Section 3(3) of the Act is rebuttable. A fortiori, a presumption
that is not even expressed in Section 4 of the Act cannot be
treated as conclusive. The relevant para from this judgement
has been reproduced hereunder:
“75. We may also state at this stage that Section 19(3)
of the Act mentions the factors which are to be examined
by CCI while determining whether an agreement has an
appreciable adverse effect on competition under Section
3. However, this inquiry would be needed in those cases
which are not covered by clauses (a) to (d) of sub-section
(3) of Section 3. Reason is simple. As already pointed
out above, the agreements of nature mentioned in sub-
section (3) are presumed to have an appreciable effect
and, therefore, no further exercise is needed by CCI
once a finding is arrived at that a particular agreement
fell in any of the aforesaid four categories. We may
hasten to add, however, that agreements mentioned in
Section 3(3) raise a presumption that such agreements
shall have an appreciable adverse effect on competition.
It follows, as a fortiorari, that the presumption is
rebuttable as these agreements are not treated as
conclusive proof of the fact that it would result in
appreciable adverse effect on competition. What follows
22
(2020) 16 SCC 615
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 40 of 52
is that once CCI finds that case is covered by one or
more of the clauses mentioned in sub-section (3) of
Section 3, it need not undertake any further enquiry and
burden would shift upon such enterprises or persons,
etc. to rebut the said presumption by leading adequate
evidence. In case such an evidence is led, which dispels
the presumption, then CCI shall take into consideration
the factors mentioned in Section 19 of the Act and to see
as to whether all or any of these factors are established.
If the evidence collected by CCI leads to one or more or
all factors mentioned in Section 19(3), it would again be
treated as an agreement which may cause or is likely to
cause an appreciable adverse effect on competition,
thereby compelling CCI to take further remedial action
in this behalf as provided under the Act. That, according
to us, is the broad scheme when Sections 3 and 19 are
to be read in conjunction.”
62. Comparative jurisprudence is in accord with these principles.
Article 102 of the Treaty on the Functioning of the European
Union
23, the principal template for Section 4 of the Act, has been
read by the Court of Justice of the European Union as
demanding a concrete appraisal of effects. In Intel Corporation
Inc. v. European Commission (Case C -413/14 P, judgment
of 6 September 2017) , the Court affirmed that allegedly
exclusionary conduct may be condemned only after the
decision-maker has balanced its likely anti-competitive impact
against any demonstrated efficiencies that accrue to
consumers, a test already articulated in the Commission’s 2009
Guidance on Article 102. Because the Commission had omitted
that balancing exercise, its decision was annulled. The ruling
underscores that merely classifying conduct under a descriptive
23
In short ,”TFEU”
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 41 of 52
label is insufficient; net competitive harm must be shown before
liability can attach.
63. The CCI’s own decisions acknowledge as much. In Indian
National Shipowners’ Association v. ONGC
24, the CCI
undertook a “fairness or reasonableness test” and exonerated
the respondent upon finding objective necessity. Similarly, in
Excel Crop Care (supra), it was held that an administrative
body cannot, consistently with Article 14 of the Constitution,
apply an effects test in some cases yet disclaim the power in
others; such selective deployment is the antithesis of equal
treatment. The relevant paras of this judgement have been
reproduced hereunder:
“110. Moreover, in Hindustan Steel Ltd. v. State of
Orissa [Hindustan Steel Ltd. v. State of Orissa, (1969) 2
SCC 627: AIR 1970 SC 253], this Court made the
following observations: (SCC p. 630, para 8)
“8. … An order imposing penalty for failure to carry
out a statutory obligation is the result of a quasi-
criminal proceeding and penalty will not ordinarily
be imposed unless the party obliged either acted
deliberately in defiance of law or was guilty of
conduct contumacious or dishonest, or acted in
conscious disregard of its obligation. Penalty will
not also be imposed merely because it is lawful to
do so. Whether penalty should be imposed for
failure to perform a statutory obligation is a matter
of discretion of the authority to be exercised
judicially and on a consideration of all the relevant
circumstances. Even if a minimum penalty is
prescribed, the authority competent to impose the
penalty will be justified in refusing to impose
penalty, when there is a technical or venial breach
of the provisions of the Act or where the breach
flows from a bona fide belief that the offender is not
24
(2019) SCC OnLine CCI 26
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 42 of 52
liable to act in the manner prescribed by the
statute.”
(emphasis supplied)
111. It should be noted that any penal law imposing
punishment is made for general good of the society. As
a part of equitable consideration, we should strive to
only punish those who deserve it and to the extent of
their guilt. Further, it is well-established by this Court
that the principle of proportionality requires the fine
imposed must not exceed what is appropriate and
necessary for attaining the object pursued. In
Coimbatore District Central Coop. Bank v. Employees
Assn. [Coimbatore District Central Coop. Bank v.
Employees Assn., (2007) 4 SCC 669: (2007) 2 SCC (L&S)
68], this Court has explained the concept of
“proportionality” in the following manner: (SCC p. 678,
paras 18-19)
“18. “Proportionality” is a principle where the court
is concerned with the process, method or manner in
which the decision-maker has ordered his priorities,
reached a conclusion or arrived at a decision. The
very essence of decision-making consists in the
attribution of relative importance to the factors and
considerations in the case. The doctrine of
proportionality thus steps in focus true nature of
exercise—the elaboration of a rule of permissible
priorities.
19. De Smith states that “proportionality” involves
“balancing test” and “necessity test”. Whereas the
former (“balancing test”) permits scrutiny of
excessive onerous penalties or infringement of
rights or interests and a manifest imbalance of
relevant considerations, the latter (“necessity test”)
requires infringement of human rights to the least
restrictive alternative.”
In consonance of established jurisprudence, the
principle of proportionality needs to be imbibed into
any penalty imposed under Section 27 of the Act.
Otherwise excessively high fines may over-deter,
by discouraging potential investors, which is not the
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 43 of 52
intention of the Act. Therefore, the fine under
Section 27(b) of the Act should be determined on the
basis of the relevant turnover. In light of the above
discussion a two-step calculation has to be followed
while imposing the penalty under Section 27 of the
Act.”
64. Turning to the present record, the majority ruling of the CCI
professed to have analysed effects yet adduced no economic
evidence of price increases, output restriction or foreclosure. By
contrast, the CCI’s minority Member, after compiling converter
sales, EBITDA and price data for FY 2007-08 to FY 2011-12,
found (i) that all independent converters expanded output and
margins, and (ii) that pharmaceutical buyers paid identical or
higher prices for containers from the joint-venture than from
other converters. The data thus falsify any allegation of
competitive harm.
65. The learned Counsel for CCI urged that Section 4(2) of the Act
is a “deeming provision”, ipso facto condemning the listed
practices. The submission cannot stand. The very case on which
Counsel relied, Fast Way Transmission (supra), did not
consider, still less decide, the present question. The Court was
there concerned with a licensee that had already infringed
statutory broadcast conditions. Moreover, Section 32 of the Act
empowers the CCI to investigate conduct outside India only
where such conduct “has, or is likely to have, AAEC in India”.
It would be absurd to demand an effects analysis for foreign
conduct yet dispense with it for domestic conduct; the
legislature cannot be taken to hav e intended such
inconsistency.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 44 of 52
66. We therefore hold:
(i). that an effects-based analysis is an obligatory component
of every inquiry under Section 4 of the Act;
(ii). that the CCI, having relied on untested statements and
pre-2009 correspondence , Undertook no credible
assessment of harm; and
(iii). that, on the evidence marshalled by the COMPAT,
converter growth, stable downstream prices, absence of
foreclosure – no appreciable adverse effect on competition
is shown.
67. The omission of a proper harm analysis vitiates the CCI’s order
in limine. Because each of the alleged abuses has already been
negatived on the facts, the appeals must fail on this additional
ground as well. The COMPAT’s decision to set aside the CCI’s
directions and penalty therefore warrants affirmation. Issue V
is answered in the affirmative with respect to both the
questions.
Issue VI - Whether the investigation and the Commission’s order
are vitiated by denial of cross-examination and allied breaches
of natural justice.
68. The Act entrusts the DG with inquisitorial powers of great
breadth, but those powers are bounded by the fundamental rule
that evidence adduced against a party must be open to
challenge. Section 36(2) of the Act incorporates the Code of Civil
Procedure’s guarantees, including the right to “examine
witnesses on oath” and to test them in cross-examination, while
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 45 of 52
Regulation 41(5) of the 2009 General Regulations obliges the
DG or the CCI to grant that opportunity whenever it is
“necessary or expedient”. Audi alteram partem is therefore
woven into the statute itself.
69. In the present inquiry, the DG’s “Methodology” shows that he
questioned only nineteen converters identified by the informant
as “major players”, all commercially adverse to Respondent
Schott India. Apart from circulating questionnaires, recording
their statements and “surfing the worldwide web”, no
independent verification was attempted. International suppliers
were contacted by e-mail and only two responded. No converter,
friendly or even neutral, to Schott India was interviewed. The
Report thereafter cites those statements as its primary proof
more than twenty times. For example, “the above stated fact
becomes evident from the statements”; “reading/analysis of the
above quoted statements”; “findings: from the statements of the
parties mentioned above”. The CCI adopted the same material
without independent scrutiny. In short, uncorroborated
testimony is the foundation of every adverse inference by the
DG and CCI against Schott India.
70. In its written objections dated 16 May 2011 , Schott India
squarely put the CCI on notice that the depositions emanated
from “converters openly conflicted and inimically disposed” and
requested the right to cross-examine each deponent. At the oral
hearing the request was reiterated. The CCI refused, reasoning
that no “separate application” had been filed. No attempt was
made to weigh necessity or prejudice and it is clear that the
request was rejected on form rather than substance.
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 46 of 52
71. That refusal disregards various precedents upheld in a catena
of judgement of this Court like Raymond Woollen Mills
Limited and Another vs. Director General (Investigation
and Registration) and Another
25 and State of Kerala v. K.T.
Shaduli Grocery Dealer Etc.
26. In Andaman Timber
Industries v. Commissioner of Central Excise, Kolkata-II
27,
this Court made the following observations regarding the right
to cross examination:
“6. According to us, not allowing the assessee to cross-
examine the witnesses by the adjudicating authority
though the statements of those witnesses were made
the basis of the impugned order is a serious flaw which
makes the order nullity inasmuch as it amounted to
violation of principles of natural justice because of
which the assessee was adversely affected. It is to be
borne in mind that the order of the Commissioner was
based upon the statements given by the aforesaid two
witnesses. Even when the assess ee disputed the
correctness of the statements and wanted to cross-
examine, the adjudicating authority did not grant this
opportunity to the assessee. It would be pertinent to
note that in the impugned order passed by the
adjudicating authority he has specifically mentioned
that such an opportunity was sought by the assessee.
However, no such opportunity was granted and the
aforesaid plea is not even dealt with by the adjudicating
authority. As far as the Tribunal is concerned, we find
that rejection of this plea is totally untenable. The
Tribunal has simply stated that cross-examination of
the said dealers could not have brought out any
material which would not be in possession of the
appellant themselves to explain as to why their ex-
factory prices remain static. It was not for the Tribunal
to have guesswork as to for what purposes the
25
(2008) 12 SCC 73
26
(1977) 2 SCC 777
27
(2016) 15 SCC 785
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 47 of 52
appellant wanted to cross-examine those dealers and
what extraction the appellant wanted from them.”
Moreover, in a similar competition matter in Cadila Healthcare
Ltd. (supra), the Delhi High Court held that where findings
depend upon oral statements, denial of cross -examination
vitiates the decision. A statutory discretion to allow or refuse
must be exercised judicially and it must not be defeated by
procedural technicalities. The relevant paras of this judgement
are:
“61. This court notices that the CCI had earlier, in the
order, noted that a party can reasonably request for
cross examination of individuals whose testimony can
adversely affect it and that it has to consider the
applications made in such cases, by exerc ise of
discretion.
62. Cadila's argument that its request was turned down
without adequate reasons, in this court's opinion is
justified. Regulation 41(5) of the 2009 regulations
provides as follows:
“(5) If the Commission or the Director General, as
the case may be, directs evidence by a party to be
led by way of oral submission, the Commission or
the Director General, as the case may be, if
considered necessary or expedient, grant an
opportunity to the other party or parties, as the case
may be, to cross examine the person giving the
evidence.”
63. This court is of the opinion that the discretion, which
is undoubtedly vested with the CCI to permit or refuse
cross examination of a witness, is to be exercised
judiciously. The reason for denial of the request for cross
examination is that the justification given by Cadila is
not “satisfactory” and that the testimony of witnesses
who have deposed and whose cross examination is
sought, are not relied upon in the DG's report. This court
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 48 of 52
is of the opinion that such reasons are not germane;
mere “dissatisfaction” does not imply judicious exercise
of discretion. As regards the reliance by the DG in his
report is concerned, the grounds of cross examination
are necessarily wider; it is avowedly to establish
whether the witnesses were credible and whether any
part of their statements could be relied on; furthermore
they can be cross examined on relevant facts, which are
not necessarily confined to what they depose about.
Therefore, it is held that CCI erred in refusing to grant
cross examination (to Cadila) of the three witnesses who
had deposed before the DG.”
72. The COMPAT captured the essence of this violation as follows:
“total reliance on the statements of these interested witnesses
even without cross-examination was risky and uncalled for” . The
COMPAT added that the CCI “should not have insisted on a
separate application once the plea was raised in pleadings”.
Having so ruled, the COMPAT proceeded, perhaps over-
cautiously, to examine the merits; but it acknowledged that the
evidentiary framework of this matter had been gravely
compromised.
73. The practical consequences of this violation are obvious. Cross-
examination would have revealed that several converters had,
during the period in question, expanded output, raised prices
independently of Schott India, and in some instances sourced
tubes from imports, all facts inconsistent with the foreclosure.
It would also have exposed inconsistencies between written
replies and contemporaneous purchase records. The CCI’s
“cherry-picking” of only inculpatory passages, while ignoring
exculpatory statements such as the reply of Lisa Ampoules (DG
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 49 of 52
Report, Reply to Question 11, Page 902), is precisely the
mischief the law guards against.
74. The CCI stand that it “relied only on data supplied by Schott
India” cannot survive scrutiny. The “data” are summary tables
compiled from the very statements whose reliability was in
dispute. Without the underlying testimony, the tables are
meaningless totals. The edifice therefore collapses unless the
testimony passes the test of adversarial scrutiny. Moreover, the
denial was not an innocent lapse is confirmed by later
regulatory reform. In January 2024, Regulation 41(2) was
amended to insert an explicit proviso stating that where the DG
relies on oral evidence, he “shall offer” the opposite party an
opportunity to cross-examine. The amendment reflects a
legislative judgment that the right is indispensable and it
underscores that the right existed in substance all along and
was ignored here.
75. We therefore record, in emphatic terms, that the proceedings
before the DG and the CCI were procedurally defective in a
manner that, by itself, could have warranted dismissal of the
complaint at the threshold. The fact that the COMPAT and this
Court have, for completeness, entered into an effects-based
merits analysis does not water down that conclusion; it merely
furnishes an independent foundation for the same result,
ensuring finality should a higher forum take a different view on
procedure. If the CCI had allowed cross-examination, two
courses were open: either the allegations would have crumbled
under questioning, or a tested evidentiary record would have
emerged on which a reasoned decision, whichever way, could
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 50 of 52
rest. By electing to proceed on untested assertions, the CCI
deprived itself of the material needed for a legally sustainable
finding and placed the respondent under an evidentiary
handicap contrary to natural justice. Issue VI is answered in
the affirmative.
VII. Conclusion
76. We have, for completeness, scrutinised each precedent relied
upon by the appellants and the respondents. In our considered
opinion, the factual matrices and statutory settings of these
case laws except those referred to in the body of the judgment
differ in material respects from the controversy before us.
Setting out individual distinctions in this judgement would tax
both the length and the clarity of this judgment. However, we
are placing on record that none of the cited authorities unsettles
the reasoning or the conclusions we have reached.
77. For the reasons set out in the foregoing analysis we hold that:
(i). The slabbed target-rebate scheme does not impose unfair
or discriminatory conditions;
(ii). The 8 per cent functional rebate, whether in its original or
TMLA form, is objectively justified and uniformly available;
(iii). The LTTSA with Schott Kaisha neither effects a margin-
squeeze nor forecloses downstream rivals;
(iv). No coercion or tying between NGA and NGC tubes is
proved;
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 51 of 52
(v). An effects-based inquiry is integral to Section 4 of the Act
and, when properly undertaken, discloses no appreciable
adverse effect on competition in the present case; and
(vi). The investigation by the DG is vitiated by the denial of
cross-examination and by reliance upon pre -statute
material, a procedural lapse that would, of itself, have
sufficed to invalidate the impugned findings.
78. Competition law is not designed to humble the successful or to
clip the wings of enterprises that have, through industry and
innovation, secured a commanding share of the market. The
true purpose of antitrust laws is to preserve the process of
competition, i.e., to ensure that rivals may challenge the
incumbent on the merits, that consumers enjoy the fruits of
efficiency, and that technological progress is not stifled by
artificial barriers. If mere size or success were treated as an
offence, and every dominant firm exposed to sanction without
tangible proof of competitive harm, the law would defeat itself:
it would freeze capital formation, penalise productivity, and
ultimately impoverish the very public it is meant to protect.
79. In today’s global economic climate, prudence is vital. As the
United States and Europe retreat behind their newly-minted
trade walls of protectionist policies to shield their homegrown
markets, India’s bid to emerge as a global centre for
manufacturing, life-sciences and technology will succeed only if
regulation rewards scale and intervenes solely when genuine
competitive harm is shown. Heavy -handed enforcement,
divorced from market effects, would discourage the long-term
capital and expertise the economy urgently needs. An effects-
CIVIL APPEAL NO. 5843 OF 2014 ETC. Page 52 of 52
based standard is therefore not a mere procedural nicety. It is
both a constitutional bulwark against arbitrary restraint of
lawful enterprise and a strategic necessity if India is to capture
the opportunities that more protectionist economies are in
danger of forsaking. In the result, Civil Appeal No. 5843 of 2014
(Competition Commission of India v. Schott Glass India Pvt.
Ltd.) and Civil Appeal No. 9998 of 2014 (Kapoor Glass India Pvt.
Ltd. v. Schott Glass India Pvt. Ltd.) are dismissed.
80. The order of the Competition Appellate Tribunal dated 2 April
2014 is affirmed. Having regard to the wholly unsubstantiated
nature of the allegations and the prolonged litigation they have
occasioned; Kapoor Glass shall pay costs of Rs. 5,00,000/-
(Rupees five lakhs only) to Schott India within eight weeks from
today.
81. Pending application(s), if any, shall stand disposed of.
.....................................J.
(VIKRAM NATH)
…………..........................J.
(PRASANNA B. VARALE)
NEW DELHI;
MAY 13, 2025
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