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CCI Order: Multiplexes cannot overcharge for coldrinks, etc.

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  • karmayog - tanya
    Rajesh Modi ‏@rajeshhmodi - @Devinder_Sharma very interesting judgement by CCI on overcharging of cold drinks at multiplexes. See at
    Message 1 of 3 , Jul 31, 2012
      Rajesh Modi ‏@rajeshhmodi - @Devinder_Sharma very interesting judgement by
      CCI on overcharging of cold drinks at multiplexes.

      See at
      http://www.cci.gov.in/May2011/OrderOfCommission/HCCBPLDessOrder150611.pdf

      pdf, 66 pages

      Extracts:

      The purpose of going to a multiplex may be for watching movie but in
      the present case the purpose cannot be a factor for defining the
      relevant geographical market. Of course, the movie goers are going to
      watch the movie but the purpose is not only watching a movie but a
      wholesome entertainment.

      M/s ILL further states that it is a natural choice and not a forced one to
      go for a product which is conveniently available at sales counters and
      as such the choice of the food and beverages available at the sales
      counters does not determine the decision of the customers to visit a
      multiplex. The logic given by M/s ILL is funny as a movie cannot be
      substituted by any kind of beverages or vice-versa.

      The argument of M/s ILL that there is no compulsion on the consumers to buy
      any beverages,
      and it is their natural choice to go for it is correct but this argument
      would have been valid if the alternatives/substitutes have been
      provided.

      Secondly, ILL does not allow any other supplier of bottled water and
      soft drinks inside its premises. It leaves cine goers without any choice
      except to consume the products offered by it. The ILL, therefore, enjoys
      the position of strength in the relevant market whereby it is in a position
      to affect its consumers in its favour.

      The DG has finally concluded that based on the market share, size and
      resources, commercial advantages, dependence of consumers,
      countervailing buying power of consumers and the marketing entry
      barriers, it is conclusively established that ILL is completely dominant in
      the relevant market of sale of bottled water and other cold drinks
      products inside the geographical limits of its multiplexes.

      Further, ILL enjoys complete economic power in the sense that its
      consumers are completely dependent on it for the relevant products
      offered by it within its multiplexes. These customers are practically
      locked-in customers as they cannot go outside the premises because of
      security reasons.

      I have no doubt that ILL has indulged into following activities:-
      (a) It is charging excessive and exorbitant price for the sale of bottled
      water and soft drinks manufactured and supplied by HCCBPL
      (b) It has entered into exclusive supply agreement with HCCBPL for
      the supply of packaged bottled water and soft drinks which has
      created entry barriers for other supplier of the same product and
      by indulging in such practice market access was denied to all
      other competitors.
      (c) It has imposed unfair and discriminatory conditions in purchase
      and sale of bottled water and packaged soft drinks by charging
      two different prices for the same product having same quantity,
      quality and characteristics
      (d) By giving ‘preferred beverage supplier’ status to HCCBPL it has
      put discriminatory conditions for other suppliers

      It is submitted that competition law protects competition and
      consumers, not a particular competitor.

      I, therefore, am of the considered opinion that this is a fit case where
      following directions under Section 27 of the Act need to be issued:

      1) M/s Inox Leisure Limited and M/s Hindustan Coca Cola
      Beverages Pvt. Ltd are directed to immediately stop from
      charging discriminatory prices from the customers.

      2) The discriminatory conditions mentioned in the agreement dated
      10.06.2008 and any other subsequent agreement to this effect
      be changed immediately to allow other competitors of the same
      product within the premises of multiplex owned by ILL.

      3) A penalty of 5% of the average of the turnover for the last three
      preceding financial years is imposed upon M/s ILL and HCCBPL
      for deliberately entering into exclusive supply agreement to
      foreclose the competition and driving the competitors out of the
      market.
    • G.C. Mathur
      The extract below of a CCI Order saying, Multiplexes cannot over charge for cold drinks, etc. is the long awaited act from any judicial authority by
      Message 2 of 3 , Aug 1, 2012
        The extract below of a CCI Order saying, "Multiplexes cannot over charge for cold drinks, etc." is the long awaited act from any judicial authority by consumers. In fact consumers courts have time and again failed to reach such a conclusion as CCI. This Order is a lesson to consumer courts in the country on "how to protect consumer interests". It is also an order that needs widest publicity through magazines particularly those feed to consumer protection.

        Consumer courts have been very shy of imposing penalties. In this case CCI has imposed a penalty of 50% on the turn over whereas consumer courts feel satisfied with just repairs and replacements.

        In the case of cement industry CCI has also shown the path of delivering justice for violation of competition law and indulging in unfair trade practice, and the penalty levied is not only on the cement companies but also on their association and the amount runs into something like Rs.35000 crores, if I am not wrong. Consumers and the activists hope consumer courts take a cue from CCI.

         
        G C Mathur
        Convenor-Trustee Treasurer, Binty
        ( A Voluntary Consumer Organisation)
        Regd. Office: H No 9-B/9, 1st Floor
        Kishangarh, Vasant Kunj Post Office,
        New Delhi: 110070
        Tel: +91 11 26136232, 26132420
        Email: gcmbinty@...
      • amritlal saha
        Dear Friend, Thanks. Good information. CCC and all consumer organisations may disseminate this information through their newsletters. regards. Amrit Lal Saha
        Message 3 of 3 , Aug 1, 2012
          Dear Friend,
          Thanks. Good information. CCC and all consumer organisations may
          disseminate this information through their newsletters.
          regards.
          Amrit Lal Saha

          Chairman, Consumer Coordination Council (CCC)
          *(A National Coalition of Leading Indian Consumer Organisations)*
          *www.core.nic.in*
          *ALLIANCE & INVOLVE - Together Let us Make a Great Indian Consumer
          Organisation*
          *
          ------------------------------------------------------------------------
          President
          Consumers' Protection Association ( CPA India)
          A member of CAGs registered with TRAI
          An Investors' Association recognised by SEBI
          E-mail: amrit1950@...
          Mobile: 09862216817
          www.indianconsumers.org
          *CONNECTING CONSUMERS*
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