Kapoor Glass Private Limited vs Schott Glass India Private Limited Main ... on 29 March, 2012

[Cites 7, Cited by 1]

Competition Commission of India

Kapoor Glass Private Limited vs Schott Glass India Private Limited Main ... on 29 March, 2012

NGN CﬁNFiBEN'§'§AE. V£RSEQN A3 PER REﬁULA"E"§Q§\2$ BEFQRE THE CGN§PET§'T§GN €GM§V3§SS~§GN Q? iﬁﬂm Cam Ne. Z2 9*? 231$:

~§<ag:mor G§ass Private Limited : infarmant Against Schott Giass India Private Limited j ~ Oppasite Party {Date of Order»? fl ﬂrdver under $ecﬁon 239% 'mg Cnmaetitign Act, gm:

1. Backgmund and Pmfﬂe G? the games 1.1 mformatisn under the pfuvisioﬁs of section; 19(1) {3} of the Csmpetition Act, 2902 (Act) was ﬂied cm May 25, ZCESJIJ by Kapoor Giass irzdia Private Limited (hereinafter E<§%;\n;*§{_5;2c'~{'5:':'"""°Ess.«:_,;»_' __ the infermamt) aikeging certain anti~ 'u .-'-< ' V "

imiia 0!' the Qppcsite Party or the 0?}. The iriformaticsn brings out aiiegations of various anti~<:ompetitive practices by Schott Giass mdia in the market at 'neutral LiSP--1 borosiiicate giass tubes' and 'gia:s5 ampmsies' made {mt at such giass tubes in India.

1.2 Neutrai LiSP---1 bciresiiicafte giass tubers are matte out of bemsiiicate giass, which is a speciai type of glass with unique prciperties. Due to its low thermai expansion co~efficient and high resistance taicitémicai reacticm, tmrosiiicate giass tubes are used ta make giass ampciuies, viais, cartridges, syringes which are primary packaging materiai fcir liquid iniectabies arzé drugs by the pharmaceuticai industry. Pharmaceuticai campanie~s generaiiy 5pe<:ify the standards or quaiitiy/source for borosiiicate giass tubes which may be useti ta make giass tubes ampcsuies, since the moiecuies in iiquid injectabies tend to Reach with the surface of the giass container in which they are stored over a period at time, which may remit in a change in their chemicai ccamgmsition, Er; tum resulting in reduced potency. This may 3153 resuit in discharge of aikaii fmm the giass ccntainer into the meciicinai sniuticm which might pose significant saieiy raiatéd concerns for the patients being administered with the iiquici drugs packed in such gi-ass containers. Oniy such borosiiicate giass tubes which conform to United States Pharmaccpoeiari standard and are neutrai with aiizaii release of iess than 1.0 mi are reccsmmended. Borosiiicate glass can either be amber or ciear depegﬁnggggggthe drug it is tieing used for. Since certain drugs require very i0 - '? Gtttﬁi . t, these are packaged in amber bcirosiiicate giass.

Pmﬁﬁe sf ﬁchatt G§ass ﬁndﬁa ﬁrévate Limited «--- "me Qgspesése iﬁarty 1.3 Schatt Giass India is 3 whmiy cawneé subsidiary of Schott Giaswerke Beteﬂigungs -- Gmbﬁ, Sermany ("Semis GmbH"§, whiczhjirz turn, is a whoﬁy cswned subsidiary of Schett AG, Mainz, Germany. Schatt AG is the uﬁtimate parent mmpany of the Schsstt Gmuga. The Schott Group is swned by the Cem-

Zeiss-Faundaticsn, Germany.

1.4 Schatt Giass india Pvt. Ltd, as a whoiiy owned subsidiary cw? Schatt giaswerke Beteiiigungss ii-3mbH, Germany (Schott Germany) is esngaged in the productian of 'neutrai USP4 borosiiicate giass tubes' as indie used for the purposes cf manufacturing amp-au$es,, viais, cartridges and glass syringes {Containers} for the fiﬁing of liquid injectabies. Schott Giass 'india was registered as a Private Limited Company in the State of Maharashtra, indie: in December 1%? and in January 1998, it acquired the assets of M/s Bharat Glass Tubes Ltd, me of the existing Sncﬁian pmducers of bomsiiicate giass tubes at that time. The Tubing Bivisian of Schott Gfass Bndia is iocated in Jambusar, . Gujarat and saies divisian in Mumbai. The 'tubing divisiAon of Schott Glass Endia is part of its group business unit 'Pharma'. The 'Pharma' business unit of Schctt Group consists of business segments; 'Tubing' which manufactures and sails borosiiicate giass tubes far pharmaceutics! and technicai agspﬁcations far pharmaceutécai use, ans; ';:aharmaceuticai packaging' which manufactures and seiis containers made out of Type E giass tubes. .

1.5 Schcstt Giass indie manufactures tws quaiities of borasiiicate g¥ass tubes, A"

V' :£%}3éQ_se of £13.38 mi of H2SO4{3.O2 N per §ﬁ§j>iass {Hear {NSC} and Neutrai ,,_k%.-' g' ,.,£ Giass Amber (MBA) with aikaii release an' (3.50 ml which fuiﬁlis the USP ~---Type E stanﬁardsr NSC and NGA tubes are produced exciusiveiy for inrrriarz market, whiie Fécﬁax cﬁear is produced for Indian market as we?! as for export.

1.6 in May 2£3{)8r,'Schc3tt group through Schott F'raar'maceutica¥ Padcagéng Gmbﬁ ("S:.:hott Pac:kag§ng"} a subsidiary of Schort Germany, entered inta 3 Joint Venture agreement with 23 dcwnstream ampouie manufacturer Keisha Manufacturers Pvt. Ltd. ("Keisha") to integrate aperatians sf Schott in Endia verticaiiy with downstream giass carztainers manufacturing business, now knmwn as Schott Kaisha Private Limited. Thus since the year 2008, Smart India, throrugh the N of its reiated group company, Schmtt Packaging' has been engaged in the business of producing bath bomsiiicate 8!:-rss tubes and grass ampoules ﬁr': indies. The unit sf iiaisha is situated at Barman.

Pmfiﬁe sf' Kapoar @5353 Private §.§mited- The Snfarmant

1.? The informant is a private Eimited company engaged in the business sf producing g§ass ampouies, vials and cierntai cartridges (miiectiveiy referred as Containers) which are uses by the Pharmaceutical industry as primary packaging mareriab far filiirig and dispensing of liqaié i,l'3§eC'E3b¥ES (drugs). This key component used in the manufacture of crmtainers is neutraﬁ barosiisicate giass tubes. Ti?! the year 2908 Kapoor Giass had a presence alscz in the upstream business sf manufacturing of neutrai borosiﬁcate gﬁass tubes. Now it , lturirng ampczuies, via¥s and other

2. trrfermetien

2.1 The facts and etiegetions es mentieneci in the infermetien, in brief, are as under;

2.1.}. As per infermetien, tndian industry 'fer 'rreutret t3SP~§ beresiiicete grass tubes' has eiweys been a concentrated one, wherein the deveieements can be 'seen in three citstinct time perieds- a) prior to the entry of GP in 1998, tr) eeried between 1998 and 2008 and c) period from 2608 tiiﬁ crate." K 2.1.2 The informant has stated that prim t0 the entry of the DP there were five producers of 'neutral US$34 berosiiicete giass tubes.' in indie, nameiy Sereikrreiie Gfass Works Ltd, Brseret Giass Tubes Ltd, Twincity Grass India Pvt Ltd, Triveni Gfass Ltd. and Kapoer Grass (indie) Pvtttd ( the informant itself). Seraikeiie Glass exited the market ermmd 1996, Bheret 51355 was acquired by the GP in 13.9% and Twincity exited the market in 2007' foiiowed by klaecoer Giass in 2088. Triveni tree been taken over by the mere Giass indie Ltd. in March 2010. Thus at present the GP and Nipro Giess indie Ltd. remain the eniy producers of 'neutrai USN berosificate giess tubes' in India. There is however mrrsideretzte eifference in the cguatity Of the neutrai USP Type 4 bemsiiicate giess tubes ef the OP as compared to the tebes manufactured by Trivenilfxtipro indie.

2.1.3 The informant has submitted that since there are oniy two domestic preeurzers of these tubes in india, most at the domestic demand is met by them, and arm; a portion of derriand is met by way of imports 'frem China and other countries tike Germany, htaiy and Japan. However, imparts have remaérred low because ces §§§?'§§.;.rrem countries ether than thine is k W {.,,Skr¢ nearly 3C3~3S% higher the?' " riarzts. Since the profit margins in

1. ¢\\' 2' .,'\ ' '.;i_=;\:.';-0 \-Z-';_;' I ' - r ?\ the industry are iczw, the giass amgmuies manufacturerzs ck: not £'€~:SOt't to imports. Aithuugh the cost of imports from China is hzzwer than other ccmntries, given the difference in quaiity, mast arganizsad pharmha-ceutical companies do not prefer to use giass ampauies made hum Chinese giass §ﬁbE& 2.1.4 According to informant, the quaiity of giass tubes produced by Triveni / Nipro $.50'? hfiglher expansicm and is not acceptable: ta the mast pharmécieuticai campanies. As a resuﬁt, the giass ampouies manufactures in ihdia ihciudinhg the informant. ake forced to :'he§y an the GP to meet their demahnci because 8? is the eniy piayer who is producing high quhaiity 'Neutrai USP Type 3 Bamshicate Giass Tubes'.

2.1.5 According to informant, although most manufacturers of 'Neutrai USP Type £ Barmhsiiicate Giass Tubes' in the wnrid are a¥so engaged in the business af making g¥a5s ampouies and other containera, there are several independent manufacturers aiscz» in the market whca are maturing 'these tubees from upstream suppiiers for manufacturing of the amgmulhasﬁmther ccmtainers.

2.1.5 it has been stated that for its husinesa of manufacturing gﬁass ampouies and other c:on:'ta'ine-rs, the infcmhant is dependent entirely an the 0?'. Since most lmiiar; pharmaceutizzhai companies have aiready stabﬂized their products with giass ampouies made out of Ta.:--hes manufacmred by the OP, contaniner OP ahiy.

2.1.? According to informant en 1«tLO5.2{3G8, one at the empeuie manufacturers, Keisha Manufacturers Pvt. Ltd. entered into a joint Venture Agreiereertt with Sctmtt Packaging, subsidiary of Schett Germany. Setzett Packaging is heiding 59% of shares in Keisha and with this arrangement, the OP has now became verticaiiy integrated with e iarge ciewnstream empouie manufectu ring cempany.

2.1.8 The interment has cieiineateci relevant market for assessment of eempetition in the case as 'i\!eutrai USP type t Boresiiicate Giass Tubes in india'., in this market, accorcting to mformant, Schott indie hotds e pesitien of dominance in accordance with the previsien cf Section 4 cf the Act. The interment has eiso brought out that the GP has a dominant presence in the inciien market having a market share at about 67% in 2009.

2.1.9 According to informant, the anti~competitive practices being carried out by the 0? can be divitzied ﬁnite two broad categories; (3) practices effecting the state of eempetition in the market for 'Neutral USP Type i Bcsrosiiicate Giass Tubes' in India and (bi practices affecting the state of competiticen in market for ciewnstreem precinct ef giass empeuies and other tztmtainers.

2.1.10 At the upstream ievei, the informant has eiieged that the OP has adapted a practice at unfair and discriminetery pricing of Neutrai USP "Wee 'i Berosiiieate Giess Tubes'. initiaiiy, it started seiiing the tubes at a test iewer than its cast of emduetion es weii as pa"eve_ii'ing prices in intemationet market, in order to drive out the existing competitors in the market inciuding the 'item the market. The ether two tube manufacturers aise stitfered iiraanciei iosses. After the exit at the internment, once the GP was ebie ta estabiisii its posiitien at demi.nance, it greduaiiy startee to increase its prices far its tubes. in .

its attempt te estabiisii its dominance, the OP aise started iiiring key managers at the .in'ferment. The predatory hiring at -empioyees of the informant was resorted to since the OP feiieci tn acquire the business cencems of the informant anti since it was aisci reaiizeoi that the informant, which was engaged in businessei' meking both tu hes and ampouies cciuici pese signiﬁcant cempetition to the GP. Due to this, the prociuctien of the infeimant came in a halt and affected its competitiveness as a viable empeuie manufacturer.

2°13}. it has been aiieged that the GP is net eeiy charging unfair prices but it is aisci granting ieyaity rebates and disceunts in girder to prevent the shift cf ampauie manufacturers to imports and to ensure that ampouies manufacturers use giass tubes at the GP cmiy. The interment has bmtight nut that under quantity discount scheme, the DP provides certain discounts depending upon the cguaritiity of 'Neutrai US-P Type i Berosiiicate Giess Tubes' purchased by giass ampeuies niantifacturers. Under ioyaity ciisceunt scheme, initially the ciiscount was given if an ampeuie manufacturer useci to purchase at ieast 80% of its totai requirement from Sciicstt. in additien, the empouie manufacturers were to promete the saie ef Schcitt breed and aiso required to seii the ameouies at prices suggested by the GP. The OP has new stipuiated that it '§i;ieui'd"g'ive disceiints te depending upeii cenciitiens that they meet "' I ' tiiige/iiﬁnt for the its hes from it.

?S*_rg3u 2.1.12 Accerding tee informant, the OP requires that ampeule manufacturers wiii net engage in making ampoeies en temperary "job werk arrangement basis" and En this manner, it ensures cempiete myaity tram the empeuie manufacturers. it else refuses tc: deaf with such arnpeuie manufacturers whe make ampouies using tubes from ether sources.

2.1.13 in additien ta etzseve, the intormarzt has atieged that the 013 else requires that in order be await tubes at discounted rate, the emeoute manufacturers must agree to furnish a bank guarantee ef Rs. 70 Sec. According to the informant, this wouid feed to comptete forecfosure of mmpetitton in favour of the GP.

2.1.14 The interment has further breught amt that in actditien to the aforesaid two types of discount schemes, the DP aise has been granting a speciai discount to certain favoured ampouie manufacturers iike its own JV, Keisha, Kiasspack Pvt. Ltd. and Tuhegiass Ceratainers Pvt. Ltd. By granting specie! discounts to Sehett Keisha, the OP is engaged in the practice of discrimtnatery treatment ex' tts customers.

2.1.15 Aceerding to interment, the UP is the oak; manufacturer of the amber variant of 'txteutrai USP Type 1 Berosiiicate Giass Tubes' which acccunt for abeut 30-35% of the entire market for giess ameeuies inciueing emgjemeg made out of deer variant of such tubes, The GP using its deminarzt pesitien in amber verientef the ta bet»; is drivitng out compettters from the market at ciear variant is ' 'M r r r ' ' y makmg the tuptniy ojr(get<n}3.§r_,j§«i:§;¢ \ te empouie manufacturers contingent on the precuremenfégih wt ' Q:

the GP only.

.-' ' :»4;..

~ .

X. ' t'{3,§:)% from not ether seurce but ﬁr 2.1.15 Due to the ahti~compeiitive practices cf the OP, whiie most ampcuie manufactures have shown a minimum growth rate, Schett i(aisha's gmwth has been significant, garnering considerahie market share.

2,1,1'? The informant has aheged that the practices ef the O? of charging unfair prices, granting quantity discounts and ieyaiiy rebates are inconsistent with the provisiens of Section 4 {2} (3) of the Act. Further, hiring of the infeimasifs empieyees in order in strengthen its market share in the downstream market for giess ampouies is in viuiaiticm of the Section 4 (2) (e) of the Act. it has aise been aiieged that its practice of refuse! 'to ties! with giass empouie manufactures may be inconsistent with the pmvisicms {ii Section 3 (4) of the Act.

Reiiefs sought 2.2 The informant sought the foiiowing reiiefs from the Ccammissicm:

2.2.3. To issue interim orders under Section 33 is restrain Schett from abusing its peasitien of dominance, inciuciing by offering its discouhi scheme by engaging in unfair or discrimihaiory pricing; er 2.2.2 To issue interim mders under Sectien 33 asking Schioti to extend the same terms of discounts and rebates to ail ampcsuie manufacturers without any discriminatien on the basis of ieyaity or any ether criteria;

2.2.3 To issue interim orders under Seciien 33 to restrain Schett from cantinuing with its agreements for refusai to deei;

' {ties for abuse of dominance and 2.2.4 2.2.5 issue orders under Section .2?' ca? the Act for breakizig up of the joint:

venture company between Sciaott and iiaisha.

Prima Facie Gpinimi

3. The Commission upon iexaminatiorz of the facts of the information passed an mder under section 26 (3.3, on iuiy 6, 2810 recording its opinion that there exists a prima facie case, and directed the Directcir Generai tea investigate into the matter.

Praceedings under Sectisn 33 3.1 ihe informant in order in substantiate its aiiegations in support an' its piea for interim reiief made additiana! submissicms on O?.G7.2G3.G, 09.07.2913 16.03.2010.

Remy of Opgcisite Pariv 3.2 The repiy of the GP in the proceedings under section 33 received by the Ccimmission cm ﬁ32LiguiS~'t 2?, 2010 and erai submissiens matie on 30.09.2010, in brief, are as under:

3.2.1 ita entry into the giass tuiaing industry in india was by way of acquisition mi' assets beionging ta Eiharatiﬁiass Tubes Limited in the year 19%. As part 0»?

such acquisitiuns, it acquired the prciduction iaciiities that Bharat Giass had used for manufacture mi' ii-iieuirai Giass Tubes of Ciear Variant (NSC) and Neutral Giass Tubes of Amber Variant (NGA). Thereafter, ii: made 'financiai and techri.<:>i:.::gicai investments to iﬁgggye the stanciards of these pmdiiction {jg 52's .F.s~5,?\\L' faciiiicies. its efforts in tiiis(,o;jfj§ir'--'ecic'i?(%'" d it 1:0 manufacture higher quaiity "e v' 1?"

NSC as compared is the ; ctsgfe cf NSC and aim NGA in inciia. 2" ' " i 3.2.2' The GP in its repiy argued that the aiiegatiens made hy the interment against it and its afﬁiiates were eempieteiy taise and haseiess and had in fact been made with the maiicieus ehgective at harming its reputetienr 3.2.3 The SP raise submitted that the cause at action, it any, and the exit of the informant hem the hemsiiicete giass tubes rnari<et, eccurted prior to coming inte effect of sectien 3 and 4 et the Act. Therefore, as a matter at ﬂew, the eiiegations of the informarst pertaining to the eiieged practice at the GPA cannet he erttertaiined under the Act.

3.2.4 As per the submissions at the DP, the exit at the informant from the giass tubing industry was not ettrihutahie te any arttiwcompetitive practices by Schott indie as aiieged. According ta 0?, the Competition Act is rmt intended to offer pmtectiet: to players iike the informant who cannot compete in a market ﬂue tcs peer business siziiis and tack tn' technoiogy to ensure high quaiity stenriards. in this regard, the GP has aise brought out that as per hearsay statement, there was a fire at infermaht's predu<:t'ion faciiities which resuiteci in extensive damage to the taciiity that was in use to manufacture horosiiicate giass tubes. ﬁn account of that, the informant had to stop preciuction of giass tubes severei times due ta technicei reascms retuiting En higher casts which they might net have been ehie to absorb ané eventuaiiy had to: shutdown.

3.2.5 It wees. eiso submitted by the C39 that the igiass tubes imparted ftgm China, which were similar to the queiity at giass tubes manufactured by the informant might have given geeggggggghpetition t0 the informant and this '{3} 3:,' L::.',\ .

«e cauid have eciverseiy etfectegﬁsrvf 3.2.5 The informant aise fiied a rejeincier to the repiy at the apposite party on 22.09.2019 and fiieci further submissions on 30.0§.2D3..0 in tvhich apart frem substantiating its aiiegetitmg further, it eise requested the Cemmissien ta pass an order under Section 33.

4. After giving due cdnsicietaticin of ore? and written suhimissiens from hath the parties, the Commissian decided not to pass any restraining erder uncier section 33.

5. ﬁndings at 05 (Director Genereﬁ) 5.1 The DC-3 submitted his repert of investigation on March 14, 2011. The £326 investigated the matter with respect tn the tmiiawing three main!' issues:

(a) Whether the D? has a dominant pcisition in the market at 'neutra¥ USP --- E boroeiiicate giass tubes'?

(E3335 so, whether the OP has abused its dominant gaosititm in the reievant market by aciopting vavrieus exciusionary and expioitative practices in centravention of the provisions of Sectitzn 4 {If the Competition Act, 2052? T i it) Whether the GP has abused its dominant position in the upstream market of 'neutral USP -~ i bcomsiiicate giess tubes' to drive out the gt '-

;eM;€*t \ '\ i vg,. § 5.31 in Greer to examine the issues framed abeve, eguesticmnaires were sent hy D6 to the informant, Cippesite Party, Nipre Giass Private Ltd. (the oniy ether manufacturer cf 'neutre3 USP --- i berosiiicate giess tubes' in indie at present), nirreteen customers 0? such tubes iampeuie manufacturers who account fer purchase of over xxx% of the tetei dcsnwestic saie er' the GP ) who were named as major piayers in the said market by the informant, Gperrsite Party and the Pharmaceuticei cempanies and arise to seven top pharmaceutical companies in "india, wire are the purchasers er grass arnpouies as primary packaging meterieis for fiiiing and dispensing of liquid injectebies.

5.3 in addition to examination of the repiies, documents, transcripts of certain audit: recordings received from the informant and other' parties, the statements of the President and ex~empioyees ef the GP, the informant, priricirraei officers 0'? the major glass aempeuie manufacturers (out 0'? both Tavouried' and 'disfaveured' customers ef the OP} am Managing Director cn' Schott Keisha ( the IV) were aiso recorded by SE.

5.4 The different pharmacepeia standards, nemeiy the United State Pharmacopeia, the Eumpean iiharmacopeia arm! the irrciiarr Pherrriacepeie, prescribing the procedure for testing of grass emperiies were aiso perused by the D6. Respcmse from two 0' 4:5 538, -

j {s « M_:tieriai mmpetitors ef the UP and /''''n impert data were aiso czbtasi M m?€'s findings an Reéevant Pmduct Market 5.5 Upan appraisal of the issue cu' substitutabiiity of bomgiiicate giags tubes, 36 tank into account the two major aspects or? "characteristics' and 'intenc3ed use' 0:' the tubes under consicieratkm. D6 conciuded that the unique «characteristics cf the 'neutrai USP -2 bczarasiiicate giass tube' and its intended purpase to store Eiquid ﬁnjectabies with a requérement af retaining the safety,

-- quaéity and efficacy of Eiquid injectabies stored in these cmntaihers {ﬂakes it a non-suhstitutahie praduct. As the product has no subatitute and as there is 2'10 cammercial scope or possibility for the consumers to interchange the product by any other product, the demand for neutrai USP i 3m'osili%cate Giass Tubes, acczarding ta D6, is net price aﬁastic.

5.6 Dr: suppiy side substitutabiﬁity, {N3 ccmcluded that the production of 'weutrai USP ~§ borosiiicate glass tube' being a very ccsmgaiex process requiring . speciaiized technoéogy, knawhaw, huge capital investment, high gestation period and running casts, is not easiiy subatitutable keeping én View the suppw side comtraﬁnts.

5.7 Based on the anaiysis of demand subsﬁtutabiiity and suppiy substitutabiiity of "Neutrai USP -4 Bcxrczsiﬁcate Glass Tubes', D6 has conciuded that there is nan ahternative to "£343-g i:_:iBQg:0si¥icate USP *2 Borosﬁicate G§ass * " ~ ~ """"'*'T" >,.\ C-9 82;, ' \' ..§?3§*'1 e v <7;

Tubes' for the purpcse of giass ampouies and other containers.

5.8 {)G extended the anaiysis further to deive imro the different subeategeries ef 'Neu*.:rai Boresiiicate USP ~§ Bczsresiéicate Glass Tubes". According to £163, within the bmacﬁ prudent categery ef Neutrai Eorosiﬁcate USP Type 5 Giass, there are variations in the USP vaéues expansien ieveeks of the giess tube manufactured by differeent manufacturers. There are fivee bread sub categeries of the eroduct under censideretien, which cempete within their respective competitive space, as under:

6 Fieiex ﬂea: ~ Neutrai Gtaess Ciear tubes in the range of ergpansiene belew 5.0 X a Fioiax Amber ~ Neutral Giess Amberetubes in the range 01' expansiens beiow 6.0 e Neutral Giass Ciear {NSC} -- in the range of expansion between 6.06.5 9 Neutral Giass Amber (NGA) ~ in the range of exgaansion between 5.8 te 6.5 % *2 Neutrai Giass Ciear tubes having expansion ranges higher than NGC' 8:

NGA but within the standards pre5»:ribed as USP Type E. 5.9 {)6 has further breught out that Fielax Ciear and Fioiax Amber in the range beiow 6.8 expansiens are the most advanced versions of 'neutrei bomsiﬁieate giags wees'. These are said at prices much higher than the other categeries. The internatﬁenai manufacturers (ﬁerresheimer, Amcor, NEG and Neubm"}.onEy produce glass tubingef this; expansion range. Eieiaxls ereduceci gu-

by the Qpposite Party §arge¥g:§§fer}%§§§§§;;e§§'\f§tvQarket' These are 3350 used by 3 .:<.:~ _ :1 v ,C\-.\' *'3\"

-:~a"',\3.';-5' ' ~, ' C -"F-\,' I _ _ _ converters and the pharma Eosjgfpa ', ﬁe iiigdzﬁ for exporting their respectwe :~. «.s~ *1 preducts. *7 5.10 According to BE», NSC and N6A tubes are most wideiy used 'neutrai US?' -- 3 boresiiicate gtass tubes' in mdéa. White the tubes with lower expangicm range tan be 'used in mace tn' tubes withthigher expansion range, the ccmvetse is not true. The fifth sub« category has expansion in the range highet than NGC 8: NGA but still within the standards prescribed as USP «Type ¥. They are chea per than the other sub categories and giass tubes imparted from China generatfy fat} within. the .sub-category: Thresé are mt being marketed by the Chinsééé manufacturers themselves in india and are being imported Enta the country by various imperters.

5.11 Having regard tn the above facts. can retard, the (36 has czcmciudect that while the ﬂistincticns between the varieus sub categories of 'neutral USP «B bcmjsiiicate giass tube' may be borne in mind white anaiyzing and understanding the position of dominance sf that SP, the reﬁevant product in this case 'far the upstream market is "neuttai USP -3 borosiiicate giass tube'. Atccarding 1:0 D6, this definition at reievant product market, as a§s0 given by the infcsrmant, has been concurred by the OP. The retevant product for the downstream market has been determined by the EEG as "ampt2ules, viais, dentai ca rtridges and other containers" made from 'neutrat USP *1 boroaiiicate giass tubes'.

Re§e':;:a5'e*tt'§'éogir"Ta@§1it: Market aphic market, the D6 has 3S,'$§'~ .:§:':'-'5".

considered the contention at t \ Wit-gt' SIHCE the ccmdstzons of iT:_ _. ..

comperitien for the supply' and demand fer the reievarrt product "neutraE USP « l berosiﬂicate giess tubes" are homogeneees in the wheﬁe of indie, therefore, the entire indie-rz market he considered as the reﬁevant geograehir: market, Further, D63 aise censidered that even» theugh GP asserted that the re¥evant geographic market was not limited to indie given that the refevam: preduct was pmcured by various cerwerters in india frcm ether ceuntries, gaartécuieriy Ciwina, it has submitted that since the appreciable adverse effect en competition is 're be exarnined with respect to India, the reievent geegrapruic market comd be taken as indie.

5.3.3 QG based on examination of vrarieus aspects reiating tn sourcing of 'Vneutrai USP 4 berosiiicate giass tubes' and submissiens cf the informant and the (ZIP has determined the relevant geographic market for the given reievant product in the present case as 'indie'.

Reieuant Market 5.14 in View cf the analysis with regard in the reievant product and geographic market as abave, the DG concmded that the reievarrr market in the instant case is the market for 'neutral USP 4 borosiiicate giass tubes for the upstream market and ampeuies, viais, dentaﬁ cartridges and other ccmminers for the downstream market in the whrﬁe of indie'.

SE5 Assessment at' ﬂominence v""' "'>'::"5x ,"

5.15 Having determined the reiefﬁe ix ' ;{gr§§\.;x§he D6 assessed the dczminance ' of the GP in the refevanr upggreiém riff " geutraf USP" -3 beroséiicate giass \' "W tubes in india" in accordance with the ciefirritiion of demirrance prevideci En explanation (a) to secttien .4 anti the factors prescribed in sectiorr 19(4) at the Act.

5.16 After studying the marketing mechanism depieyed by the manufacturers of the reievaat product in india, [)6 has brought out that the manufacturers, rrameiy, the GP and Niere Giass tndia do net engage agents er intermediaries to market and set! their products. Neither of themhas any agreement or understanding with any"r;rf"t'hé"'p»harmaceuticaI companies havihg a bearing on their procurement of glass cerrtainers, viz; ampeuies, viais and dentai cartridges. Ther'refor_e, the market for the reievarrt upstream product is a seiieﬁs market and manufacturers do not strive for earning the patronage of the custemers. Further, given the poor cguahty at the products manufactured by Nipro and insignificant voiumee of import from major internatienat players, the preducts of U? are preferred by the pharmaceutical companies. As a resuit of the prevaiiirrg market structure and the caeehiiity of the GP to meet the requirement at the ever growing market, Dis has conchzcteci that the OP enjeys a position 0f deminarzce in this market.

5.1? D6 has atse regretted that market share of the GP in terms of gates quantity was 61.49% in 2{)(39~1{3. Er: terms at saie vahre, the market: share at the OP was 81.53% in 20{}9~10. Thus, the GP by far hoids the Largest market share in the trachea market fer 'neutrai US? 4 boresiiicate giass tubes'. The BS has 'further stated that the market share is even mere prenounced in the specific product segments of NGA, F' geﬁtgher and Fioiax Ciear of the {weer} reievent product. The market shar are hrgeejiegments are 93%, §?'% 8;

~37 § S319 e if \ :4.» ﬁr ~. (,5 ,.-'5' 87% respectiveiy for 20G§--:t€3 and the GP has a virtual monopoly to product segments in the range of NGA, Fioiax Amber & Fioiex Ciear.

5.18 in the segment of Amber' tubes, {.36 has brought out that whiie Triveni, the oniy other manufacturer of the reievant product in indie, hati got production capacity in respect of such tubes, their oroduction has been insignificant since 2008. As regards import of amber tubes, this is on a low scatie as the inttian pharma contlpeﬁies use the ﬁghter shade produced by the GP in indie and not the darker shade produced by the other intetnationei manufacturers tike Gerresheimer or Netsbor. Therefore, import of amber tubes from them is iimited and is only against the sgzeciﬁc requirement at the oharma companies for such products' 5.3.9 Upon assessment of the size and resources of the OP, {)6 has brought forth that Schott Group, a muitinetioneﬁ group tzeedcguartered in Germany, is in the business of developing and manufacturing soeciatty materiata for more than 125 years. ﬁne of the business urﬁtst of Schott Group is Pharma which Consists of two tmsi-ness segments, nameiy, tubing and ptzarmaceuticai packaging. The business segment Tubing' manufactures and soils borositicate giass tubes mainty for pltarmatceutécat use and aim for technicai appitcations. it has six production sites. aii over the work}. The OP manufactures borosiiicate gﬁassm tubes oniy for pharmaceuticai use. The '''\_,,.'."~~.\ . ._ 'toe. t-A?t?ao§5%aging' manufattures and seiis e GP nwanufactures gtass tubes ,,,,eV and Schcztt Keisha, tee N 91' Schott Packaging, a group cencersw 02' Smart A6, of which the DP is a futly owned subsidiary converts such tubes into containers.

5.28 Thus, the ﬁchett Group tegether with the O?' is 'present both in the mantsfacture of grass tubes and ccanversien of grass tubes inter cenrteiners in india and is therefore a verticeiﬁy integrated enterprise within the meaning :2»?

ctause (tr) 0'? Section 2 of the Act read with exrslerzaticans (a) & (ta) ta Sectien S of the Act.

521 DG has 3330 brought eat that Schett Greurfs gﬂoba! "sate is of 2.85 tzriiiion eures (208913), with manufacturing sites and safes effices in 42 countries. with a productiern capacity of more than 130,008 tons and production sites in Europe, South America and Asia, Schett Tubing is one of the Seeding manufacturers of glass tubing waridwide. Acmrding to D6; from the statements of the converters, it becomes evident that the woridwide resources of Schott Group have eiweys been aveiiebie ta Schett indie, which even on its own has resources far more than any at its cempetiters tn India.

5.22 in order ts assess the reiative pesitien of strength of the OP vEs«é~vis its competiters in the reievant market, {)6 has submitted that the size and importance at the conmetittars of the (ZIP in India ere not at materief signiﬁcance. Nipro, the other piayer Er: ttteupstream reiievent market has 3 far iess production capacity as the OP. Further, htipra has nu presence whatsoever in the IV v err.

5.23 From the import data, US has noted that the itetaﬁ quantéty and venue 01' imports are rant significant and as such do net create any competitive pressure en the 0?. As regards Chinese imports, BE has eenciuded that they are ef a much inferier quality than that er' the Q? and cater tn the requirements of mew end and specific eharmeceurticai segment?"

5.24 DG has aiso breught nut that Schott Gmup"§s eise a dominant mayer in the giehei market of the reievent product and on accnunt of the strong business re¥atic3nship;neitheremcornorr Gerresheimer Esin a position to exercise any competitive pressure on the {JP in india.

5.25 According to D6, being rear': 01' the gieim cengiomerate Schott AG, the OP has enermeus econemic power qua its cemperitors. its economic power is buttresseri by the fact that it has get fut! range of predect ﬁne and has the abiiity ta supply the converters from any :23' its giobai iecetions at indies': prices, which provides tremendcsus ecenenﬁc strength and pewer to it.

5.26 DG further a§§uc¥ed in the statements cf converters wherefrem he has conciudedr that censumers are very heavily dependent can the OP. According to D6, the consumers are also heavny dependent an the GP fer their requirement in View 9'? the quaiity, product repgegeensumer preference far its products and . ', . . r":s7"V'* r - .

rts etnisty ':0 make trmeiy angxedeqge ' a»'.\§ *' 'i.

3.2? According ts HG, the dominance of the GP in the reievant market aiso stems out imam the fact that entry in the mairket is not easy since giass tube manufactu ring is 3 highiy spsciaiizsd ﬁeid requiring very advanced irscicmoiosgy. Further, it aiso invoives heavy capitai investment, huge running cost and high gestation Qerioci. investment for an asziditianai tank {manufacturing piant far the reievsnt product} makes business sense cmiy if tiiers is a demand far at ieast 3008 MT of the same. The aforesaid acts as a barrier far a new entrant or far an existing manufacturer to invest in an additicmai tank.

528 D8 has aiso submitted that requirement of stability studies creates another significant entry barrier. Pharma companies do net easiiy opt for new sources of the msteriai used for manufacturing glass ampauies/viais as they have tested stability with existing ssurces. in aiddition, import duty can neutrai borosiiicate glass tubes of apprczximateiy 10% siso acts as 3 significant barrier' to entry.

5.29 Acccsrding to 36, there is rm countervaiiing buying power {if giass ampciuie manufacturers in india, which impairs the comgietition in reievani; pmduct market in india since the giass amipouie inclusiiry comprises of severe! smaii manufacturers which are famiiy owned or famiiy mm enterprises. They do not have requisite financiai power to pose any chaiienge to the OF.

5.3% On the issue of allegations of abusive acts and cainduct of the OP qua raising its prices after eingaginggr/§:g[ 2'? ' g~,'~ ~'\ $3.." -\0\ -=1 31:» egfha ' iisgistary pricing prior to 2008 and existing its competitars fmm '§'€'| §-§'§'s\reported that the repiy /' data z hirnishee by the C}? shows that the increase in its prices past 2088 was reiateci to the increase in its manufacturing cost and cannot he said te have been reserteci to for receuping iesses incurred eariier on ecizetmt at its predatory pricing. As regeres the issue ef excessive and high prices, there are no staneards te judge as he what can be stated to constitute excessive er high. There cannet be any threshoid iimit for determining the same; the price that a custemer is wiiiing to pay depends on the vaiue which he ascribes tee a product it and nething can he said to be excessive tiii such time there are buyers wiiiing to pay the gsrice of the product. in ether words, the market forces can alone determine as te whether the products are being offered or said at excessive and high prices. in any case, an enterprise is free te price its products and there is no Eegai restrain on him. in view at the same, the aiiegation of the ii} in this regarei has not been feund substantiated by the E36.

5.33. As regards the aiiegaticm that the exit ef the competitors of the GP from the market is attributebie to the aiieged predatery conduct of the OP, theugh the reasons for the exit of the competitors from the rnariret have rust been specifiicaiiy irwestigeteci, {)8 has stetee that there is ne evidence tci substantiate the aiiegetion of the ii?' that the same was an acceunt at any aiieged predatory pricing en the part of the UP. The exit of the erstwhiie czczimpetitors ef the GP {rem the reievant market ceuid be en account of their irtahiiity to manage their ewe husirzess for a variety at intemai reasons iiire their inabiiity to mairrtairi er preduce quaiity precincts, ismbiiity te manage thet there is no evideriee to support the aiiegetion that the exit at the cempetitors of the GP was on account of its aiieged predatory prices. Aeeordingiy, D6 has coneiucieci that the mischief in terms of provisions of sub dense (ii) of dense (a) of sub section 2 of Section 4 is not attracted on the issue in the case.

532 On the issue of aiiegations of interment that the Q? tried to ciestehiiize it by pursuing a poiicy of predatory hiring of its key persormei who were H operating at the high speed imported fines of the H3 and aim by predatory hiring of its mariageriei staff, {)8 has stated that whiie Sehott Keisha was in need of additional manpower in View of its increasing production needs, there were difficulties for the informant to retain its empioyeues cine to its deciining production and deteriorating financial condition. it is aiso iiiteiy that this weuid have caused a serious apprehension in the minds of the employees of the informant about their future. Therefore, it appears that the empioyees chose to move out of the informant out of their free wiii, choice and in order to protect and enhance their iiveiihood.

5.33 As regards the submissions of the informant that his imit ieceted epproximeteiy 290 Km. away from Schott Keisha was targeteti for hiring of the empioyees and there was no such hiring from the factories of the converters ieceted within 15a-2i) Km, of the 'factory site of Schott Keisha, St; has izarought out that it is not known whether there were any simiiar push factors for the eihpioyees of the nearby corﬁverters to move out and join ﬁcimtt Kaishai in view tn' the same, DG 4 E

5..-' \.

.9 V __ > ~_' .-

' .. «'\'- 2&3 .:~ '3 . i_- V', -(,<ze\N_o', > . ) \"'"J.\ ~5- 5.34 As regards aiiegatitans as'? unfair and discriminatory canditians or price in the sate art glass whet, {)6 has noted that they are premises! an the twc majar issues; discrimtntatory ciﬁscount poticy of the GP and the aiieged bundhhg at amber tubes, which account first 3C3-=35% cf the entire market of glass ampouies with the dear variants using the unique market power that GP enjays in the amber gegment.

5.35-.A$ regards ciiscaunt paiicy cf the GP, 06 has ¥'}£)?.'E€§ that ths {}P"'gf'ants two types of discounts to the canverters, nameiy, target discount and functhianai discountﬁhere are various stabs of target discount, ranging from 2% to 12%, which are based on quantities purchased by the converters tram the DP, which is given cmly on purchase at N66 and NGA tubes and the purchase of Fieiax are reckcmed onty for the purpose of determining the stab. However; Schctt Kaisha, the W of the OP is given target discount on purchase of NGC and MBA as Wei! as on Fioiax tubes which no other converter is granted. Further, target ctiscaunt is given to the: converter cm a quarteriy basis on receiptof certificate at safes as specified by the GP and upon fuii payment of invczitces raised in the said qs.sarter.. Hczwever, the same is paid to the .:v on a monthﬁy basis.

5.36 As regards grant otfunctisnai discount and bonus to the converters, {)6 has suhmitted that they are subiect to fuifiiimem: of the certain mnditians viz;

that'the converters wiii promote __~j;§§h0tt tubing by purchas'ing the égreed . . . 4:?" .

quantsty' an the partxcuiar yeagigfiagj i§;1§:'.'_4§§:;\ the converters wﬂi mt use Gt"

\+:~'f;é°'h V" '~39 1 convert Chinese tubing and SM ,§s'0f§ mi?

E wt' :1- ! itiforyuatisn and proof in this regard.

end that the cenverters W311 rnaintaira "Fair Pricirzg" ref empeuies viaﬁs for Sehott tubéng.

5.37 QCS has else reported that from the year 2819, the OP has required the converters to Sign its Trade Mark Licence Agreement and Marketing Supper':

Agreement in order to get funt:tierse¥ discount. The Q? grants functienei discount at the rate at' x>:x%, however, the converters have stated that there are verietirgng __ir_1 the grant of functionai discounts. The Q? in its diseeunt.

statement has "furnished detaiis. which show that the JV has been granted discount ef xxx'% on NSC, xxx'?/é an MBA and xxx?/o on Fioiex Clear in 2898-09 and xxx% on NBC and NGA and on Fimax deer in 200§--10. The converters whe have signed the "FMLA of the GP riameiy Tube Giass, Kiass pack and USA have been given the disceunt at rate cf :<xx% en NGC and NGA and nil on Fioiax deer in 2008-69. in 200946), Tube (33355 has been granted :<xx?/6 discount an NGC 8: NGA and Kiasseack and USA have been given xxx% disceunt en NGC & NGA. They have net been given any disceurzt on Fiefax dear. A3? ether converters have been given discount ranging frem xxx% ':0 xxx% en NGC and NGA onﬁy in the years 2638-09 and 2D()B-3.0. N has 3259 been grantee xxx% bonus by Scrrett Germany for materiais sup;::s§iec§ frem eutside indie for the years ZZO£'38~09 and 2GO9--1U as per the ieng term suepiy contract with the JV.

\"i\\§*"e;;;eEied by the OP even in terms ef its (>9 deciared peiicy and it h sas>fe'ru'r\t price discrimination where the game cemmodity has n ciifféreegrt prices te different eustemers 5.38 Based upon arreiysis ef disceurrt strggctere, [RC5 has conciuded -that the-

despite idenricai cast. The unfair and discriminatory disceurit poiicy er the SP, according re DG, contravenes the provisions of Section 4(2) {'31) of the Act.

5.39 it has eisczs been stated that apart frem Schott Keisha rm ether converter has. been granted any disceurrt en purchase of Fioiax tubes. Further, oniy Schett Keisha has been granted discount an procurement 03' Fioiax tubes from Schett GmbH, Germany. THE conduct of the dominant enterprise, ie. the OP, contravenes the :.;:;rrovisions er" Sectien 4(2) (23) cm' the Act. Whereas aii converters were given target disceunt en querteriy basis and the functional harms on yeariy basis, Schotr Keisha was given bath the target disceunt and the functionai discount on 3 mcnthiy basis. Thus, appiying ciissimiiar condition and price «on similar transact'iorrs,ri1e OP has abused its dominant positien and has contravened the provisirms of Section 4(2) (3) of the Act.

5.40 .«'~\ccordi:ng in EEG, the discount parity er the OP ceupieci with its Saie Purchase Agreement with converters, Se as to account fer neariy aii their recruirements of glass tubes from the GP, is aimed at fereciosure of competition in the reievarrt market and is a per se abuse in terms of sectien 4 of the Act. The poiicy oi functioriai bonus is aiso 'Eoya£r:y/fideiity inducing' which forecioses the market far its cempetitors frem the demand perspective.

The two ciisceunt peiieies resuit in a kind :3'? tie--ir: saie which forecioses the.

market for the irrternatienai manufacturers. That the discount pcrsiicy foiieweci by the C}Pi'A'i"sa:$'AAiir":deeci foreciosed the indiiar: market for its internatienai cempetircrrs is evident from '"§:i§§r§§§het neither imports ir: any significant * 'isi'é>l%:aken piece nor any inrernatienai "C e 3 manufacturers have errtereci the mdien market eeseite its huge petemtrei and grewth. Thus, the discount peiiey of the OP arse cerrrraverned the previsiens ef Seetien 4 (2) (C) of the Act as its practices have red in denier of market ecrgess.

5.43. {)6 has further submitted that the éiseounrt peiicy er the OP is arse intended to cause secondary ﬁne injury by causing dissimiiar finance! impectlinjuries to the converters other than its geint venture in the downstream market for :é§':rii§:><§ir3es, viais etc. As a resuit er' dissimilar cost there is no lever pieying field in the dewnstream market. Thus, the GP by virtue of its disceunt peiicy has abused its deminant position in the reievant market for 'neutre8 USP -1 berosiiicate giass tubes' to protect the downstream reiatecr market fer ampouiesfviais through its jeint venture, vioiartien of the previsiera of Section 4(2) (e) cf the Act.

5.42 {)6 has aise further investigated the terms of the-_ Trade Marks Licence Agreement (TMLA) in particuiar to assess its impact on the rzempetitive cenditions in thee relevant markets. The BS arse appraised the vaiidity and signiﬁcance of the 'mixing risk' which the OP pmvirﬁed as the rationaie fer taking recourse to the "FMLA. According to BSA, the terms ef TMLA have been uniiaterelﬁy determined by the OP, more particuiariy Schett AG, as it seeks to be an agreement between Schett AG am one part and the respective converters on the e'rhe_r. The terms of the TMLA. are gressiy unfair, one sided and Lheeviiy waded in fave conduct of the G? is sir.$€r*:t"f, green. Theunfair and oppressive converters {whe do hesiness with the OP on e principai to principei basis and are not its agent) te the status at a contract manufacturer of the GP.

5.43 Awarding to D8, though the TMLA does; net specificeiiy deher a converter from using tubes of ether manufacturers, but reee with the Seie Purchase Agi'eemeht 3:. the Marketing Suppert Agreement which are required he be signed by cenverters, it becomes very deer that the G? has severeiy restrained use at tubes other thah thet of Schatt. Further, in order to ciiscipiihe and enforce its wiii on the emweirters, the GP threugh its TMLA, has sought te acquire the iegai right to enter the premises of the cenvertersi and inspect the contsract eroducts and/or the manufacture thereof and/or to check. the 'compliance by the converters. in terms of the purperteci agreement, the decision as to whether the ccmverters have breached the terms of the TMLA (by mixing the tubes of Schott with others or using the trademark of Schett on products made out of non Schett tubes etc} is to be eniiateraiiy determined by the OP.

5.44 {)6 has reported that upen such uniietere! determination of breach cat' the terms of the TMLA by the 0?, the permitted agreement seeks to bind the converters inte paying such damages as sheli be eietermineci hy the GP, it has been stated by various converters that the DP sought to obtain a bent:

guarantee of Rupees Seventy tea: mehsu re the payment of damages.

Purchase Agreement 03' the OF/Schott AG, attracts the rniscrrief contained in Seaman 4(2) {.3} (E) 8:. (ii) cf the Act.

5.46 96 has aisrn examined the "FMLA fmm the prcrriﬁt 0:? View 0'? its aiieged forecimsure effect on the reievarrt market. in this regard, DG has rabserved that even though the Chinese products dn not compete with the products cf the GP, it nenetheiess Emits the scope of the OP from being the oniy source of suppiy cf *'rreu;tra'§ US? -i borc»sil'icars__g!a;__§s tubes' to the cmwerters. rr the ccmverters could be blacked from using Chinese imparts, then aﬁ segments 01' the market wouid have to perforce meet their requirements from OP aicme.

5.47 {)6 has further added that under the garb emf its mgitimate right to protect its trademark and to ensure that its brand is not misused by the cnnverters, the DP has raised the bogey ax' 'mixing risk' as menticmed eariier.

That its stated apprehension is a mere camoufiarge, intended to forerziose the market by preventing the converters from using 'neutral USP «-3 hurosiiicate grass tubes' frem other scsurces imparted fram China is evident frcm the fact that it has never come across even a singie incident cf rts SE) caiied 'mixing risk' tiﬁi date. Sn thig 'issue, [)6 aiso referreﬂ to the statement of President, Schott maﬁa in which it has been submitteé that the company has not cmrre across any instance in mdia when the informant or any other corwerter rzas been found is have imtiuigeri 'm rnixi¥r;:ﬁ_gg,_'.gf;Ss;§3§f;3t't tubes with tubes made by rather ' ' '< .~~ N:

marmfacturers, inciuding' th tisgﬁhiraese tubes, far manrwfacture :3? .~ N ' ' ' -'>3 K, . , 3' ampcmies, mats and ether Cc;{§t§is1e:

1% \' 5.48 {JG has eise brought Gut that the GP has introduced 3 practice er putting a dotted iine on its NGC tubing to differentiate its tubing from other suppliers.

Such rrzarking differentiated the __i_*iGC er Sichett frerr: those of ether manufacturers and eraabied it to identify if there was erry frauciuierrt 'mix up'. in View of the same, there was no ratioriaie fer the GP te impose its onerees, arse sided and unfair TMEA on its converters. DG, in titis regard, aise reiied uprm the statements at the converters who unequivocaiiy turneddewn the possibiiity at such "mix me' en the ground ti*iia1't'irx":':ase'a converter tried to mix, the same wouid be detected as different giass tubes havieg different chemise! composition, which wouici create prebiem at the pharme end at the time of sealing having regard to their different sertening;peints., 5.49 Having regard to the facts and statements gathered in course 0'? investigation, DG has submitted that there is neither any evidertce of 'mix up' rmr any scientific retioneie, technicai pessibiiity, ieasibiirty for mixiing of the giass tubes of the OP with that of Chinese imparts. Accordingly, {)5 has conciuded that its TMLA and other reieted agreements as aiso its ciiscourzt peiicy were tmiy intended ta foreclose, iimit and restrict market, deny market access to the converters eneriating in the reieverrt market. TMLA has the effect at iimiting er restricting the 'market: therefor' which attracts the mischief contained in Sections 4 (2) (ts) (i) at the Act. Further, the TMLA resuits in cieniei czf market access for the cerwerters epereting in the reievant market as they _ ":1 .V «f\--\\:\ re'etw;'e~rQent from any ether seurce which are prevented frerrz sourcing t attracts the misrchief centaingé ' \ 5 1 " .- \»' ""~«»......~..x»**""

5.50 DE aﬁse carried out Erwestigetierz in order to examine the etﬁeged discriminatew practices of the GP and its impact an the eownstreem market of ampeuies. tn this regard, DE submitted that it was evident from the batence sheets at the several converters that the JV :2»? £3? has grewn much more than the ether converters operating in the downstream market. it me rked increase in the prefitabiiity of Keisha has aise been ebserved cempering the ere-Iv' and pest-JV perieds. in view of D6, sugh grewth couﬁd mat be attributed to any effieiency an the eart of the N as cﬁaimed by the GF*'atid the profits of Schott Keisha were a direct resuit of the favourebie terms granted to it by the ()9.

5.51 The faveuraeie treatment tn the iv was examined by the 536 by way of enafyzing the terms and cendiﬁcms of the Long term Tubing Suppiy Agreement which was entered into by Schott Rehrgiass, Gmbh, Schett Glass india and Keisha. §n accordance with the terms of the agreement, ¥t was observed by the 536, that the prices for suppiy ef tubes ta Schott Keisha remained static:

'between xxx and xxx, whiie the other converters were charged higher prices fer the tubes suppiieci by the OP during the same period. {)6 has submitted that in terms of the long Term Tubing Suppiy Agreement' the prices at which the tubes hat/e been suppiied to the JV by the GP has remained fixed fer xxx year (Le. up to xxx) at the Sextet of xxx prices. During this period the other converters have faced approximateiy xxx'?/5 rise in prices at the glass tubes-

frem the OF. The 'L«r:m,g Term Tubing;Supp§y Agreement' 315:: prevides that \\\'\-~ \ --

"_,...\ F \ ..«**'"

even' after xxx, the..Ajpercentage',gg{\§e% re"e'j- wsii epety tn» the JV oniy an prices _,,l 'y.' '.

prevaient on xxx whereas th the other converters en prices if :

ri prevalent on xxxr Thus the said agreement provides for differreritiai pricing for the N in eerpetuitv.

5.52 Further, ciause (3) in the agreement under the heeeiing of Eeiiveries, Payment Terms and Prices', as per the EEG, provided far 3 eentinuing discriminatory treatment to the ether converters of Schett tea the advantage of "

Schoti: Keisha since as per the ciause (3) of the agreement, the OP is under eontractuai ebiigation to make uninterrupted suppiies to its W. White Schett Keisha has been gettieg assureri, reguiar and timeiy suppiies of the required sizes at tubes the same have been denied to other converters. This resuited in 1053 of business for them an& eiso ted to a situation where they have remained uncertain about their suppiies and have had te carry huge irwfenteries. it was further brought to the notice oi the D8 by the other converters that the position of preference and priority of Schett Keisha was aise canvassed and premeted izeefore the pharmeceutieai companies by the GP.

5.53 96 aiso observed that Schott Giass has ferced other converters te suppiy tubes net beiew the prices charged by Schott Keisha. its N has sent emails to inferm a Converter regarding its prices for a particuiar pherme cempaey 3:: as to ensure that the said cenverter does not charge price iewer than its prices, and in effect, to withdraw from suppiying to the saici gpharma ceirnpany.

5.54 Aeeerding ta DE, the \ 3 A ~* at supplies to them wh néetw %e'§i';:r':§3'\\indiertei<e jab werk for e eherma _ 5 NEG iapan. That the threat at . M, 's jx stoppage of surppiies has been res! is evident from the fact that the converters were forced the withrtrew in the matter which shows that the OP has abused its pesition te favor its JV» Schett Keisha.

$.55 Based upon investigation carried cut by him, D6 has conciudesi that the (3? has grossiy abuses? its dominant pesitiorr in the upstream retevant market which has ied tan» a situation where the iexrei at competition in the downstream rrsarket has been disterteci to werk in the fever of its taint Venture. _ 5.56 According to DS, the {JP has taken steps to eiiocate the varieus pherma companies to the respective ctmverters and to fix and cryordinate the prices whic:h a converter muld charge 50 as to heip its rv grow much more than the other cemrerters without any extra effort er efficirersey on the part of the iv. The said set on the part at the 0?, according to D6, attracts the provision of Section 4 (2) (e) at the Act. Since the practices of the GP in favour of the JV has also resuited in iimitirrg and restricting the market for the converters ane has Eeci te denier of market access to them, the same aiso attracts the provision er Sectiers 4 (2) (tr) 8; (C) of the Act.

5.5? B6 has eiso submitted that the terms at the JV agreement are inconsistent with the provisions at the Competition Act 2002. The Q? has stated that §t has given the faveurebie terms to its 3V Schett Keisha on account at the agreements it has entered into whiée fermaiizing the iv. The favourable terms given by the OP', which isa derninarrt enterprise in the upstream market, to its verticaihr integrated JV Cemgserry, eperattrzg in the dewnstream rnarket, ccmtravenes severe? previsiepjgsgsifth = 'E->i \ s has stated that sectien 50 it rigs C ;; trtregn hat states as under:

'The prcsvfsiens of this Act shelf have effect notwithstanding anything incensistent therewith contained in any ether Iawfor the time being in force.' 5.58 According to D6, in View of the above, even it these agreements are enferceebte inter se between the contracting 'parties in terms at the irrdian Contract Act, they are voidebie in terms of the Competitien Act 2002 to the extent they are incensistent with it.

5.59 es regards aitegatioes by the interment that the GP ievetreges" its menetmiy in the ember segment to ensure tun line enfercement of its products on the converters, EEG has brought out that the Q? has itseit stated that its market share in the NGA is 93% and in Fiolax Amber is 87%. Therefore, in terms of its market share in these preduct segments it is evident that it has the power to ¥everage safe at ember tubes being contingent upcm sate cf clear tubes. The statements at the converters that the OP ieverages such pewer in the amber segment to enforce sate of deer tubes finds force when the same is viewed along with the TMLA and dismunt poiicy of the OP which are intended to achieve fut} tine entercement.

5.50 Accerding to D6, the OP deaﬁs with the converters on a princtpai to principai basis. As such, the converters are independent to make their choice as t0 the source frem which they weuid my amber tubes and tram whom they wauld buy ciear tubes. The sate and purchase of deer tubes and amber tubes are disttnrctly different and by theirrzature er usage have rte cennecttcm with "m... .

each ether. Thus, in ',;:e;?t?i1erket pcswer of the OP, its TMLA and .\" "'\ ' 2 "V .vIf;

discount peiicy, and tﬁe eta: ts 'eff-we converters it is evident that the UP W if 52"":

:3 "'$',§ 'fa?

\ is has been making the sale at ember tubes contingent upen the converters buying the ciear tubes fmm it, which attracte the mtschief centained in Sectten 4 (2) id) at the Act.

5.61 As regards aiiegation at deniai of market access 120 the interment, {)6 teak note of the response of the GP that the interment previousiy attempted ta intentienaiiy infringe Schetﬂs trademarks and frauduientiy pass beresiiicate seas tabastmerxefeeteteettttéttitetttetietstieeiafiheti9?thettetreeeeeeiiatiéeat aaaaaaaaaaaa TT T of an erder fer printing fake labeis of 'NBC SCHOTT' and 'Made in india by Schott Giass india Pvt. Ltd;', under the signature of Birecter, Kapeer Giass. in View of this, {JP blacklisted the informant and decided not to enter into any suppiy arrangements with it. However, the informant centested the stand taken by the O? and stated that Schott indie refused ta deal with it vide its ietter dated O5.04,2DU1, whereas the incident of aiieged attempt of infringement of Sc:'hett's refusai to deei with the informant and the aiieged incident took piece at a Eater date.

5.52 {)6 has noted that the informant furthet expiaineci its conduct stating that the taibeis of Schett indie were afiixeci on the ccmsignmeni: of 'Sc:hott indie tubee', which it had obtained {mm another ampeuie maker because of Scimtt indies refuse! to suppiy to it. it was stated by the infermant that es some at their customers had stabiiizied their formuiatiens with Schott tubes, they required ampeuies made cut of Sctmtt tubes oniy. on accetmt of this,' they were forced it: procure ether ampeuie makers, to whom .3.' 5 -\ ' .\ W eta Schott indie was suppiyin to retain its customers 3 at however decided ta suppéy Schott tubes to the informant on ' no names' basis and after removing the Eaheis in crder ta aveid getting hcnticed by Schctt.

5.63 Having regard ta the expianation furnished by the informant as above, SQ has ehserved that it is evident that the informant has induigeé in unauthorized usage ef the trademark of the GP. However, the cuipahiiity he? the infermant regarding suche unauthorized usage 93' trademark ef the GP has to he viewecf in the heckgreuhd of the facts of the case that such usage was only in respect of the preducts Q'? the OP', which far reasens best known to GP was not being suppiied to the Informant.

5.64 D6 hes submitted that it is significant to note that the OP has stated that it has strong re-ascms to heheve that Kapoor (31355 has attempted to affix labeis stating' 'NGC SCHQTT' and 'Made in india by Schott Giass india Pvt. Ltd.' on its own products but has not given any evidence in this regard that the informant was trying to pegs eff its awn products as those of Schott. Thus, the issue herein for the OP was not of frauduientiy passing off of the pmducts of the others as those of Schott hut essehtjaiiy of unauthorized usage of its iabeis. There are Eegai remedies evaiiahie fer unauthorized usage of iahels and 'trademarks and if the 0? has net fcaken iegai receurse for such infringement for such a hang period it cannot be ahtxwed the refuse stspeiy cf heutrai borashihcete USP Type E giass tubes' to the informant , mere so when the OP is exited the said upstreerhh *4' '7» 5.65 in view of the afciresaid, accorciing to 96, its expianation mat to deai with the infcirmani: on the graund that a party cannot be forced to suppiy its products to a person who has by previous actions Shawn disregard for the intaiiectuai praperty rights of such party snd, has in fact attempted to defraud through: misrepresentation, ather piayers in the vertical suppiy chain, is not sustainable.

5.66 According to D6, size" 0? 'continues to deny the pin-ducts manufactured by it to the informant Vii;§3iChv shows that the OP is inciuiging in the abusive conduct of its position 0f daminance in the reievant market which attracts the mischief as iccntained in Section 4(2) (rs) & {e} of the Act. Despite its refusai to deai, the infarmanitihas stiii managed to somehow csperaice in the downstream market for ampouies 8: viais. Howevef, its capacity to operate in the said market is severeiy iimited on iaccuunt of OP's refusai to suppiy the "tubes to it. Schott tubes have no aiternative far the leading pharma mmpanies, and far high end therapeutic market segment 8; expart markets and tiierefme refus;-ii to make suppiies to the informant, ammmts to deniai of market access and an attempt to protect its iv in the downstream market. Tbs OP, being the dominant enterprise in the upstream market has a responsibiiity tn ensure ievei piayingfieid to aii the parties operating in the downstream market.

5.67 D63, having investigated the case, has aisa formed the View that Schott AG was fuiiy respizmsiisie far the abusive ccmduct (if its whoiiy owned subsidiary Schoitti Giassiindia Pvt. Ltdzﬁhe (JP) which i'i§?:i an apprec'ia1bie effect:

_.o**""'r"~,~\~-, ':\i an competition in the upstrea: ,<g:i43ci:'~ ;. , \'~:"\'.-QC' \ iii if . '\ \_.J since the Qperations sf the parent company to further its interests in the reieviaant market. in this regard, BS has aiso reniiied ugen the statement. :3? President, Schott indiavin which irrter~aiia, it has been stated, "we work cioseiy in ccmsuitetieri with my bass, vrhe is the head ef Tubing Division which is under Sehott Pharmaeeuticei Systems and ether ceiieegues who are at cerparate ef Pharma Tuicrirrg business at Germany. Major decisions concerning pricing, discounts, rrieiting process, prodmztien, quaiity, brarrciing ef our products, investments in the ceuntry, empioyment of runctionai heéiis oi5riif*ferent departments. ere taken in jairrt eorzsuitation with the Corperate Headquarter of Tubing Qivisien of Germany... On :3 forms! basis there is a morrthiy telephonic conference caii to review perfarmance vis~a-«via the monthly performance objectives f goais and balance score card objectives."

5.68 To substantiate his aforesaid arguments, {JG has aiso submitted that on perusai of the copy (If the TMLA, it was found that the said agreement is between Schott AG, Germany and the respective converters. The price circulars as aise the disceunt offers are issued by Schcsizt AG, Germany. Further, according to D6, the response er Shri iviehan ioshi, the President of the OP is aisn ireievant in 'this centexr which reads as rmcier:

I ........ ..First'iy, thaugh i have signed the long term suppiy agreement of the JV with Srzhott Keisha, aii decisions inciuding pricing :3'? the suppiies rr3>g§\signetiire and the necessary :>P'\ 5.69 in View of the above, {EC-3 has conciuoiedi that it is estaiziiisiied that Sitiioit AG is fuiiy responsibie for the abusive conduct of its whoiiy owned subsidiary Schott Giass imziia Pvt. Ltd. (GP) which has an appreciabie effect on V competition in the upstream & downstream reievant mari<ei:.s in inciia. The BF, the JV and the parent company Schott AS form part of the same enterprise in terms of ciausei (ii) of Section 2 8: expianaiions {3} 8: (iii) to section 5 of the Act.

As such the conduct of the Schott AG attracts the provisions of Section 32 of the Act and the parent company is ﬁiiiy fiesponsibio for this conduct of the {}PV_, which has abused its dominant position in violation of Section 4 (1) of the Act.

6. Submissions of Parties to the finéings of Q5 5.1 in View of the conficientiaiity ciaimed by the parties on specific information and data, DG submitted his report in both confioentiai and non-coniidentiai; versions. The report of investigation was sent to the parties seeking their response on the same and i'uri.i'ier process of inquiry was undertaken in accordance with the provisions of the Act and relevant" regulations thereunder.

submissions of the Opposite Party 6.2 The OP submitted its written replies to the report of 36 on 10.09.2011. in additions it aiso made orai submissions during inquiry proceedings before the Commission. A summary of orai siiismission was aiso submitted. in addition, 3 refgiy in response to the que_stion_na_ire was aiso submitted wide Better dated 84.11.2011. This O?' has the report of 86 is hasty and ~ )'x-__' 3%' disposition against Schoit. in fact is bgsoé on statements made by certain £ Cnnverters {withnut any crass examitnatinn) who are cteariv confiictad as they are diretctiy interested in an adverse ruling against Schcstt Giass tncita. The submissi0ns.0ft¥1etQP an various issues , in brief, are as under:

6.3 The GP has agreeci betnre {)6 that the retievatnt pmnmst market in this case wouid be 'neutra¥ USP»: notosiiicate giass tubes'. However, it has cnntentted that the reievant geographic market is not iiimited to india given that the bnmstlicate giass tubes are procured by Cnnyetters in tndia from other Asian countries, particularly from China. Further, the pharma companies incated in Endia have the ability tn impart Bnnasiiicata Giass Tubes frnrn foreign manufacturers for processing by Indian converters.

5.4 The 07? has alsn cantended that the reievant market is cnmpetitive given the fact that imparts at the borosiiicate giass tubes into inertia are increasing and its own market share is dedining. The D6 Report aiso shnws a decrease in its market share and an increase in imports {exduding imports fmm Schott Germany}. Further, market share of Triveni Giass Limiter}, 3 cnmnettitor of the UP, increased from 32% in 2068 tn 14% in 2909. Even the informant in the infcstmation has stated that the market share of Trﬁveni Glass had increased from 12% in 2308 ta 3.4% in 2609. in 2910, Ttiveni 933355 said its tube glass business to a iapanese company, Nipm, the tatai sates at which were wcsrth Rs. xxx {Store for the year ending March 2011. Niprn has aiso recentty acquired majority at thares of Tube Cotntair3»t=;t§gLi{n_ited, an indian converter. The entry I D 'ﬁihsrt \\='-: - -

cf Nspto, both m grass ma Q13-§;i%;,*E"£°i;l?=t¥'-3! gtnent as weii as zn conversion V. Q31. ".:j\ \

-:3 'i -

nngnt in both the upstream and «s 9*':

.;_- § business refiects a comp :g(ti§-e Q . Q dQWﬁS'i:i°Eam markets.

$3 The findings of D8 regarding rriajer internationai manufacturers carving different geographical domains for tnernseives is baseiess, without any evidence and unwarranted.

6.8 As {)6 has netted in his report, the exit at the erstwhiie mrnpeititois of the GP from the reievant market couid be on account at their inabiiity ta manage their own business for a variety 0'? iriternai reasons iike their 'inabiii'ty tn maintain or produce ejuaiiity products, inabiiity ta manage iinances er cash flows etc. it couid aisc be on account of their inability to match the product superiority of the OP, its superior marketing strategies, the preference cf the consumers for its prcadurzts. Given the said statement, there remains no doubt that whiie there is a state of iireaithy cempetition in the reievant market; it is because of mismanagement by some manufacturers that they exited from the reievant market. The 36 after confirming in his report that the exit rzri' certain domestic competitors was not an account of any aiieged practices of the OP --

but could be because of inaniiity to manage business, produce quaiity products, and manage finances er inabiiity to match its quaiity and marketing standards, cannet aisn cenciucie that domestir: snppiiers have had ta shut their tubing izrusiness consequent upon its entry.

6,? According to GP, it is net correct an partpi' D6 in say that requirement of stabiiity studies, change from a berosiﬁcate glass tubes manufacturer to another was feasibie.

8.8 The (J? has submitted that {JG has reported that everieus seurces of beresiiieete giass tubes de not impese any signiﬁcant cemeetitive pressure on it Hewever, if this were the case, there wouid have been my requirement by it to offer any discounts. Given the fact that it offers disceunts an its beresiiicete glass tubes is deer evidence of cempetition in the reieveni: market. The fact that it has te offer discounts in the first piece to its customers is indicative that it cannot afford in be ebiivious to competitive.

6.9 Awarding ta OP, discrimination as a Eegai cencept is Lmequa¥ treatment of equaﬁiy placed parties. Thus, different disccmnts when given to different persons who are unequal cannot, per se, be treated as discriminetcufy or unfair. Schott Keisha has been by far 31:3 iargest customer. No ether cmwerter can match the veieme of erciers that Schott Keisha pieces on Schott Giess indie. Schott Keisha was the ieader in the Ampouie industry even before the jeint venture with Schott was put in piece.

6.3.0 Any aﬁegation suggesting diereetiy or indirectiy that Schett Keisha garnered significant market share eniy because ef the terms at which it 'is suppiiee tubes. by t§1e.:;€3P in india is 'faise. The terms of suppﬁy to Schett Keisha 't§;§fe\rge5t custcsmer independent ef the off'e;e'3e by it to Schott Keisha, price at 3 C3.

which Schott Keisha supplies Amnouies to pnerma iznrnpanies is at cczmpetitive arm's iengtn price. As a matter of fact, Ampouies suppiied by Scho-it Keisha are not priced iower than Ampcauies supplied by other converters. Hence, the terms offered to Schott Keisha are not used to cause any apgaresiabie adverse effect on competition in india.

$.11 The Q? has aiso denied at! such aiiegations that Schott Keisha has been assnred of reguiar and timeiy suppiies, whiie it has deiiberateiy' stopped or cieiayeci suppiies to either converters so as to provide Scnott Keisha with a competitive advantage. Whenever a shortage in supply of tiorosilicete glass tubes has occurred, it immediateiy provided the same from manufacturing sites in other countries. it has 3530 cieniied that its officials have canvassed Schoti: Keisha in front at' the pharma cnmpanies. in fact no pharma company in its statement tn the D6 has stated that the GP canvassed for Schott Keisha.

6.12 Contrary to the conciusions reached by the D6 in his Report, it is highiy incentivized to suppiy borosiiicate tubes to aii converters and keep an such cnnverters satisfied. First, the priociuction tanks required far manufacturing ianrosiiicate giass tubes nmst produce certain minimum quantities in order to protect these major investments from damage and to justify the energy costs required to run such production tanks. Then, 3055 of business from any ovtheir cnnverter couici pntentiaiiy affect its capabiiity to itirofitaizsiy run a predustion 'tank. The converters have against it since if: cannci:

\ . .fK:'§'\'\ .

afford in iose the business a ggfs ;

"\ $4-ii'e?'.'\iits saies teams are incentivized 3*' § te se§§ mere b0z'osi!~ie:ate giass tubes to cenverters (other than Schott Keisha} since they receive incentives en saies made to such cenverters.

8.13 it is incorrect on part of D6 to say that it hoids the ether; iedustry pieyers 9 at ransom in terms of prices and suppiies since EEG himseif has aiso cenducied that ks quaiity and re¥ieh§§ity are unsurpassame amﬁ cites that as the main reascm for preference stewards its products. Schett Giass indie can never hold the;.ph_er.me companies {which are the industry giants) to rehsom..§n.tesms in' prices or sumaﬁes.

6.14 The {BF has also denied any aiiegations that pursuant to a meeting scalieci by it, converters were required te supp¥y Ampouies te pharma companies at prices which are not bemw the prices charged by Schott Keisha. According to 0P, the custemers 0f the cenveerters are the pherma cempanies over whom they have ma ccmtroi.

6.15 The 013' has also submitted that the aﬁegation that its disceunt peiicy ensures that the prices 9%' its borosiiicete giass tubes for converters remain Sewer than the cast of imperteci berosiﬁcate giass tubes manufactured by imternetionei mmpetitors, thereby, foreciesing the indian market for internationzﬁ competémrs is miscenceived, incensistent with and contrary to either statements in the BG's report. The report of DE itself has mentioned that due to its superior producteguaiity and marketing strategies, the other '\\.

;M.Qreever, existence of intemetienali siippiying high quaiity preducte at tow prices in the form an' discounts is pro» ccsmgietitive as being beneticiai for consumers and cannot be caiied ariti--

::empetitive..

6.3.6 Accorciirzg to GP, the findings of 3% that TMLA has restrained the use at bomsiiieate tubes of ether manufacturers are inccrrect. it has stated that its concerns raiseﬂ on pas5ing eff and mixing are genuine as eppeseci to E)i3's finciings: iMi.A helps it to mitigate the risk at converters mixing Amiaeiiiee I made from berosiiicate giass tubes supplied by it with those made from inferior quaiity boresiiicarte giass tubes imparted from China. The converters accguire the right ':0 dispiay Schett loge and brand as part of materiais they use to market and suppiy Ampouies to pharma companies. Under the TMLA Scitett acquires the right ta irisrziect the premises of converter to ensure that its brands are not being abused. The DP has further stated that it aisa executes a Marketing Support Agreement pursuant ta which the converters agree to promote it and its erociiicts and services to enhance their awn business with its active cc-eperatitsm.

$.17 Schett aise benefits threugh the erametion of its brand by the converters in their marketing and packegirig materiais. it agrees to pay the cenverters certain sums on at querteriy basis far that purpese. The discount and payment matte to cerwerters who have executeg the TMLA and the it/ierketieng .S1;ppot"t Agreement is the fumztioriai discggigteeffered by it to such ctmverters. There is " discounts and simiiar fimctienai €'if:_if.3'..\\I:'}3i"i£) have executed the TMLA and we 33 '\ ».\ ,3 the Marketing Support Agreement. Fuhctionai discauni: is a method by which it can signiiicantiy mitigate the cancems it has for Ampauies made from iniierior quaiity bargasiiicate glass tubes being passed off as made from its barosiiicam giass tubes. White it makes an extra payment at ccmsicieration to those converters which enter intci the marketing support agrée.mem: to c:o--~pmmote its brand and products, reguiar vsiume discount and supgiiies are avaiiahie to aii converters, even if they may choose not tr; enter 'into the Martketing Suppart Agreemieht. "

6.18 The GP has further brought nut that the practice of incorparating a dotted iine was an effort made by it to eliminate the passing off/mixing risk. Despite the dotted iine on its NGC hczmsiiicate giass tubes, many pharma companies, particuiariy smaiier ones are mt aware of this identificatian mark. it also had a camparabie mark on its Fiaiax ioranci of bemsiiicate giass tubes. Hewever, pharma companies did not appreciate the resuitant markings an the Ampczuies since these markings caused piohiems with their automated Qptimai defect controi and resulted in waste for them. Therefore it had to discontinue such markings.

6.19 The (DP has aiso denied the aiiegation of ieveraging the amber segment to make sate of NGA contingent upon purchase at NGC. The OP has stated that this_,was...a izrnmpieteiy faise aiiegation based ion statements of ji.i'3t \.\I. .». .\'_\\\ ...... ,, N sdgyer has been found to substantiate Converters. No written evi§§§t .

- 3 a~'-*».»'.~ this aiiegaticn. Further afgteréhirg, I t..

C' ' ' , "u ,4-' ll) ' v. .

'~ '. ' -\ /1;

__ k \ , ._ '_ '_v_. ~ .w' . -': 9 .-' . . ' distinguishabﬁe and preferred on account :31' its high quaiéty and reiiannity, there is no rea-sen why it wouki even induige §n such 3 practice.

6.20 As regards deniai of suppiies to the informant, the DP has submitted that given the previews attempts to intentienaiiy infringe Scﬁmtfs trademarks and in fraxudniently pass eff bomsilicate giass tubes manufactured by the infarmant as hnrnsiﬁicate giass tubes manufactured by Scnott mass india, it is reiucta nt in 'suppty its"'nnrn§§Eicate giass tubes to the informant. A party cannot be forceé to suppiy its products tn a person who has by previous actions shown disregard for the inrteilectuai property rights of such party and has in fact attempted in defraud through misrenresentation, the otner piayers in the verticaﬁ suppiy chain.

6.21 Newhere is there a deniai in the report of D6 that the informant cnmmﬁtted a fraud and nothing can justify a fraud. The fact that it did nnt take iegai action against the informant does net change this. it wouiﬁ be very unfair to force it to deai with informant under any circumstances. The infarmant has shown its hostiiity towards it very publish; ané blatantiy. Further, cieariy there are other manufacturers in the market apart from it and therefore its refused to suppiy bcrrosiiicate giass tubes to informant does not affect its abiiity to manufacture Ampauies. Further, {)8 times not seem in have investigated in.tz:2,.th.e manner En which the informant conducts its Amno.uies...\_.., business and what its standing'; " " the rnarket qua quaﬁty, refiabiiity anti

-' -\ credibiiity as these are air: I 6.22 The GP has brought nut that whiﬁe D13 in his repert has ccmciuéed that Schett Keisha is verticeiiy integrated with Scﬁett gmup, he has net been able to ehew any adverse imeiicetion on cernpeizitron in the upstream and downstream markets as e resuit ef the same. Schott Giess indie continues to compete with its cempetitors in the upetreem market to get orders from converters. it therefore effers discounts to them to procure erders from them. The terms and conditions effereci by it to Schortt E(ais§':e_ are not used it:

undercut other cerwerters "err th'e prices er ampeufes er in any other way adverseiy affect the dowhstreem market of ampouies. Further the mmpetitien regime in European Union recognizes that benefits evaiﬁabﬁe between verticeiiy integrated enterprises are not to be seen as amtecempetitive Lmiess such benefits are in fact being used to cause adverse effects cm competition, which is ciea my not the presem: case.

6.23 According to the OP, based upon the fact that TMLA is between Schott AG and r'espective converters, {)6 has imzorrectiy conciuded that Schott AG could be respensibie fer the aiieged abuse 0'? demirzence by Schatt Giess indie.

Since the Schott brand is erwned by Schett AG, in iege! terms, the right rte dispiayrhe same can only be granted by Schett AG, Heme Schott AG is the party /' to the TMLA. Given that Schott Gfass India is a whoiﬁy owned subsidiary of Schott GmbH, which, in turn, is 3 whom: owned subsitﬁiary 0? Schott AG; it is mature! fer Schott indie ta discuse its strategies and peiicies with Schett Gmhﬁ.

indie wouﬁci share its exp $3 3 re; Schott Giase indie. That it is a game technicaiﬁty that Sc(wé>$§ ACE':

'.> p§§:ty";tq_ the TMLQ because Schott AG M' ' \ « \_ Q .1?!'/'egg' L3 *'s' 3 gr "*' it ' ,~"Vv 7}' :\..

,. N.\\' ;;$\§_,

-»'\'\',-"_,v"' ~,.':{35\Q.-"K (" 'I 93:'. '_.-4'.

tecimicaiiy owns the brands. Te use this tecimirceiity and ignare the overeii arrangement and scheme is a gross error and shouid be disregarded.

' Submissiens by the interment 5'. The informant eiso made written submissicms detect 30.08.2011 and 92.09.2011 on the finciirigs cf DE. A summary cf orai submissions made an 33.09.2011 was aise submitted an 10.10.2011. ihe infermenit aiso submitted some aciditioriai meteriais wide its ~iette'r' dateé 27.10.2811. The submissidns made by the interment, in brief are as under:

7.1 The inibrmant has enderseci the findings. of {)6 on relevant market, dominance and abuse of poeitiorr inf demiriance by the 0?' through its various practices. However, on the issue of investigation (if aiiegations of unfair price, the infermarrt has observed that the US has ccinfineci his anaiysis of 'unfair prices' oniy tn the examiriation of the manufacturing costs sf Schott indie to reach a conciusion that the increase in its prices was related ti) the increase in its rrianufacr:utirig cost and therefare the OP cannot be said tn have reserteci to the practice {if recouping iosses; incurred eariier on account of predatory pricing. The BS has erred by confusing "preciatary price" with "unfair price"

whiie the fatter is not cenfided it) the former and in doing so, has rendered the ianguage used in Section £i(2) {a} (ii) totaiiy recziumiarit. The informant has submitted that it was incumbent on the £36 to first determine whether the mergin earned by SF (Le. difference between preduciion cost anti price) was ,--~:'(-., iaitiieiéiﬁietiire far the {E6 ta enquire further and 4:€:'T:\ W check whether the excessive. Thereafter, it 3 Q _.

.--..,\ ':s§\fi2\t;ged by the Schett Group had any § :.'« § .

reescsnebieness. The in§:Ei':'iii3en z"

rd§i7ig§,: requested the Commission ta Set aside the findings at the £36 on this issue end re' find out separately that the Schett Group had in fact iirxduiged in charging excessive prices.

37.2 The informant has further brought out that white deeiing with the issue ef predatory hiring , B6 has faiied to appreciate the intention hehind such hiring. The informant was singieci out far such treatment because it was engaged in the business of making both berosiiicate glass tubes as weiii as giass ampeuies and mute pose significant cempetitierr iioﬂthe Schett i3re:.sp's operation in india. Cirice Schett Greup's bid ta acquire the informant failed, it began to hire its key workers. it is not correct that the empioyees eppreacheci the Schott Group since they were not being peie by the informant. Such predetery hiring harms the aiaiiity at the informant to produce goods and is prohibiteci uncier Section 4(2) (hi (i). Beth Schett Greup and Keisha have the requisite in house expertise and skiiis te makeempeuies and vieis and the act of Schott indie or peaching errqoieyees of the informant eniy, emeunts te predatery hiring.

7.3 Expreseing its agreement on the findings 0'? the 0113 cm the other issues iike ciiscrimiriatery iziisceurrts being offered by the GP, hunciiiiig of amber giass tuhee with cieer tubes, ieveragirig ef eiemiriaece in the tubes market to protect the dewnstrearn arnpouies cerwersien market, reiusai to idea! with the informant and the cuipehiiity ef Schett AG in the matter, the interment urged that the highest ievei of eenaity ieyiahie under the Act be imposed an Schett e:§i'ti.en and resuii:ing massive iesseste the .

T er' informant and other Cciﬁif"

3. issuee for Determination

8.1 The Commission has carefuiiy gone through the Snfmmation, investigation report 9%' D6 and repﬁes of both the informant ancéthe Ggnposite Party cm the findings ef DG. Having corasideiedé am the materieis evaiﬁabie on retard, the Commission observes that the issues fer determination in the case are as unden'

3) Cm the basis of facts imroived in the case,'-w¥'1at'§s the relevant market in the case?

b} is Clpposite Party having a position of dominance in the relevant market in terms ef provisions of section 4 01° the Act?

c) if answer to b) 35 in affirmative, is there any case ca'? abuse on the ear': of the GP in terms of the faitowing acts and conduct, which , if estabiished, may be said: to be vimative of varieus prmzisicms of sectien 4(2) of the Act;

2') Whether the OP has indulged 'in the act of predatery pricing in vieiatien of provisiens of semen «t1(2)(e){ii} cf the Act?

ii) Whether the (3? hag impcased unfair and discriminatery conditions or price in the sale 0? neutral USP~--§ boresiiicate g§ass tubes through its discount poiicies, Trade Mark Licence Agreement, Merkeetingv__'__S>uippert_ Agreement and Saie .--:*?"{°"::'e P:urchase;4§g<:'ee 3° ,, sectien {ljfiaﬁ vi

vii) Whether the aforesaid peiicies of GP are exeiusionary and iimii: and restrict the market in vieiatien of provisions of section 4(2)(b}{i) and are aise causing denial ef market access in items 9*? section «ii-{2){c) of the Act?

Whether the O'? has ievereged its position of deminance in reievant upgtreain market (if neutrei USP-=1 giass tubes tov enter inte or pretest the reiévant downstream market 0'? 'Ceniteiners, -i.e., ampeuies, viais, cie'i'i'c:.-xi cartridges anti syringes made out of 'neutrai USP~i borosiiicate giass tubes'? Whether the OP has engaged in the practice czf making the saie of amber tubes contingent upon converters buying ciear 'tubes frem it in contraventicm czf provisions cf sectien «--'i.(2)(ci) anti any ether provisions of section 4.cri the Act?

Whether the OP has refused to cieai with informant as has been eiieged, denying market access to it and if yes, has the GP cszmtravened the provisions of sectiem 5. (2) (es) cf the Act?

Whether the OP has induiged in the; practice ef preﬁatery hiring cf empieyees of the iwformani: and if yes, can the practice he eaiieci inconsistent with the requirements under secticm -4'i(2}(e) of the Act 2' Further, can this act be said to be vieiaizive of pmvisiens of Section 4 {2)(i:i}(i) since it is §.. ﬂetermirsetien issue 1 9.1 02*: the basis ea? facts Envehzeﬁ M the case, what is the reﬁevant market in the case?

Reievam; Preduct Market H.i3;>,§..1 The Commission mites that D6 in his Report has conciudegi that 'neutra§ USP4 berosﬁieate g§ass tube' is the reievant predutt market as the same is not substitutable either from demand or suppﬁy side 'because 01' unique properﬁes of the product viz; Seas: reactiene gradient with chem'ica§s and law aikali re¥ease. Néutraﬁ USN boresiiicate giass tuéaes and the ampoutes, viais and other centainers made thereof ccsnferm to the various pharmacopeia standards including that cf the US Pharmacopeia which is themes: widens accepted in terms 01' the standards and stringency of the test that it prescribes. Hewever, DE hag aise brought out that based an the USP Type! test vaiues $2 thermaﬁ ceefﬁcient of expansicm as aisc the seiner 0'? the tubes there are five sub~categ::2ries cf the reievvant preduct;

{1} Fioﬁax Ciear equivaiem: -- Le. Neutral Giass Gear tubes in the range of expanskms bekzxw 5.523 ( 'which is mmmenly known in the trade circie as 60 expansion;

(2) Fia¥3:x Amber ec§L;.''°' \ 'K 1 \ra¥{§'§a55 Am beftubes in the range sf expansions be¥ox§u§&§§i)(w 1 "'~ 35 CE§mi§i0ﬁiy imewn in the trade circie as w\ V7 .2.' -a\\- ~ A' .

60 expansion);

(3) Neutra? Gtass Clear tubes (NSC) in the range at expansitnrzs between 6.0 and 5.5 which is cemmoniy known in the trade circie as 50 ~ 65 expansions};

(4) Neutrai Glass; Amber tubes {Matt} in the range of expansions between 6.0 ta 6.13 (which ts cczmnmniy krrewn in ttre trade circie as 60 -

65 expansiorrs);' «{5} Neutrei Giasg Ctear tubes having expansion higher' than"N€3€'*& NGA but within the standards prescribed as USP~-'Type i.

31.2 According tr) D8, distinctions between the various sub categories of . 'neutra§ USP4 bomsilicate gtass tube' are of immense significance in arraiyzing 8; understanding the position of dominance of the DP in the reievant market.

9.1.3 {)6 has atso concmdect that whereas "nem:raf L£SP--i borosiiicate glass tube' is the retevarrt product for the upstream market, the reievant product for , the downstream market is ampouies, vials, deratai cartridges and ether Containers made from 'neutra§ USP-1 borosiiicate giass tubes'.

9.1.4 The Cemmission notes that the O? has agreed with the finctings of {)8 that the reievant product market would be the neutrai boresiitcate gtass tubes (te. giass tubes. meeting the UPS«-Type I standaVrris)_._,,_ itha$__.a.¥5e.._.be.enstated ........ .. that pharma companies oniy rrrescriiae the use at rteutrai bczrosiﬁicate giass ttrbes for the purpose of arnpeuﬁes in their purchase orclers tn the cemrerters. 9.1.5 The informant has aisca brou;get:r;t"§§§§§t'tZ§t.tzstt»\the DG"s zénariysis is technicatiy accurate and in accordance :9 ...r~ej3§; The informant has further ggbmmisssion to consider any 3:2.

brcsught cut that there is nt3'§"t'§;;3SO as ..

aiternate definition of the reievant product .market since the OP itseit does not diseute the deﬁnition adopted by the D63.

991.6 an e carefui consideration of facts at the case, findings of E8, the averments of the informant and the GP, the Cemrnission notes that it is necessary to appreciate the competitive interpiay between the various ceiour and quaiity variants at the products invoived in order to preciucie any possibility of rnisestimating the market power of the enterprise under inr;;>ui_ry.A 4_ in this riegirerrdgitne apparent distinctinn between the sub categories in terms of 'colour/share' and expansinn range' merits an appraisai at whether they can be reasonebiy viewed as sntzstitutes and as constituents of the broad reievant product market of 'neutrai USP-i bnrosiiicate giass tubes.

9.1.7 The Commission further observes that the distinction between the different quaiity variants at tubes stem from the variatisn in expansinn iirnits, aitreit within the range perrnissibie under USP Type i standards. The prices of these variants too are different. The question that is critical in concinciing suiostitutabiiity between these variants is whether they sufficientiy constrain prices of each other. in View of the price--sensit:iiity at the Indian mericet anti in absence of anything substantive made evaiiabie by {)6 or the parties that cnnciusiveiy ruies eut the cnmpetitive interaction between the different quality variants of the giass tubes under consideration, clear demarcation at distinct rnaritets fer each qiuayittyr--xreri~ent' at tubes appears impiausibie. The . ' . '. *\ Commission, therefore, fE?{,$}i) . "-"' ,\.

keep the ambit of the reievant Q4 ' precinct market in cencurr%gg;cLe7_Tj wit;

9.1.8 However, the Cemmissien aiso notes from the avaitahie facts that for storing Eight serzsitive formuiatioris, ccmtainers, i.e., ampouies, viais or cientai cartridges, _macie at amber tubes are used white for other ﬁghts rtorvsensitive formuietierts containers made from ciear/'white tubes serve the purpese. This makes it deer that the end use of amber tubes is distinctiy different from that at ciear tubes. A change in price of amber tubes fer a given cguaiity cannot presumabiy have any impact or: the demand of deer tubes of the same quaiity or vice versa. 'Fhereifore, the Commission holds that amber tubes and dear tubes cannot be concluded tic: be interchangeabie and inciusien at bath in the same relevant market appears unreascmabie.

9.1.9 Bearing in mind the non-substitutabiiity between the two coieur V3 riants of neutrai USP-I borosilicate gtass tubes as discussed above, the Commission is of the View that reievant product market in the current case must be categorized broediy into two upstream reievant product markets, nameiy a) Market for "'Neutrai Ciear USP-i Sorosiiicete Grass 'tubers' and b) Market for 'Neutrai Amber USP-i Borosiiicate Giass tubes'.

91.3.0 Accordingiy, the downstream reievant product mari<et(s) in the case wcxuid be a) Market for 'containers, i.e., arnpouies, viafs, dentai cartriciges and syringes made out at Neutrai Clear US$34 Borczsiiicate Giess Tubes' and *0) Market for 'conrtairsers, i.e., amprmies, viais, dental cartridges and syringes made eat at "Neutral Amber USP-E Beresiiicate Giass Ta.it:es'i. Reietrant Geegraphic ,,_ 4' 'J~\'.\>° 9.1.11 The Commission fniogées t § :a'<-

1 6' geogr'aphic market by the' it ...\ is not iirrziteci to india given that the horosiiicate giass tubes are procureczi by converters in india from other Asian countries, perticuiarh; from China. Further, the pharma companies iecated in india have the ahiiity to import herosiiicete glass tubes frern foreign manufacturers for processing by ineiian corwerizers.

9.1.12 The Commission also notes that the relevant geographic market as has been determined by V'rhe'"DG as indie, ihtereiia on the grounds that the conditions of competition for suppiy and demand of 'neutrei LiSP-i horosiiicate giass tube' are homogeneous in the whole of indie. Further; requirement of the reievant product by the downstream prayers are sourced primariiy from within the country; the imports from foreign manufacturers constituting a very insigniﬁcant portion of the suppiy for the indian market.' DE eiso considered that the demand of goods from the foreign entities are distinctiy different anci not homogeneous with respect to that of the domestic suppiier(s) an account of the fact that the foreign suppliers manufacture the rreuirai cieer USP---i horosiiicate tubes ohiy of different expansion range. Even their amber' variants are different and not preferred by the Indian buyers. Further, foreign manufacturers, other than the GP, do not have any manufacturing giant in india and are not in a position to ensure uninterrupted timeiy seppiy and require a much higher Seed time.

9.1.13 Yhe Commission observes that the above arguments of {M3, taken in conjunction with the market for the reievant products is characteristicaiiy diffe§reh:§'O marker in terms of demand $cor§"'eiq;hentiy the competitive comziitions, ' 'T' E s_c, u' re patterns, market str Véttiire 5 . __.\ _ 3 '»-~' 3*' '\.

(3 $3' supports a reasonable conclusion that the reievant geographic market for the reievant pmdects is indie. Mereover, in accordance with the erevisiens of exptanetien {3} to sectiem 4 er' the Act, the dominance of art enterprise, is required to be tested in re§event maricet in 'indie and therefore relevant geagraphtc market, if is determined by taking areas outside tndia, weuid net give a correct assessment at dumieartce of enterprises in question. Accerdingiy, the Commission hates the reievertt geographic market in the case as 'indie'.

Reievent Market 9.1.14 The Commission acccsrciingty cenctudes that the retevant upstream markets in the case are a) Market for 'Neutra¥ Ciear USN Burositicete Giass tubes in india' and b) Market for 'Neutrai Amber USP-E Bcrcsiticate Glass tubes in India'. The relevant dewnstrearn market accordingty would be 3) Market fer 'Containers, i.e., ampouies, tviats, dentai cartridges and syringes made cut of 'ftieutrati Clear USP-i Berosiiicate Glass Tubes' in India and tr) Market for 'Containers, §.e., empeutes, viats, dentai cartrieiges and syringes made out of Neutrat Amber USP--B Borosiiicete Glass Tubes' in india.

issue 2 3.2 ts Qppestte Party having a pesitien ef deminarsce in the reievant market tn terms ef provisions ef seetien 4 cf the Act?

9.2.3.. The Commission t:t;§etv.es\\that tiomirzance §'Bé3:=.5r been defined 53*:

- .4 5'.» ' '~.

.23:-\ P' erxpianation {a} to sectiestjge t 5' ' " Exptarxation --- For th€p§3:r;3_< \-Te-r'f*' \

a) "dominant pesitiert" means 3 position at strength, enieyed by an enterprise, in the reieva nt market, in india, which enabiles tt ta --

i. operate independentty of competitive terees prevaiiirng in the reievant market; er ti.' affect its competitors or cerssumers er the reievent market in its favraur."

9.2.2 The Commtssion ebserves that independence in the context at dominance does net mean absence of any other piayer in a tetevant market, but that the enterprise whose dominance §s being ascertained has market pewer and is in a pesition te infiuence competitive forces to its own advantage and t0 the detriment of others. The Act, therefore, does not prescribe any structure! definitien of diominance in terms at a defined threshoid of market share atone. What is required, instead, is to give due regards to the other facters in addition to market share as mentioned in section 19(4) of the Act in order te assess or test whether an enterprise is in a position to operate independent of cempetitivet forces or can affect its competiters er consumers in its femur in a reievent market. Accerdingiy, in order ta assess the dominance of the GP in the reievant market in the instant case, besides reiative market share, the §};;§&;t%tisst:ti:t'f"~=censiders it imperative tee enaiyse . . e-~\£ treneus other factors tasted, it eectt .3 ca Market Share 9.2.3 As regards market share in the upstream reéevant market for "Neutraé amber USP-% borosiiicate giass tubes', the Cammission notes that as per the submissions of the Opposite Party, its market share in indie is amund 93% in the NGA range of tubes and 87% in the bﬁmded Fioiax range in 2809-ii}. As reveahadi by the submissions, the aniy nther llndiian competitor Nipro (Trivenﬁ had been producing amber mbes tiil 2{3{}9-aibeit in insignificant voéume.-5 vis-é« vis the tcaataé damestic demand. Nipm repcartediy has resumed its production cf amber tubes recenﬂy, the vmuma nonethe¥ess, are in no manner comparabie to that of the 0?. Furthermore, a significant portion of import in' amber tubes in india is accountesti for by the imparts from Schctta AG, group concern ta which the GP belongs, frqrn its various mcations.

9.2.4 The Camnwisskm also notes that in the reievant ma {Rat af "'Nautra3 Gear USN boresiﬁcate giass tubes' in India, the oppcsite party's market share, as per its submission, stocaci at 43.2% in 2809-10 and 38% En ZGOTMJS. in the branded Fioiax category, it went up from 91% in 2007-08 to 937% in 2609-10. The dear variants of the tubes are being supplied aiso by Nipm (Triveni) andv war the iast few years Chinese imports taro have made inrczads into the indian market. However, their share is iess than that 0f the GP. On the other hand, the aiternative sources of Fimax dear tubes are imports fmm intemationai manufacturer's of muntries ﬁke ltaﬁy, Japan. mbeét in smaﬂ volumes.

9.2.5 The market share G6, which inciudas aﬁ the sat» 3, -'\"\,§_'\\¢,<' »\.. ;'\.

categories of borasi%icaté aggﬁuced by Schatt india shaws that 9 32?: E Schott india's share in ﬁinajiaﬁ ma 'gfggééféar and amber tubes. incﬁudsing both "' Q': . X W. 3'3 .2' ,_ "

Fi-aiax amﬁ NSC/MBA varieties in terms {sf sakes value has deciéned marginaﬁy from 83% in 200?-G8 til» 81% in 2009-13 Name of Party 2903-as 2008409 2909-10 Share in Share in Share in Share in" Share in Share in Saie Qty saie Sake Qty saie Sade Qty saie vaiue vaiue vxame Schatt Giass xxx%" T xxx % xxx % xxx E43 xxx % xxx % H Nipre/Trivéhi xxx % xxx % xxx %" xxx % xxx % xxx % imports xxx 3 xxx 96 T xxx % xxx % xxx 96 T xxx 96 9.2.6 Qn the basis of aforesaici, the Commission sbserves that the GP is a market ieader having the iargest market share in each of the two upstream relevant markets - amber and dear giass separaxteixg and 61.49% in terms rm' quantity anti 81.1?',% in terms of vaiue in the iaroacier upstream market in' xxeutrai USP-§ burosiiécate giass tubes' in India. in contrast, its nearest competimr has a share in the b:'aa<$er market :1? 13.09% and 7.81% respectiveiy.

9.2.7 The Commissinn notes that in other jurisdictions iike EU, the European:

'~if§%;f Egzase of Hoffmannwta Roche 8; Co a§§'@:§'ue¥d therein that an Landertakﬁng N /§:_.~.:' K!' 3' i 63 which has a iarge maritiet share and hcsitis it ever for same time has 3 pasititih of strength.

9.2.8 The Commission further notes that in the case of United Brands and :29 and Continentai vs. Commission ( Case 27/75), UBC was ctmsiciered by the Cmurts in EU to be ciominant, consiciering that its share was aimost twice that of the iarggest campetiton in that case, the EC} had heid 45% of the market share aiso to be sufficieint for estatniishing dominance. The European Ctsurts have aiso presumed dominance where an undertaking haids a market share of 50% or more (Case C-62/86, AKZQ V. Ccimmission).

9.2.9 The Ccsmmission observes that the market share at the GP in the instant case in the upstream reievant mari<et(s) far exceeds its nearest competitor and has remained siignificantiy high over a period at three years as per the data ccimpiieci by OS as brought cut in para 32.5 above. This is indicative at msititm of strength of the GP in the reievant market(s) in the question.

9.2.10 The Commissisn further observes that Schott Pharmaceusticai Packaging Gmbi-i ('"Si:ht>tt i3aci<aging") a subsidiary of Schott group, to which the OP also beicmgs, entered intc» a Joint Venture agreement with 3 ciownstraam ampouie manufacturer iiaisha Manufacturers Pvt. Ltd. ("i(aisha"}, the biggest itidian amptmie manufacturer in 2008, to integrate its isperaticms verticaiiy with downstream amgmuie manufacturing business. in iv, the Schatt group is having S{)%=~t3f the equity sitaresfin the financial statements of the GP, Schott Kaisha is shown as its sLi}:isi§i:isty..

ahead at other piayers in giérivtﬁrizgstx Q \ aimosi hah' at the saies inisné as ' ~13 in sates terms, Schott Kaisha was far 'atJi<{_et in the year 2909, constituting tzgeaifzti itiarket among the aii ccenverters i t :;.'>\ x: "t (,3 '.>5'"" 'Slips \ 1 \" .->$~g\.\"f' "v '-

whose sates figures are reported and avaiiebie. The JV has not giver: detaiis as regards its market share. However, since sates on any enterprise are good proxy of its market share, it cannot be denied that the JV enjoys a position of being market leader. Moreover the repty of GP dated 18.09.2811 also brings out tr; dear terms that Schott Keisha is market Eeader in downstreamrrzarket of ampouies etc. Ttsus, since the year 2808, GP together with W, Schott Keisha, a reiateo group concern is. engaged in the business of producing both ' borosiiicate giass tubes and giass ernpouies and in addition to upstream rnarket(5) they aiso enjoy a position of a strength in downstream reievant m;ari<et(5)r 9.2.11 The Commission observes that market share of the C3? in upstream reievant maritet{s) itself is indicative of its dominance. Aithough the N has not given market share in definitive terms during the proceedings before D6, it indeed is a market ieader in terms of saies, which shows: its suoeriative market share in the downstream rrrar§<et(s). However, the Commission observes that in addition to the market share, other factors iisteo in section 19(4) of the Act aiso require assessment in oroer to take proper accourit of the degree of dominance or otherwise of the GP or the N in the reievant mari<et(s).

9.2.12 Therefore, the-Commission finci'§ it fit to take cognizance of other '~" \ .->"" ,A 5;. .

»-. x factors tisted in section 19(4) of the case.

ﬁiee and reseurees of the enterprises 9.2.13 The Commission notes from the report of {ii} that GP ans Schott Keisha ere part of Schoti: Eroup which is a muitinationai group iiieiariicgueriered in Germany and is in the business of oeveiopirzg and manufacturing speciaity meteriais for more than 3.25 years. Cine of the business unit of Schoti Group is Pharma which consists of two business segments, nameiy, 'Tubing' and 'Pharmaceutics! Packaging'. The business segment of Vuhihg' manufactures and seiis borosiiicete glass tubes mainiy for Pharmaiceuticai use and eiso for re-chnicai appiications and has six production sites aii over the world (Germany, Czech Repubiic, Spain, Brazii and indie).

9.2.14 Further, as per the Business Report for Finenciai Year 20(i§-10 on its website, Schoirt Group's giobai saies is of 2.85 hiiiion Euros anoi has 17,508 empioyees woridwicie and has manufacturing sites and seies offices in 42 countries. With a production capacity of more than 130,000 tons and production sites in Europe, South America and Asia, Schoti: Tubing is one of the ieading manufacturers of glass tubing woridwide. Sichott Ph.arrrraceutic:ai gsaickaging, which has entered into the join? venture in india es Schott Keisha Privates Limited , is one of the worio's Seeding suooiier of parentai packaging for the Phermaceuizicai industry. ithas more than 600 production iines in 14 countries woridwicie producing more than '17 hiiiion syringes, viais, empouies, cartridges and specie! articies of 'u.rb_irig giass or poiymer.

9.2.15 The Commission notes that the size and resources of the OP ans its investment and has e§so got the ebiiitytte market its pmductsr wﬁdeﬁy. The size and resources at the Schatt group avaliiabte to the JV atso make it a deminarzt piayer in relevant dawnstream markeﬂs).

Size and impertenee at the cemgetiters

9.,2.1§ Based upen the ﬁrzdtrtgs ex' {)6 and avaiiebie materiais cm retard, the Cnmmiesicm notes that the size and resources of the canipetitars of the GP and 3V in lnéia are net very The oniy damestic manufacturer, Nipro, has a production capacity 01° only xxx tens. against xxx tens of the GP in upetream market. Further, it has started production oniy from March 2310 and has no 'presence in the prtrduct segment equrivafent tn the Fioiax grade (both deer and amber) manufacturee by the 0?. The turm3ve:' (sates) figure of the OP is aim much more than Niprcz, its singie domestic crsmpetitor.

9.2.1"? As regards the other matter tube manufacturers in the giobat market, tike Gerresheimer and Amecrr, from detaiis on record, the Cammissian notes that the tatai quantity and veins of Ernpnrts from these entities are not signiﬁcant 'in relevant geographic market and as such da mat create any campetitive pressure on the OP, Simiiariy, the size and rreseurces of ampie manufacturers in dawnstreem market are aiso far iess in eomparisen with the JV, Schott Keisha because at nut or:!yé§§f:§§ﬁ§§iB";)tQfitra'biEity but aiso state it has *7 <~ Q r air! the exeertise, resources of Sam t"gt-ta -

.9152 57' Ecemmic pewer ef the entemrise inciueiéng cemmereéai advantage ever cemeetiters 9.2.18 The Commissicm notes that superier size and reseurces ef the DP and N in both upstream and dcvwnstream: market(s)# give "them superﬁative ecomtwmic pewer qua their competiicors. They have been abie tea invest huge sums crf money in augmenting thee' faciiities because cf its huge resources at their command. The fact that the OP he§.L_§7_f;;§Trange of product ﬁne and it is in a pesition to suppiy the cisnvertorsﬁﬁoirirw any of giabai iocations cf the Schet group at inciian prices as reported by the DG gives it a huge commercial advantage over any 0:' the competitors and contributes to its position of deminance in re¥evant market in india. Censequentiy, its JV aim has distinct advantage due to the fact that it can get suppiies and resaurces not oniy from the {)9 but aiso from Schott Pharmaceutical Packaging fixmbﬁ ("Schett Packaging") a subsidiiary cf Schcrct Germany.

Advantage cf 0? being verticeﬁiy integrated 9.2.19 As brought nut in the preceding paras, Schott group, to which the UP beiongg, is verticaiﬁy integrated with a ciawnstream market piayer in india, nameiy, Schbtt Keisha Pvt. Ltd. which is in the business 02' manufacturing ampouies, vials, syringes anei cartridges frem USP type -=--- i berosiiicate (iiass tubes. Schott Keisha Pvt. Ltd, a Joint venture company in which Schott Packaging GmbH hoéds 50% 0f the Tshares,'e7n§oys position of market ieeder én downstream market(s). The said j.oin:::ienture company, in uperatien since 2008, has been buying aEmQst£;V{(§':§*{"f?\..:«:;§§:"';.:\..

{ﬁe [" ..

c- ' giéments from the O? and Schott Rohrgiass GmbH, Germany, again 5'?

Cemmirssion fines that the verticei integration at the Scncstt group with the JV, iargest converter in downstream reievant market is) in india is heiping the GP in czornmanciing a huge and unrivaiie_d_rna;rket power in relevant upstream rnaritetisi in inciia.

ﬁenendence nf mnsurner 9.2.20 The Cnmmission notes from the findings of B6 and statements at various converters retarded in course of prorieediings that as consumers they are heavily dependent on the GP for their requirements in View of its product range, prefeirence of piiarmaceuticai rcnmpanies for its products and tack at viable aiternetive options as on date. in particuiar for the amber tubes, converters anti pharmaceutics? companies are neariy entireiy dependent on Schott as they are the oniy suppiiers cf the tubes in preferred shades to the indian market. Further, due to the fact that saies ofiv is aimost half of the top existing converters, pharma cnmpanies in downstream market are aiso to 3 ierge extent dependent upon getting ampnuies, viais, syringes etc. Entry Barriers insiuding barriers such as reguietery barriers, financiai risk, high capital cost at entry, marketing entry barriers, technical entry barriers, ecennmies cf sceie, high cost of snbstitutebie gnnds car service fer 83€3i"iSE.i§'i'B&?5.

9.2.23. The Commission observes that heavy capitai requirement, huge running costftuigh gestation period §,t:}di_'~;e¢:f(}>;3Q_gT1i€S of scaie in the productiein 11 "' 'I ~\ \ the BG are the significant K of the upstream relevant produ?€s$§s"* entry barriers in the reievant meskéij. "E" quiggepient of stabiiity tests by the piiarrria cczimpanies eiso comes in the way at easy entry in both ugstream and downstream markeitis) as even the submissieiis of the GP reveei that the pherrria ccimpariies siiaii take 3 minirriurn time of ---6 mcmths before they can decide and choose any product. Mareover, this wouid eise require censiderabie investment, which in face of evaiiebiiity and acceptabiiity at the products of the DP may act as deterrence for the pimrma wrnpanies ta mriduct any staiiiiity test an new prciducts. in this regard, import duty of 3.0% cm the tubes, also acts. as cine of the constraints to mekegainiui entry in the meri<et(s}. These entry barriers maice the position of O? and JV a formidable one in both upstream and dcwnstream reievant mari<et{s) , particuieriy in ﬁght of their huge resource size and cammerciai advantage vies-e--vis their competitors.

Eounterveiiing Buying Power 9.2.22 Dominance at any enterprise may get chaiienged by presence at countervaiiing imwer in the reievant market. in this regard, the Cemmission observes that the consumers in dewristrearri reievant market{s), leaving aside the JV, Scriott~i<aisi1a, consists of several smaii ccmverters who indiviciuaiiy iacic the requisite size er firiarieieii strength to exercise counterveiiing buying power on the GP. in fact, they are dependent upon the GP for their suppiies and cannot exert disciplinary farce on OP.

9.2.23 The Coimmis$.i.en also cibserves that it cannot be said that the aims and objectives of the DP and the N are soieiysjgg s 37331-'3i'i*i5"ZC} any srirziai obligation.

They aiscs have not acquired positio §'§a resuit at any statue or * "5 ' E . ergtiteﬁir pgsition of dominance by virtue ef being a Government céméeny {E i' is on account ei their finariciei strength and other resources which have giver:

them significant market power in reievant maricetis).

9.2.2-ti 0n 3 ceiiective consideratien of the factors as tireught out in the, foregoing paragraphs, the Commissien heids DP and the N, Sciiett Keisha, dominant in the respective upstream and downstream reievant mari<et(s} as determined in para 9.1.14, in terms of section 19(4) ef the Act read with 4_eicpien.ation (3) to section 4 of the Act.

9.2.25 Having considered cieminence, the Commission proceeds to examine aiiegations against the OP cm various issues iisted in para. 8.1 (c) to determine whether it has aiso coritravened provisions iisteci in section 4(2) of the Act which are asseciated: and concemeci with abusive acts and practices on part ef a cieminant enterprise in a reievent market. The Cemmissien hoids that language ef sectien 4(2) makesit ciear that there shaii be abuse of dominant position, if an enterprise has engaged iii various acts end practices iisted therein, meaning thereby that the iegisiature has cast a special duty on a dominant enterprise not to engage in certain prohibited acts and practices.

"i'iierei'ore, in the instant matter, if the DP is ieund te be engaged in the acts and practices iisted in section 4(2), there is no neeci te cerrduct a further anaiysis of their impact on the market.

$2.26 However, since in course of preceeciirigs, the GP has justified merry of its alleged acts stating tijet they rice net have anti--cem;3etitive effects, the \«-*'f:"\ "

Commission in adciiticsri to deiterfestie e'-;}'{\';'\\'.'J\"\.e' ' isﬁeether the GP has indeed cemmitteci the impugned acts has eiso s we ' "ls. .

ecﬁstiiem witiyrespect to impact '. ; §

-3-.»

-\ cm competiticm in the backdrop of the cempetitive construct in the reievant markeﬂs).

- ~-issue 3: ﬂetermineticm 0? aﬁegetéons e§ abuse against the S? V Ltd { the informant) , Twin city and Triveni.

Sub --- Sssue 3. Whether the GPA has 'indulged in the act ef predamry pricing ha vicrietiun ef prmrisicns ef section :${2)(a){§E) 9? the Act?

9.3 T¥_1e_informant has aiﬁeged that in mder to force the existing indian prcsducers 0f neutrai USP Type ¥ Bosrosiiicate giass tubes cu': of the market, Schott Germany initiaiﬁy pursued 2-3 poiicy of seiiing tubes at much iower prices which ieft iittle choice for the indian tube manufacturers to continue on their own resulting in Bharat Giass. geiﬁng its assets and production faciiities to the ' GP. in support of its contention it has encluseci circuﬁar dated 29.3.0.1§99 0f Schatt Germany and detaéis of Fioiax tubes imported from Schott Germany vis-e 3-vis their mice-5 by various mdian cempanies during 3.99'?-3.938.

9.8. After acquisition of Bharat Glass, till 2008, the GP said USP Typed neutrai bomsiiicate giass tubes tn the downstream containers manufacturers at extremeiyiczw prices. As per tee aiiegaticm, the prices cf Schmtt 'tubes were significantiy low as compared to its cost ctrf production as weki as the prevaient prices in the internatimnaﬁ market and were predatmy in nature in order to drive out the eampetétors in the indian market, nameiy, Kapmr Giass india Pvt.

9.5 it has further been stated that cm?' price undercutting by the UP, the existing manufacturersgeiﬁf \ iasses and uitimateiy . .¢ 59,, had tea exit the market, 9.6 The OP has eentested the céaims of the interment etating that it has never ' induﬁged in preciatery pricing.

9'.""'? Tﬁe'C0tmmission 3350 notes that S-G has examined the centestmgdaims of bath the parties. DES did net ccmsider necessary ta cat} for the date 'reger::§Eeg the cost at preciuctien at the GP in the eeriy years :3? its eemmencement ef pmductien in india because the eiieged act at predatory pricing prim to the cemmengemeent at the enfercement prowsiens of the Act Le. 2G.{3§.20€}9 cannot. be a subject 0'? investigation unless and untii such conduct of eiiegeei predatory pricing centinued even after that.

9.8 QG has eise reportee that the issue of predation cannot precede the determination of the fact sf dominance. The case that the GP / Schott AG enjcsyeci a position ef dominance in the reievant market even before starting production in incﬁe erteven til! such time the other dcmestic manufacturers were operattng as its ccarepetitors in indie has neither been elieged by the it? nor is borne out of the facts on regard- According to [36, the OP can eniy be said to have enjoyed a unique positien of market power pest 2.008 when it came! strengthen and fertify its positicn after the exit of its competitors, its augmentation of pr'm:§uc:tien capacities and its W with Schott Keisha besides other teeters which have given it a positien of strength.

9.3 The GP in its repiies has eése bmught cut that ehegetions prior tie the mtifieetion ef provisiens cf section 90? the Act cennet be made. subject matter ef inq airy.

'\ 9.3.0 {"323 the basis of efereseid, the C r SS"

bsejfvés that it is clear tram .f>,--:\'.>s~ L"

a N that atiegatiens of ><x- ' :3' submission sf aﬂ parties inciudmg t precietery pricing pertain is a eeried when the enfenzemeniz provisions of the Act were not netified. There is no evidence or eiiegetion en retard that such an act of....e~i.i.eg.eid predetien has continued even after the date er notificerigrrgf the enforcement previsicene.

9.11 The infarmaniti in its veriious submiasiens and in its response to the rejeinder iiieci by the GP in ceurse of preeeeciings before the Commission has eiso brought: out that 'Keener Giass has consistentiy maintained and submitted that some of Schett india's practices such as saie of 'neutrei USP Ty;3e~i borosiiicate glass tubes' at prices beiew cost er predatory price-e were carried out '(iii the year 2308 and are no ionger in existence'.

9.12 in View of feregeing, tine Commission hates the': the aiiegetion of predatory prices against the OP is not iegeiiy tenabie.

9.13 The Commission notes that it has eiso been eilleged that after the exit of competiters of the UP from the market and perticuieriy the exit of the informamt in 2008, the GP increased its prices drasticaiiy ta recover the iosses ii: had been incurring on account of its predatory pricing in the eeriier years. it has eiso been ' stated that euch extremeiy high prices are unfair and discriminatmy.

9.14 The DP has contended that Schott Giass in the year M88 raised its price _ of borosiiicate glass tubes acress the entire woriczi since there was an increase in energy tests aiiﬂover the worici. it has eiso sfeted that apart frerr: the ees': ief energy, the cost of raw materiais, pr "arid persennei, eii of which affect the mices cf boresiiicat 3, ed eiso irir:reas.eci.. The 3% '-17 :1 3,, ' . ' Commissien rietes thatrhe said ste cl ief ti} 8. heel" aiee been mentioned in its Vi S price circuiars dated 9.1.2008 and 26.7.2008, in the price circuiar sf Schcm dated 09.11.2008, it has been stated as under:

"We are c0ns'fi'iiiiiiéd to revise our prices due to increase in pmducfian referee' inputs specinily Borax Fania Hydrate and fuel prices, together which ccmtributes signsficamfiy to ruining costs. On 'neuirai giciss dam' and amber tubing :1: price increase sf 10% appmx. and on Fiolax clear at price increase of 3% approx. need he be days over our existing prices."

9.3.5 The informant has contested the ciaim ef the GP stating that it can been seen from baiance sheet (if OP itself for the period immediately preceding the year 2008 and thereafter, that there has been he significant increase in energy or raw rnateriai cost. Further, Schott uses PNG the fire its furnaces and the price cf PNG in indie is not subject to giohai fiuctuatiens (because it is fixed hy the Government as part of the administered price mechanism) and therefore, assertion cf the GP that it had its increase its 'cube prices because of the increased cost an' energy is false and misieaciirig.

$.15 D6 in his findings has repcrted that increiase in the prices by the OP was related to the increase in its manufacturing cost and cannot be said he have been reserteci to fer recsuping iesses incurred eariier on acceunt of its predatcry pricing. D6 has aiscv submitted that there are he standards to iudge as ta what can he stated is constitute excessive and high prices. There canhet be any thresheid iimit for determining the same; the price that a custs3mer.i.s.....

wiiiing ta pay depends on the veins which sizribes its a product and nothing can be said to be excessive tiii suci},{i:i§§:e as; gbuyers wiiiing to pay the ,;?L'\:.--.§ "\, price tn' the product and the marks; iufséeé " 1qs:i;'é'§i'z*iii*1i-'.--'. as ':9 whether :1" / R' e <-' E ._' 3 3 the precincts are being seid at excessive prices. in View of the same, {)8 has cenciucied that the aiiegatinn at the informant in this regard is net iounci substantiated.

9.1? On a carefui censicieretion, the Commission crbserves that the eiiegetion of excessive price of tubes is inextricahiy iinked with eiiegaticrns cf practice nf predatory pricing foiiowed by the GP tiii 2008 since it has been aiieged that once the DP acquired pnsition nf dominance, it started -raising its prices tn recoup its iesses. Once the evidences on retard and investigatien by {)6 do not estabiish that the OP had engaged in act at predation, the Cnrnrnission observes that it cannot be concluded that rise in prices at tubes by the DP fer the peried after 2008 were with a purpose to recoup the iesses suffered an account of predatory pricing.

Suhuissue 2: Whether the GP has impnsed unfair and discriminatory' conditiens er price in the saie of neutrei USP4 bernsiiicete giess tubes through its ﬁiiscount peiicies, Trade Merit Licence Agreement, Marketing Suppert Agreement and Saie Purchase Agreement in centreirentinri ef the previsions of section 4(2)(e)(i} and (ii), of the Act?

$.18 The Cernmission notes that the facts mentioned in the iiniermatien, verinus submissions nf parties concerned and report of {K3, wouid show that the OP offers two kinds nf ciismunts te the downstream piayers or ccnverters .-""

of the upstream re-ievent prnducts; (i) "tint 'and (ii) Functianai discount.

Target ﬁéscmmt 9.13 As per discount pczsiicy of the {JP furnished ta the C::mm§ss§on and to the office sf DE, target ciiscaunt is----a form sf veiume based tiigcbutit, whereby . varying rates of discount are offered by the GP to: the corxvesrters/ampuuie manufacturers at the fnﬂuwing rates an the quantity of ampmzies and viais and ether products fabricated out of the Ciear Giass Tubes (NSC) and Amber Tubes (Ni.-EA) gtnurchased from them and soéd jig: the pharmac.eutica¥ cnmpanies and other purchasers, in an Indian ﬁnan<.:ia¥ year:

' 2*: Siam 1.10.2981 $5 to 150 "

xxx percent

153. ta 450 xxx percent 461% 680 M xxx percent $131 to 9% xxx percent 9&1 8: above xxx pertent .?%ate 6%' 9 '-'tar 296 . 253 ta SDI} xxx percent 381 to 'I50 xxx peasant 'F51 to man M xxx percent 1603. 1:9 xxx percent 1581 S: 2530 Moré than 2839 3;§eV:fcé.:'§E' 9.20 The discount scheme, in form (if a quantity siei:i-diseziziunt rate menu, is made avaiiabie to the converters at the beginning of the transaction period. The {JP issues credit notes for 'disrmiriteri amount on a querteriy basis on receipt of certiﬁcate fer safes and fuii payment of invoices raised in the .reievarit quarter. Target disccurits are eppiicabie eniy on basic veiue en' 'NSC, NGA and the saie caf Fioiex (Cieer and amber) tubes is reckoned oniv for the purpose at caicuiaitien cf the target quantity siabs.

9.21 The Corrimissien notes that the DP aiso offers another kind at discount to its customers, which is the so caiieci functinnai discount, which in terms of its saieswpurchase agreement fer the year 2007-2008 rmwarcis with the converters, was crsmriitionai upon the 'ioiiewing:

{i} That cerwerters wiii premeie Schett tubing by purchasing the agreed quantity in the perticuiar year of agreement;

(ii) That the comrerters wiii net use er cenvert Chinese tubing and wiii provide ail information and proof in this regard;

(iii) That the converters wiii maintain 'Fair Pricing' cf ampouies and viais for Schutt tubing.

9.22 Upon fuifiiimerit of the abmre conditions, the (I)? used to offer xxx% furactienei beams to its cerwerters from 2i)0'I"»20{}8 tiii 201% cm the basic veiue of pureiiase of NGC , NCSA 8: Fioieix tieer tigiisiriig supplied by the GP at the end at the iinenciai year. Fram the h has required the converters ' '5Ls~.- "€:-

tr: sign its Tracie Marie: Licence (ggréeerrg {Q négfﬁuieriketing Suppert Agreement in ercier to get furictionai discs 9.23 Under Tracie Mark Licence Agreement iTix/iLA} with the converters, the OF' acquires the right to inspect the premises of the canverter to ensure that its brands are net being abused. There is stipuiatien attached for payment of damages of Rs Seventy (70) Lac in case oiiinfrihgement (if its traciemark by the converters ( in course of proceedings the GP has submitted that it premises te eieiete this part from the agreement).

3.24 The converters who Sign "i"i'viLA are given royaity free right to dispiay the Schett iogo anti brand as part of the materiais they use to market and suppiy ampciuies to pharma companies.

9.25 Along with TMLA, Marketing Support Agreement is aisa executed, pursuant to» which the converters agree in promote the GP and its precincts for which the converters are paid a certain sum on a quarteriy basis. The reievant portion of Market Support Agreement is brought out heiow;

"'.'i.XYZ will cictiveiy promote SCHOTT and its products and services with materiais as set eat in Exhibit 1 to enhance its awn business in india in ciese cooperation with SCHGTT.

2. ESCHQTT wiii reimburse XYZ upto _____________ Rupees on a quarteriy basis, depending upon agreed activities."

3.25 The OP before {)6 and also in course of inquiry pmceedings behsre the Commissien has admitted that the target based discount has been devised based on cost ieffiiciency considere'%i(g~ni..since the 'p'rm:ess of meiting giass angi.

.8"

. .. re manufecturmg horosiiacate gi \ \ X:

'<3 sivarimuis raw materiais is 3 r\\ aedueiiokh tank to be continuousiy at continuous process which rec; ' th 0 high itemperatu res and functioris\3(g:e \ 9.2"?' it has atso been submitted that substantieﬁ energy costs are incutretsi te bring a production tank to the required temperature at which glass tubes can be manttfactureci and energy costs have to be Lccmtinuousiy incurred to keep the production tanks running at the retevant temperatures without any interruptions.

9.28 Gwen the s;peciﬁc nature of tube manufacturing process, the OP has further submitted, any instabiiity in toad or demand may teed te heavy damage to the productien tank causing the manufactuter to incur testes.

Therefore, it is te ensure stabiiity in demand and incentivize large purchases that the target discount system has been put in piece.

9.29 The OP has 3153 submitted that the discounts on its tubes are offered to meet nut competitien from imports and new etayers in the market (N§pm--

Triveni} since it cannut afford ta be ebiivious to the cotmpetition.

9.30 As regards its leyaityffunctionat discoutnts the GP has submitted that they are effered to mitigate the risk of converters mixing ampouies made from berosilicate giass tubes supplied by the GP with those made from inferior quaiity berosiitcate gtesst tubes imported from China.

9.31 The Commission has carettsiiv gone thmugh: the report of D6 and submissiens of various parties on different dates. The Cemmission notes that cenctuct of a deminant enterprise in upstream market may give rise to competition cancetﬁ tf through that tenducttit enferces an unfair and ,.... K' xxx discriminatory discount on the meet: £33 .§'3§§fE£)_\ti§1e pievers {c:enverters) tn the dewnstream market wherein th ""I'\" '- fgbsidiazxr and contmtted by common group is else competin 'Et§_tt i . _; egrket i/eadet. Thss as because an unfair and discriminatory discount poiicy giving preferentiai treatment to its related entity in dewnstream market wiii mean higher purchase mice for the other competing piayers as a resuﬁ: of which they cannafi: compete on even ternwg.

9.32 The Csmmission, an the basis of the findings Sf DE, notes that Schmzt Kaisha, the JV has received the foiiowing discounts fmm the DP and Schott Rohrgiass, Germany (gmup concern tea which the OP a¥so beiongs) during the last three years;

Discount] Schott Glass ii) Pvt. Ltd Schott Rnhrglas Gmbﬁ Rebate ' j Tube Type 2ﬂ£)8~99 2009-16 2010-11 203$-O9 2B(}§~1G 2810-11 {up to = ' % % {up ta Nov % % Nov 10} % discount discmmt 103 % discount discount discount discount Target NGA xxx xxx xxx xxx xxx xxx NGC xxx é xx): 200: M xxx xxx M xxx SW. xxx xxx xxx xxx xxx xxx SFC ' xxx xxx xxx xxx xxx xxx Functionaﬁ Bnnus Na'.-EA xxx xxx xxx xxx xxx xxx NBC xxx xxx xxx xxx xxx xxx SFA xxx xxx xxx xxx M xxx M xxx SFC xxx xxx xxx xxx mm M xxx Bonus NGA xxx xxx xxx xxx xxx xxx NGC xxx M xxx xxx xxx xxx xxx M SPA xxx xxx xxx xxx xxx xxx SFC xxx xxx xxx xxx M xxx xxx . Others N613; xxx xxx """ " xxx xxx NSC xxx xxx xxx xxx SFA xxx xxx xxx xxx _A SFC xxx xxx xxx xxx 9.33 The Cammisséen abserves that the other dcawnstreanx ampouie manufactures are net evenﬁy placed as far as quantum of discount is concemed, a fact which has not been disputed by the DP. %n this regarﬁ, statements of certain ampouie manufacturiers retarded by HE as reproduced heiow aiso assume signiﬁcance;

(:1) Statement of Qr.Ani!AgAgarwm', MD, Mfs. Mai: Ampoufes Pvt.Ltd.:

''1. What are the dijferent types of discounts you have been receiving from Schotf Giass? Does 56:?! give equcri treatment ta ml the can%vert.<3rs as for as discounts are mncerned?

Ans: We get two types of discounts viz quantity discount and Ioycaity ciiscount, the latter now being caliedfunctional banus. The iayaity bonus is fixed at 8% and quantity discount is based an quantity lifting 5.9. 2% for .250 MT, 4% for 530 MT and $0 on as per SGF5 discount sfabs. SGI does not give equal treatment to all the canverters as far as discaunts are concerned. Preferred converters like its own JV Schott Kaisha, Klcssspack and Tube glass are given higher discount and discount even on Fioiarx mbes on which they dc net give discsunf to others including us. This is discriminatory and unfair and thus 36! uses its financial muscie to disrupt fair competition in the market which is detrimental ta our basin £355 in terests.

Se What 0'0 yon have to my about the jcsfnt venture cf Schcsft india with Kaisha? How has it affécted the existing carﬁrertera?

Ans. First of <31! 55! gives XI' ,;C_';' - '1} JV ncvmefy Schcztt Kuisha; I Ea' 2' supplies cf raw material to its happened that whereas our requirement for Ci particular size 9}' tubes has met been met, but their JV Schott Keisha has been supplied the same. As a resuit we have lost business. Furthermore, the suppiy of raw rnciteriais to us remains uncertain and we izcwe to carry huge inventories to meet the requirement 0;' czar custamers. As stated above SGi's disceunt is hugeiy discriminatory. Whereas Scimtt Keisha gets at discaunt of cipproximateiy 32% (as told to us by Shri Nishtmt Destii can ex~empioyee of Schott and current}? warkirigfor Nipm). We get ti disceimt of 1295..." {b} Statement aj' Sim' Kristian Mehra, Partner, M/s ifishere industries :

*5. What are the different types of discounts you have been receiving from Schott Giass?

Ans. The same is enciosed for the fast three years vide my ietter dated 6.12.2010 being handed over to you now. It is mentioned that Scitott gave us royalty discount far the period October, 2001 to March 2002 @ 4%. From the year 20€32«~2£i303 tiii the year 2005-200?' it did not give any discount to me because they were alleging that we are buying tubes from other seurcres. Hawever, after a for of persuasion and effort, they agreed to give me only 33.33% of the due cxmotmt which i have already submitted' vide my response dated 21.9.2013 as Annexure-vii.. The}: tank an undertaking from me that we wiii not raise the issue regarding functional bcmus any ioriger and wiii continue to pronmte Schett tubing.

7'. Does Schott India grtintuniform discount to (III the ampeuies ccnuerters?

is -£iti§i:i}\\5€1m€ far aii the converters.

if _ .

izgy mgregﬁzscaunt and uninterruizsted 422" $5 {H 7;' .f~\. ,3' "/I deliveries. i can state that in cases where i have been granted 4% disceunt, Indian Scierztific Glass iixdustries has been grantee' 5% discount as is known to me my interaction with the Sim" Khemika, owner of indian Scientiﬁc Giass industries. it is a genera! practice ofschott indie is grant differentiai discaunt to favaurfew sf the converters as a part of its policy to divideerm' rule and uitimateiy to fevozir it JV, Sciwtt Kaieha.

8. What do yea have to say about the joint venture of Schett indie with Kaishe? Hew has it affected the existing converters? Ans. Ever since Schett India has entered into JV with Keieim, known as Smart Keisha, there is no ievei playing field for the existing converters either in terms of the discounts affered O!' the deiiveries of Tubes. Smart is understand to be giving huge ciiscaunt to its N which enables it to penetrate the market for supplies cf cimpouies/vim': in competition are the other ccmverters. Further, if any of the existing converters are in direct competition wifh Scimft Keisha then Schott indie wouici curmii the suppiies 0f Giass Tubes far that converter. As a result of this practice csf Schett indie even the Pharmcz cczmpanies hesitated in piecing orders cm cenverters ether then Scimtt Keisha to ensure uninterrupted eupplies of cvmpouies/viciis in ti7em....,".

{C} Sietement 0}' Sim' Sendeee Khemke, Partner, ivijs. indie» Scieetifie Giess industries and ﬂit/'eater ef Khemke Giess Products Pvt. £.tc2i.:

J' '7. What are the differe %~;'§;z;3e§~ feiiscazxiits you have been receiving from Schott Giass and i Ans: We have been receiving target discount and functional benus from Sehett Giess. A copy of the Ledger of the 5:3! showing the tiismunts given to us from Aprii, 202:3?' ta March, 2010 is handed over to you. You they recall that vicie Annexure Vi ef our repiy dated 22.9.2010 we had submitted the cfeteiis of ciieceunt availed year wise by us. The Functional bonus has now been withdrawn w.e.f. It" Aprii, 2019 as we have refused ta sign their Trade Mark Licence Agreement. As per our knowledge 56:' has been giving more discounts to same converters and they have 422155 been giving them priority in suppiies. As a resuit of this, there is unfair A competition amongst the Ampeuie nwnufaieturers.

?(e). What do you have te say about the joint venture of Schott indie with Keisha? How has it affected the existing converters?

Ans: Asstateci above, this is resuiting in unfair competitien as they are given more discounts and priorities in suppiies. ,.._.".

(ti) Smtement of Shri Anti Kumar ﬁupte, Managing Director cf edit Centeiners Pvt.Ltﬁ.:

"'3. Could you please elaborate Aregarrding the said practices of Schatt, in shert 56;', which you consider as anti competitive respensibie for stunted grewth cf the manufacturers of ampeuiesfvieis?

Ans. The anti eempetitive practices of 56.?! can he stated as foiiows:

1} Ciiviheg differential eiiseeunts without any objective criteria: to chosen few ccmverters .................... ..

'Q. What are the dijﬁ'erentﬁg§"e'§§tiij*9Es£§€iseQunts yet: have been receiving ~\ from Schett Glass?

Ans. The ciiscnunt statement is handed over to ycu new in terms of your ciiireefinn in the summons. Tire first twci pages are the ciiscounts that we have avniieci and the remaining five pages are the reievnnt extract of mar ieciger account wherein these ciiscnunfs have been refiected. Timugh the ciisccaunt fmrn the year 20G?---£38 iriii 30.9.2010 has been stated as target discount, this siinuici be read as quantity and ioynity ciiscnunt put together. The discount prior to ;2'?£?iU?-05' was fermeci by .56! as nniy Target discount.

10. How do yam state that 56.7 inciuiges in discriminatary discount' vis- c':r-vis the nmpouies converters?

Ans. We have information that SS! offers discounts to Scnntt iiaisim far in excess nf its ciecicired discount pniicy. Whereas, Sciinti" Keisha gets 5: discount of 32%, n0 ether' converter gets as similar discount. if is pertinent to mention that in terms of its decinred discount pniicy, there is no slab higher than 12% fur quantity discount' and 8% far lnynity ciiscnunt which makes it a mini 01' 20%. es 9 result, the converter in cnmpetitinn to Scimtf Keisha cannot compete as there is no level playing fieid. When we confrenied Vice President Series of Sciwcott by our email dated 21.10.2010 regarding the discount even on Fininx fo Sciiott Kaisimg which is outside the purview 0f the discount policy of Séii, we were informed vicie their e«mc:iI nepiy dated 18.11.2010 that they cannot cnmment on the price structuring they nppiy in reinrion to their nffiiinted company Scnott Keisha. ¢,iet;*r7;§;nCty~-be«'nnted that tiéey did not deny that 96?' ,.

K.' 'A:T'iT{';\'.'-

Scimft isfaishcs is being' Qfneen"

3 :2.' ﬁipf 32% even on Fininx which no other carwerter is getting' They further infarmed us that no tﬁswunt is avaiiabie for Fi(JftI3X,.....

.11. What dc: you have ta say about the joint venture of Schott India with Kaishtz? How Ema it affected the existing converters? Ans. With Schott ifaiaha getting much heavier discount (32%), uninterrupted suppiy of tubing, suppiy 0f tubing during the time of shortages and the marketing support giver; by 561 it can only mean extremely unfavourczbie biusiness canditions for as.

(e) Statement af Shri Rakes}: Srivcistmra, General Manager, $oiar Marketing Gujarat Barosii Ltd. and exﬁenerai Manager aj the GP and ex-Genera! Manager Scimtt Kaishm:

'5 .... ..The target discount and the functional discount at its maximum cauid be 20% for any converter but for Schott Kaisfia it was mare than this perhaps on account sf their JV. 1 do not remember the exact discount being given to Schott Kaisha but I remember it was eﬁectively given or higher discaunt as such data were required to be fified in SAP system of S61. '

9. What discounts were given by Schott an Fioiax tubes and which converters were getting these ciisccsunts?

Ans. On Fiaiax tubing only Schott Kaishci was getting i:ii3::::v'um'5 and ms:

other converter' was granted this discount. It wouid be reievant to mention here that though no discount was granted on Fitiiax tubing to any atheri converter, every ' quantity of Fioimr tubing '-

gs aiicwed to add the total " itgtzzl quantity of i\i¢3C,*'N(3A /' procured for the purpose of determination of the respective target sfab, but the actua! discournt would be only on the basic price of the NGC/NGA prccuredfrom SS1."

9.34 The Comrnissicm, on the hesis crf detaﬁs 01' discorunts given to the N as brcmght cut in Para 8.32 and stetemerxtg of the converters as above, observes that discount offered by the GP to its reiated ccmcem {iv ~Sc§3ott Keisha) is mare and on mare favourabﬁe terms as compared to other converters. in percentage terms, whiie discount to ceen given upro xxx%~xxx%, the other converters can avaii discount upto xxx"/6 cniy.

9.35 Further, the Commission aiso observes that whiﬁe the target disrcourrrz is given cmiyr on purchase of NGC and MBA and the purchase cf Fioriax is reckoned oniy for the purpose of determining the siab for other converters, the N of the OP is given target discount on purchase of NGC and NGA as we" as on Fioiax.

Target discount is given to the converters can a quarterly basis an receipt of certificate of safes as specifiee by the GP and upcm fuil payment csf irsveices raised in that quarter. However, the same is paid tr: the N on a monthiy basis. The percentage target discount is determined on the basis of quantity agreed for procurement in a year by the cemrerters. in case, the cguantity purchased is Bess than the slab, then the Icawer siab discount is given. Giscounts are not given separateiy on amber and dear tubes but the discounts are bundied together.

yeariy basis to the cnnverters, it is given on mnnthiy basis to the N. The OP aisn granted functionai discount to the converters subject tn fuifiiiment of conciitinns tiii 2010 that cohverteirs winuid promote Sczhott tubing by purchasing the agreed quantity in the iparticuiar-year of agreement. The grant at functions! niscount is new iinked with converters signing Trade Mark Licence Agreement. The N, Schott Keisha aiso get bonus 3'? xx>c% fmm Schott Rohrgiass Grnbi-i Germany for materials supplied frnm outside inciia for the year 20{38~--O9 and 2€309«10, which nthers do not get.

9.37 The Cnrnmissinn observes from aforesaid that it is apparent that the OP is following a dissimiiar and discriminiatnry ciiscnunt poiicy towards the converters vis-a-vis the JV ~ Schntt Kaisha. The OP is discriminating not oniy on quantum but at:-:0 on conditions of discounts. The fact that the converters who are dependent upon the OP for its suppiies particuiariy for Amber Tubes have come nut in open against the OP refiects upon the unfairness of the prevaient anticompetitive practices in the reievant market.

9.38 The O? has aiso admitted that it effers a mare favnurahie quantity and functionai ciiscountis tn Kaisha than what it offers to other converters and has justified the same on the gmuncis that nca other converter can match the vniumei nf orders that Schntt Kaisha piaces on Schott Glass india. The OP has aiso argued that the discount is given on Fioiax tubes nniy to Schntt Kaisha since being astrong dnwnstream piayer it had negotiated hard and in Qrdﬁf-' 93$ Accerciing ta 9?, even thougrtr the ccmditicms of discourtt are cfifferent for IV than other cerwerters, the ampeutes suppﬁied by Schett Keisha are priced net less than and are even higher than amprzauies suppfied by ether converters and as such do not cause any eepreciabier adverse effect in the ' market. Further, the feveurebie terms operating between Schett: Giess Brrctia and Schott Keisha do net effect the abiiity of other borosiiiicate giess tubes manufacturers to compete for supmying berosiﬁcete gtess tubes to other converters in indie and atso do not effect the converters' abiﬁity to compete in sepptying berosiiicete giass tubes ta pharme cornpenies.

9.40 The OP has aise brcught out that discount schemes are not urrusuai in the giess tubing industry worid ever, inctuding in mdia and its target discount is based on the quantities purchased from it and that such disceunt is demanded by ait customers and granted in consideraticm of the economies of scaie which are generated by higher purchase veiurrres. That even the ¥P was offering discount schemes to its customers tit! such times it was in the business at giass tubing industry.

9.311 The Cemrrrission observes that target discount on its own may not be eiways enthzcrmpetitive. t-iewever, it cenditierrs for giving such disceunt are dissimiier then it wit! cause anthzempetitive effects in the market. This is particuteriy applicable in this case wherein different sets of cenditéons have been made eppiicabie tcrr grant of discount between verticaﬁy integrated ciewnstreem N enttether converters in downstream market due to which the converters in the downstream market as compared to theiv by the DP fer grant of discount, the competitive construct efthe market gets distorted.

9.42 On the basis of the facts on record the Cemmissicm ebserves that it is not disputed that both the structure icquantumi and peiicy (conditions) of disceurit is evideritiy dissimiiar fer the JV as com pared to other cerwerters. The disceunt policy has net been unifermiy eppiied by the DP and has led to a sari: of price discrimination where the same cemmedity has been 501:3 at different prices te \ ciitferent customers despite identicai cest fer the (JP.

9.43 The Commission further observes that the converters were also tor Sign Sale Purchase Agreement with the converters fer avaiiing discount , the ciause 2 of which was as under:

'Sciiott Giass indie appreciates commitment ................... .. fer not using or converting Chinese tubing and providing 01! information 8: proof in this regard."

9.44 The OP aise executes Suppiy Agreement with the converters arinuaiiy under which the converters are required to purchase the agreed quantity of giass tubes from the OF'. The Suppiy Agreement is so designed se as to ensure maximum quantity of saie cf the git-asst tubes at the GP and to reduce the abiiity of the converters to meet their requirement at the glass tubes from any other I source. The terms of Suppiy Agreement as submitted by some converters before QG bring out as under:

is Right in the beginni§ng(§:i3§%¥i§A.i "'~t3;je cerwerters have to agree to fix 9 "~g__ purchase a minimunq quiﬁrit eubes from the OP.

as S 5-3;.

ii. Discaunt is to he appiicabie only for NGC and NGA quantity.

iii. Grctaup discount as certain percentage an tritai purchase of NGC and NGA is given.

iv. if quantity purchased is mare, higher slab discount wit! be given, and if iess, the iower siab is appiicabie. V V. The O? wiii provide assistance to the converters signing suppiy agreement to achieve this voiume.

9.45 The Commission furtirer observes that functionai discount of OP is ccntingent upon the converters signing the Trade 'Mark Licence Agreement (TMLA), whidr according to the OP ism deal with the probiem of the 'mixing risk' at its prcidursts with the inferior quaiity Chinese imports.

9.46 The Cczmmissicm rsbserves that TiVii..A, Suppiy Agreement and the Marketing Support Agreement are intended ta achieve the objective of ensuring that the converters oniy promote and use Schott tubes.

9..-¢i»"."r' The Commissicm finds that with its discount poiices the DP has tried to bind the converters with it by giving incentives to purchase a minimum quantity right in the beginning of 3 year and paying ciiscount oniy at the end at the year depending upon actuai quantity pmcured.

9.48 The Commissirm also cbserves that terms of the TMLA are cane sided and heaviiy icvaded in favour of the GP and ever: contains prmrisions that it may reduce the converters tor perfosrsgrgt'"f'W§§ic\_g:f contract manufacturing for the OP. Aitimugh as rcrorrtencie does riot specificaiiy debar a converter from using tub 5 gr?

R. Purchase Agreement, Suppiy Agreement 8:. the Marketing Support Agreement which are required ta be sigheci by cczmretters, it becemes very cieartthat the GP has severely restrained use at tubes other than that at Schett.

Q49 The OP through its TMLA has eiso sought ta acquire the tegai right to enter the eremises cf the cenverters fer inspectitsn and to check the compiiance by the converters. in terms en' the agreement, the decisien as to whether the converters have breached the terms of the TMLA is to be unilatereﬁy 'determined by the DP.

9.50 Upon such uniiateral determination: at breech cf the terms of the TMU3. by the GP, TMLA seeks to bind the mmrerters into paying such damages as shat} be determined by the GP ( eithaugh the GP new pmpases to do away with this as per its submissions). Thus, the terms of TMLA, eiong with the Marketmge Support Agreement and the Sate ?UFChF:}$E.* Agreement of the OP are unfair for saie at its preducts.

9.51 That the discount poiicy efthe OP is intended to maintain its dominance in upstream reievant market ts evident since its discount poiitzy coupied with its 'Safe Purchase Agreement', 'Su:pp3y Agreement' and 'Marketing Support Agreement' with the converters, fumes the ccnverters to precute neariy at! .

their requirements of glass tubes from the GP in erder to get faveurabie terms.

The target distmsnt, functtonai discount read with TMLA and Marketing Support Agreement is ioyaity inducing to the detriment of other upstream.

ma rket players.

fixed. The finat discount depends upon the actuai eff take and it initiat cemmitment is not fulfitiied, they are given tower discczunt. in such a condition, a converter wit! try to reach its armuai target given to it to get higher discmmts. This woutd in turn hinct them tar get stuppties hem the C}? oniy since procurement from any ether seurce woutd mean tower discounts than agreed upen earher by the OP. Corwsecguentiy, the other manufacturers/supptiers epereting in upstream market might be adversely affected. As the Commissien has observed the eertier part at this order, target discount is not bed can its awn?' however, if certain conditions are imposed which restrict other ptayets frem effectivety competing in the market, then such target discounts shall have anti- competitive effects.

9.53 Further, the cenverters after signing Th/ILA witi virtuaiiy he forced to procure at! tubes hem the GP oniy because of inherent fear at inspecttcm of its premises by the GP and payment of damages in case the GP finds them using preducts not in cempiiehce of terms of the agreement. As per Marketing Support Agreement atse, the OP remains committed tot the promotien of preducte ef DP.

9.54 The Cemmisston observes that the discount poticy of the OP puts severe restraints en campetitive market structure in the reievant upstream market having effect of foreclosure of competition. The Commission, in this regard, observes that the informant and Twincity having exited from the market and Bherat Giess acquired by the OP, oniy Nipre-Triveni remains its cempetiter' tn upstream domestic market.

9.55 Thus, for the GP new what it J ietemains somewhat insulated 3' 1 of competition from Nipre--Triven{§{§d e if -;::§t.ts tfmm other countries, it is 'U -.

\\.

for this reasen that they have incenrivized the converters to bind 'ririern tiireugh its eferesaici poiicies. The transcript of recorcied eemrersatian in .3 meeting on 22.{}2.2010 between representatives of the GP and the cenverters submitted by the informant before the D8 wouici shew that disceunt realities and Marketing Supeert Agreement :3'? the GP are basicaiiy designed with a purpose te promote its preducts and tr: thwart competition in the upstream market. The eonversatirzn reveals that on the iines of strategies 01' any piayer exercising ciorninenee in a market, the downstream players {converters} are barred frem seiiirig among each other in order in prevent passibie ariaitrage due to differential iciisceurits arising out of such transactions and remain dependent upon the supplies frem the OP oniy.

9.56 The Commissien aise ehserves that in addition to the upstream market, the éisceunt peiicy of the UP is aise intencied to impair competition in ciewnstrearri market and infiict injuries upon the converters efher than Joint venture--~ Schotr Kaisiiai Due to iower discounts, the crmverters face dissimilar costs as compared to the iv which is impacting their profit margins. The margins of converters have been affected severeiy eise because of 'Long Term Tubing Suppiy Agreement of SCHDTT Rorrrgiess GmBH and the GP with SCHGTT Keisha which had mandated ea under;

"3. Deiiveries, Payment Terms and Prices (3) sceorr shall deliver' the eneeucrs as peeing prices and cenriitions set out in PTR 200? ~-- 12 -~ 18 rzriracfred gefxj if re _ ' ' \ crrrachea' as Exhibit 2 .5 hereto. The ' jixirxir C! and PT! 2907' ~--- :12 --~ 18 § ..

in the Exhibits xxx a and b attached hereta. The price increase for the Finaaciai Year ending xxx wili be xxx% of the appropriate SCHOTT price increase for the Indian market which wiii became effective fram xxx and anti! xxx there wiii be no farther price increase. After xxx, the percentage price increase which SCHGTT appiies reguiarly for ather custamers in the Indian market (Le. addition ta the price far other custamers as of March xxx} wiii also appiy ta icfaisha. Far example, for the Financiai Year ending xxx the percentage price increase which is applied to other customers ymindia on the price for them as of xxx wiii be appiieai ta the price5 far Kaisiza as on xxx. "

9.5?' Thus, the increase in prices of Tubes for the N were ta remain at a tower levei tiii xxx after the finaacia! year 2008-433$ since the prices were mat to be raised even if price of glass tubes were increased for other converters. Percentage increase after xxx was to be made appiicabie to Keisha, the N aniy on the base price at xxx. Further, after conciusion of Long 'term Suppiy Agreement, another agreement was canciaded in which it has been stated as unden "' As icing as Kaisha is. cur biggest custamer in India and aniy under this condition Kaisha wiiiebe given price advantage of 10% with regard to atizer inciian converters wiwa purchase a camparabie product partfaiia from SCHCITT. in the event, that Kaiaha ceases to be our biggest customer in india, we wiii discuss with Kaisha abaut a change of the price advantage. if no agreement can be reached, we a reduction af the minimum quantities to be purchased u 9.58 Thus, a perpetuai price irieneﬁt has heen given to Schott iiaisha, the JV. The investigation by US has brought out that there has been increase in the cost of tubes of GP due to various factors like energy cost after 2.008. Corisequerrtiy their price for cemrerteris aiscr registered an increase excerpt for JV which was protected by Long Term Tubing Supply Agreement. increase in prices at tubes et GP fer converters other than the N has been reperted upto 27?/€:'during 2008 -11 by D6 on the basis of the cieteiis furnished by the cemrerters. " ' ' 9.59 in anaiyzing the impact an the downstream market, the Cemrnission feeis that cegnizaece needs to be taken at the cempetitive construct at the market and the nature at cempetitien among the converters. The 'facts and materials breught on recerci Show that Schott Keisha is the iargest tube converter in India feiiowed by other pieyers iike Tube Giass Centainers Pvt. Ltd. and Kiasspacic Pvt. Limited. The rest of the market is fragmented across severai srneii pieyers.

9.60 it has been submitted that prices cit centariners are negotiated between the converters and pharmeceuticei companies on one to we basis. The ccmverters are eisc) constrained on their finai sate price since the OP had mandated them tr) maintain a 'fair price' and they are not supposed ta charge a price different than the W. 351 The Commissien observes that GP has stated that the 'favQura'bie terms' given to the JV Schott Keisha do not gee§e;;-eny eppreciabie adverse effect an ifssrii. I.' "

any of the other converters in trrcii suppiied by Schett Keisha te pharma companies are priced :ia'Ej:( riot tieiew) in cemparisen 4;

S .

tea the prices charged by the other converters. DES has also reported that the prices charged by Schett Keisha are simiiar to the prices charged by ether cmwerters making suppiies to a particuiar customer.

9.62 The Csmmissicm further observes that the ietter dated 21.62.2531 er Adit Cantainers Pvt. Ltd. and the Eetter dated 22.82.2011 cf Endian Scientiﬁc Shes industries in this regard to the D6: are reﬁevant wherein it has been stated that the ianéed prices of giass ampeuies of Keisha and the price of ampmsies manufactured by them remains same. i';ha§.'T'e¥.so been stated that the cost of giass tubes aemunt for 50-6C3% of the seiiing price of the finished products.

9.63 The relevant extract cf ietter dated 21.02.2011 of Adi': Containers addressed to D6 giving detaiis abeut the same 35 reproduced as under;

" in general there is no price difference between the gfass ampoules and viais supplied by us and Schefr Keisha Pvt. Ltd. to the pharnwateruticai customers where we are common suppliers for identicai products. It is me practice of the phcrrmaceuticai companies to compare the landed prices of gicrss crmpauies net of modvcztfor various suppiiera. in case if there is any price advantage accruing re the pharmaceuticai company on cxccount of supplies from advantage accruing to the pharmaceutical company an account of supplies fram backward areas / tax havens the benefit for the same is given to the vendor. The price ciifferemre accrued in the pharmaceuticai campc:.n}I is added to the basic price of the suppiier who is suppfying [re the pharmaceutical company.

In our case we are commcm suppiiers ygifh Srztgott Keisha at two gaharmaceuticaf M r . fa.

campanies ncrmeiy Korten Pf1arm'g'.\B§;\& .3 glass ampaufes for cmward sn{,c;;p§/ r \ is pmrzuring various sizes cf '0 'E

-:32 ' vérarfﬁs. {Eur landed ,D£'IC€ :5 almost \ r..;~ 'J 'r' 5 \ .

\:?>-'?* 2 _\ simiim as that 0}' ifaiaha even though Keisha is getting ar higher basis: price of 4% {an account of the fact that the manufacturing unit of Keisha is imseci in Damian which enjoys a tax holiday). Similar situation exists with yet another customer Aristo Pharrrmceuticcri Ltd. where both af us are suppiying 3.5 mi clear vials.

in both the cases S£3hGi"fK£'1iSi'i€2:' and we supply giass ampouies and viaie using Schott Glass tubes. This situation prevaiis even though Schott Kaisha receives a much higher disirourn' compared to us which texts are at as clear disadvantage tampered to Schott Kaisha in terms of profit. As glass tube is the singie largest cost eiemerit in our testing there is a wide disparity between in the final prafits we derive from supplying the same product using the same tube and getting the same finai price. "

9.64 The 'fact that pharma companies in practice dc: not grant differentiai prices to their suppiiers of Giass Ampouies and Viais when purchasing identicai prczducts 3150 gets clear tram Setter dated 22.92.2011 of indian Scientific Giass T industries to» D6 in which it has been stated as under;

R' Pharmaceutical coimpanies in practice :19 not grant differentiai prices to their suppliers of Glass Ampauies and viais when purchasing identical pmducts. However, in case if one of their suppiier is from tax paying area and other 5u;3piier' is fmm btxckwardi area the pimrmaceutica! company increases the basic price of the supplier who is supplying_ from backwardi area ta the extent of the Sales Tax eiement.

4* Ag' For example in case sf Stmofi 'ref tt{:i{r:isi1a and aur company tmth supply Em! and Smi An1ber§:.§§f§Qp

1.) \':§::f2c>tt Tube, Scimtt Keisha ' . K 5 ,.;:u' ..

Ampouies data not command any higher price them us an accaunf of quciiity. Schori Keisha is paid :2 higher price aniy to the extent inf sales tax (around 4%) which is in WSW sf the fact that Schoft Kaisha is iocated in Ca' backward area cf Damcm whére they have been granted 5: tax hoiida;/far is certain period.

in our industry iube cost is the biggest item in am" cast sf praduztiicm and accounts for nearly 50-60% of the seiiing price of our finished products. in View of the substantially higher dismount" given to Schott Keisha we are put to it:

great disadvantage and results in very {ow margin compares' is our competitor Sciiatt Kaishci. As a result cf this our growth is severely affected and hence needs your intervention to set right the situation."

9.68 The Ccammissicm on the basis of records of investigatitm notes that the aforesaid statements of the two converters are aiso supported by the purchase orders cf Schott Kaisha and Adi': Containers in respect of saie 1:0 Karten Pharmaceuticals Limiited which show that the prices of ampcuies charged by bath these entities are aimosi: similar, aibeit the price cf ampciuies of Kaisha are siightiy cm a higher side.

9.86 Thai Commissican Qbserves that since Kaisha receives much higher discounts an tubes (input cost) and price of ampcuies (iiriai gomduct) remains the same , a variation in the profits on sales of ampouies for iiaisha and the converters is bound to occur. in this regard. the Commissian notes that vide submissiims dated 04.11.2011, .«*'s.*€i*':'<~ if ' . i . 3 ~'\-""'\'~\' discounts offered to Kaisha and? oigie £2.

and 2010--Zi,1 as under;

i=.t.o3--m3 F-.Y. D9-1,0 ir.v.1o--n Name of r Target Funtﬂﬂﬂii Price Tara! Target Functicmai Prke Yotair Target Funct-lanai Price Tots! ilunuerter Beneﬁt V I Benefit Beneﬁt Scimtt K xx xx xx xx xx xx xx xx xx xx xx xx Keisha Tube 7 xx xx xx xx xx xx xx xx xx xx xx xx Glass Lisa xx xx xx xx xx xx xx xx xx xx H xx xx Séi xx xx xx xx xx xx xx xx ' xx xx xx . xx Kishure mt _ xx xx xx xx xx xx xx xx K xx xx xx Nit xx xx xx _ xx xx xx xx xx xx xx xx xx Eumbay xx xx xx xx xx xx xx xx xx xx xx xx lass _ iixmbika xx xx xx xx H xx xx xx xx xx xx xx xx kiasspack : xx xx xx xx ' xx xx xx xx xx xx xx xx §V£AK xx xx xx xx xx xx xx xx' xx ' xx xx xx N 3613900: xx xx xx xx xx xx xx xx xx xx xx xx ilxegis xx xx xx xx xx xx, N _ xx 7 xx xx xx xx xx K §D§1aw'a~,-'_ xx xx xx 7 xx xx xx xx xx xx xx 3 xx xx 9.87 The above chart straws that discount and price benefit given etc» the JV as compared to converters is' much mare and ccmsequentiy the cost of procurement of tubes for ccmverters other than the iv would aise be cm a higher side. While the N has been giver: discount and price benefit of xx')/6 , some of other converters have also been given discounts of eniy xx%. Functional discount has not been given to many converters presumabiy since the converters did not sign TMLA and did not agree ta promete the tubes of GP aniy.

9.68 in such a case when the cost at procurement Bf tu beg {which ccpmpriee of 3 major portian er cost of manufacture of empeuies) is. :much iower for N and prices of end products i.e. price ampeuies to the pharma companies remain iéenticei and same ( as per admissions of the UP, the prices of ampeuies efiv are even higher) the profit margin en' dewnstream converters is bound tn be affected. in order to assess the effect and the significance of the ciiscciurrt ; m.\::1,,<2' . . , _ ~" 33>"

potentiai injury te cempetitien ciueggto "'.\'* e i 0:

x \;.\ , before; depreciation and tax has also been Sacked into. The figure-":5 reveai the faifawing;

STATEMENT smwamg FENANCEAL RESULTS ____§_3F unmaus CONVERTERS Profit before Eaepreciation 8; Tax 5.5!. Name uf the 2306 3 289? 2988 2Qi3§ 2016 Czmvertor

1. Schott Keisha xxx% xxx% 3(1(X°u xx.x% . xxx% 2;. : Tube Glass xx::% xxx% xxx% K3t3={% T .Tx::x%

3. Klasspack xxx% xxx% T xxx% xxx% xxx% 4, Lisa Ampouies xxx% xxx% xxx% T xxx% xxx%

5. Adit Cantainers xxx% xxx% xxx% xxx% xxx%

5. ass: " " x:<x% T xxx% xxx% xxx% xxx% '17. Khemka Giass xxx% xxx% xxx% xxx% xxx%

3. M Kishore xxx% § x>:x% [ XXX% xxx% xxx% industries

9. Mak Ampouies x>bc% xxx% xxx% xxx% xxx%

16. Bombay Glass xxx% xxx% xxx% xxx% xxx% Bicowing M T 11.1 M Ambika Parentais xx:wz% 3 x3<x% xx>:% xxx% xxx'3{»

12. Amara Ampouiés xxx% xxx% xxx% xxx% xxx%

13. Eimawaﬁ Glass xxx% m:x% xxx% 2»:xx% H xxx?/5 9.69 The Commisaon observes that it is evident fmm the above chart that whiie the profit margin of Kaishahas rev' area! 3 considerable 'increase, from \ \-.

_.n'' - \ z<x;:% in EGG? ta xxx% in 2QE3E2'--10, .3 ' canverters have declined .

9.73 The difference in profitability appears to be emanating due to the difference in discounts giving rise to adverse cost structure to other converters as cermpered to the N. This in turn is causing harm to the competixtijre ability of the other converters and consequently harm to competitien in the downstream relevant. time to the abusive acts and practices of the OP, margins of other converters are getting squeezeoi.

9.71 TheTVC_o.mmission in this context has also taken into account and considered the arguments of the OP that the sales of converters increased over the years and hence there is no adverse impact on tiiem. in this regard, the Commission observes that the sales of the converters have generaiiy increased in the last three years. However, more sales of downstream precincts out of tubes supplied by the GP by the converters imply more saies of the tubes (upstream products) for the GP and increase in its sales volumes. At the same time, since the profit margins are getting squeezed for the converters in spite of increase in sales, their ability to compete with the .lV whose profitebiiity is increasing over the years would be considerably constrained.

9.72 The Commission notes from the details of total sales and profits before the depreciation and tax in respect of rewnverters that even though the sales in some cases were on rise during 2007-08, 2908-09 and 2i}{)9~1i), the profit before depreciation and tax had declined.

973 in order to assess the 'giver: to the 3V or: otiie-r converters, the Commission has co :'er:iI;itotei cliscouot in absolute figures given to it on basic price V. ~&§:\§508~U9 arid 20i39--10. The Commission notes that iota? discuunt during this periad given tn the JV during the period was as under;

ﬂiscaunil Schatt Giass {I} Pvt. std. Schatt, ﬁermasw-~ 4- T Rebate 26:)? «as zsasas T 2009- 10 2003 «as zoos so Target xxx xxx M xxx xxx xxx Functional Bonus xsm I xxx xxx xxx xxx Bmius { Z xxx xxx xxx Z xxx M xxx Others M xxx xxx T xxx xxx M xxx Tom xxx xxx xxx xxx xxx 9.374 Thus, during the year 2008--09, the N was given a dﬁscount of Rs. xxx and during 2009-10 the disccxunt given was Rs. xxx Crave. in compatison, the combined profit: before depreciation and tax during the year 2008439 of major 12 converters other than the JV was around Rs xxx Crore, more than disceunt given to the N. in such a situatian, when the combined profit cf aii maior converters in the market is §ess than the discount given to the JV, Commissicm observes that the conveﬁers wuuld mt be in a position to sustain in the market in the Song run since their margins are uncier severe stress.

935 The Commissmn aiso cxhserves that the profit befare depreciatiuns and tax an' the 3V during 2088-09 was aimut Rs. xxx Crare and during 2009-10 it was Rs. xxx s.:mre,while discount given by thﬁ-3'A_§iP sisters entities was to the tune of Rs. xxx Crate and RS1? xxx Cros'§':}:é;ssgt 'ssﬂihput haff of the tcztai profit. 5 7?' \ \ .5 gr?

i ,,, 7, ' ''~.2'~Jf- lﬁirp Thus, the arguments of the {JP that the proﬁtabiiity of the N is more since it is efficient in compariscm to other ctmvettertsﬂdces net hoid gocsd.

$.76 The Commission further ebserves that in erdet to strengthen its pos§tiD.nt..\..._\.;.

in both upstream and downstream market, the O? has taken stegas to reduce competition bath in upstream as weﬁ as downstteam market. in the downstream market, Keisha Manufacturers before formation of 33! was the market teadet and thereforte, the 0?' formed a JV with it to strengthen its position in that matket. }t the margins at the converters are squeezed to a tevei that they find it difficuit to survive, then they met aisu apt to became a part of the overali business structure of the OF. The OP had tried to fmmt JV with ether converters aiso under its overaﬁ business strategy. in this regard, the Commission ﬁnds the statement of Managing {)itectca.r of Kiasspack Pvt.

Ltd. before the DG relevant:

"Q18 Has Scfwtt ever offered to you to form 0 joint venture with them er dc you have fnfermatien of any such offer to any other cantverters? Why dc: you think they chose Keisha over the athers?

Ans. Around 2{303--0»:? Schott Germany had expressed their interest in a JV with Kiasspack aicngwith other Converters namely, Keisha Tube (31055 and Aegis. We befieve that these companies were sharffisted in terms of thefr business share with Schatt Giass Tubing Division as well as otherfacrors such as capacity, infrastructure and market share. As per our urnierstcznding we beiieve that Keisha was the iargest camper; in the secter with consumption infrastmcture exceedirwg 3209 t0r7§:fE§%§tq;£;§g tnrmum (the threshold to h 3 . .

justify investment for CI furnace r *ggrt5mjuct;0n cf gfass tubes} \_i( f.

oiongwith the required finoncioi muscie power that couid have posed competition to Sciiort in tubing segment'. Proiarobiy, by putting up a JV with Keisha, Scoot: has igirggi core of its potential competitor'. "

9.7? The Commission notes that the Competition Act, 2092 prohibits both discriminatory pricing as weii as conditions imposed by a dominant enterprise for saie of its precincts. The Robinson Patman Act (3336) in the US aiso makes it uniawfui for a seiier "to discriminate in prices between riiffereni: purchasers"

of the some products "where the effect of such discrimination may be to substantiaiiy iesseri competii:ion....". Further, according to Artieie 82 (Ci of the EC Treaty, if a dominant ﬁrm appiies "oiissimiiar conoiitions to equivaient transactions with other trading parties, thereby piecing them at competitive disadvantage", it is consiciereci an abuse of dominant position. Thus, in other jurisdictions as weii discrimination has been considered bad that entaiis estabiishrnerit of (i) dissimiiar treatment to eqoivaierit transaoizions and (ii) fuifiiiment of the coniditions that competition is harmed or is iikeiy to be harmed.

938 The Commission in the backdrop of the foregoing has carefuiiy considered the arguments of the GP that Schott Keisha: and other converters are not simiiariy pieced and since Soiiott i{aisha--.JV is its major customer, it is giving more discounts to it as an incentive. After giving due consideration to the contentioin of the UP, the Commission observes that giving favourabie discount to a customer who is pi'QVE'§§'§ﬁg§..,'{I}pf{$ business may not be anti-

.

competitive provided there is no a"ri'fs ompetition in the market. in Ririikferent prices to different . xv'.

customers fer the same and etguivaierzt product in terms ef etiaiity and ether characteristics. The price 01' tubes fer the 3V has been fixed under Lang Term Tubing Suppiy Agreement Q>tiyLV_.the 0?'. Due to this arrarigemerit, the JV wiii aiways be getting eriee benefits over other cemrerters even if it does net get any target er functioriai disceunt. Whiie price fer tubes has increased as has been reported by DG for ether cenverters, since signing at' Leng Term Tubing Suppiy Agreement it has remained the same for the JV. Therefore, dissimiier eenditions of series have been in}'mesed"bv the GP for equiveierst tra'nsact'ions between JV and other cenvrerters. in addition to price benefit, the Q? is net eniy giving enhanced quantum of disceunt to the group N in cemperisen with the ether cenvertersg but is aisa aepiying dissimiiar coneitions for giving such discourits. Aii these ftacters are giving cempetitive edge to the N over other competiters in the downstream market which is refiected in their cieciining prttriit margins. The margins at ether converters in dewnstreern marker. vis-e-

via the JV have aiso gone dawn cerzsicierebiy over the years.

§.?"3 AI! reievam: evidences and information gathered by the {)6 with respect to the irripiemeritetieri mechanism and detaiis of actual disbursement of target diisceurrt have aiso been exarrrined by the Cemrnission. The converters in their statements have ciaimed that the OP had been behaving in favour of a set ef buyers and discriminating against the ethers through various means, target discount being {me of them. Whereas, the GP, in their submissiens, auerred i{§'lii3i'i'y pieced cust0rrrers..

tfxateriais can record has faund . , . gk ( aieief gtiie dzsccurst were net as per J5)' ' the deciereci discount scheciuie. Simiiariy pieced buyers in terms of voiume purchased in a given year were found to have been granted different rates of target discount. The Suppiy Agreements aiso hind the converters to purchase tubes oniy from the SP. The "conditions in the functional discount poiicy toiiowed tiii 201:3, oarticuiariy deharring the use of Chinese tubes raises serious competition concerns. The revised iunetionai discount ooiiey read with TMLA, iviarireting Support agreement also has potentiai to cause competition concerns in both upstream and downstream reievant smarizet as has been brought out in previous pares.

9.81 The reievarrt products in the instant case being differentiated in terms of price and quaiity or technicai parameters, restriction by the dominant suepiier on use of any other ouaiity variant of tubes or a class of tubes such as Chinese impose restriction on consumer choice. Therefore, the Commission observes that noiiey of discount pursued by the OP has impaired the competitive ebiiity of converters ieaoing to a weaker competitive market structure in the downstream containers industry. The Commission eiso notes that it is not that the discount structure read with other poiices of UP is ciesigned to meet competition since the OP is a dominant oiayer in the upstream market and its reiateri concern i.e. JV, Schott Keisha is also .3 ieader in downstream market. Rather it appears to he with a purpose to maintain dominance of the GP and its N in both the upstream and downstream markets. it couid be due to this strategy that the informant has gone out of the upstream market end the mari<et share of i'iipro- Triveni which was xx% in ruostream market is reduced '_..-~* 4 . , .

. Further, the margins of ;,iderebii,r and if the impugned »'\ discrirninatory ciiscourits continue, the competitive structure in downstream market wouio aiso be impaired.

8.82 The Commission observes that in other jurisdictions such a discount poiicy of as dominant enterprise which has exclusionary and expioitative effect has been severeiy condemneci. The Court of First instance of EU-in case of Manufacture frangafse dos pneumotiques Micheiirr v Commission, (Michelin Ii), [T«2{)3/€31] has observed that quantity rebates not based on cost efticiencies are not economicaiiy iostiiied and is discrirriihistorgr arising out of abuse of dominant of an enterprise within the meaning of Articie 82(2).

9.83 The Commission observes that target discounts as such shouici normaiiy be embedded in efficiency and economies of scaie of an enterprise which is commanding a position of dominance. it may be a case that increase in the quantity suppiied may result in iower overaii costs for a dominant supplier which it wiii pass on to its customers in the form of a more favourabie discount. However, whiie giving enhanced discount under iavourabie conditions to W, cost does not appear to be a key consideration for the OP. Since the price has aireedy been ﬁxed and determined for supoiy of tubes to the it! under Long Term Tubing Suppiy Agreement in comparison to other converters, cost incurred by the GP for suopiy of tubes to JV appears to have no bearings upon the price. Consequeintiy, it cannot be said that the discount to the N is iinkeri with the cost efficiency with regard to the production of the tubes. Moreover, if a discount scherhe which speiis out such criteria that effectiveiy iairid the customers to obtevihustiopiies from a dominant piayer during a year for avaiiing a highegfffaiseoo Ahwhieh is more faivourabie to the N of that dominant piayer age A isiooitbenign for competition. i '.5 \V'' »\E, :-

9.84 The Ccimmission in this regard notes that in Portuguese Airpcrts [Case C}-T 153/99f the European Commission had adapted a decision establishing that the undertaking was in breach of Artieie 86 read in conjunction with Article 82 in respect of a system of ciisceu nts can iemciing charges at the airperts of Lisbon, Gporto, Fate and the Azeres. Qiseeunts were effereci to airiirtes accoirciieg' to the number of fiiights that iancied at Formguese airports. The European Ceurt of Justice (E8) in this case ruied that the ruies for\_c_:eii:t§_iating the discmmts' must not resuit in the appiication «of dissimiier conciitiens to equivaient transactions contrary to Articie 82(2) (C).

385 Further, target disceunts coupied with ficieiity rebates i.e. discounts offered as a counterpart of a commitment from the purchaser to place aii or most of its orders to the seiler granting the rebate like functional discounts as in the instant case, be they iarge or smaii, shaii became a potent horiizentai exciusienary device aimed at fereciosing competition.

9.86 The decisions of European Commission and iudgments of EC} inveiving ficieiity rebates have condemned them as abusive conduct of dominant enterprise within the meaning of Articie 82(c). in Hejffmane~i.e Reche { 85/?°6, ECR[1979]--461} the deminant izomeany had granted rebates to 3 number of' purchasers, as ea rrounterpart to the commitment from the purchasers to acquire aii or most of their vitamins er certain vitamins from Heffmann--i..a Roche. The Cemmissicm heir} that thejs;e...;cem:r_ects, mi: titer one hand, had a ,1' _. V ,5' vitamins producers and, est they appiied eiissimiiar *-'--' 2 _,§. 3 . _. 'e 9.8? Bearing in mind the construct of the upstream and downstream reievent maritet(s) and the nature of competitwn ameng the converters, having done a comprehensiive ariaiysis of the quaiitative and quantitative evicierices, the Commission arrives at e cenciusiorz 'that the disceunt peiici: of the O? is berth unfair and discriminatory and is vioiative of previsiens of secticm 4(2)(e} (ii and 4 (2}(a){ii} of the Act, which prehibits any deminant enterrsrise from irnpesing directiy or indirectly unfair or discriminatory crmditioris and prices in saie cf .\.,.gQa;;-ﬁg.' -3::--V Subdssue 3 :Whether the atereseid peiicies at SF are exciusienery and limit and restrict the market in vieiation et prmrisions at section 442} (5) ii) and are 3159 causing deniei at market access it: terms at section eiziici efithe Act?

9.88 The Commission on the basis of aforesaid analysis notes that the discount peiicies of the OP coupieci with the Trader Mark Licence Agreement, Suppiy Agreement and Marketing Support Agreement attempt to bind the converters to precure giass tubes oniy tram it. The statements of converters recorded before the DE show that they are wary of signing "i"iVii.A since it puts % restrictions on them to purchase tubes frem any other sciurtze, ever; if TIVKA cities not have an express provision of exclusivity 0'? cieeiirig with the GP. ' 9.89 The Commission observes that the eferesaid acts at the 0?' tr: ensure that the ccmverters do riot switch over ten the ether suppiiers in upstream market inciuciing importsi, iimits the overaii i11arketAei_tTt.ibe giass and is ' "'.V_,,.»""_' .7.' __ .7» vioiative at previsicms of sectie.rﬁ\\'e(Z is) "

dominant enterprise from engagiirigiin _ :€5i._::the Act, which prohibiits 3 'A \ . . . .

acticetwhich irmats or restricts the market' 9.90 The Commission also observes that the discount poiitcies of the OP have exciusionary effect as ﬁigcusseci in preceding paras. The converters in their statements before 96 have brought out that the DP restrains them from using any other giass tube and threatens to stoo supoiies if they do so. in order to buttress their contention on this point, detaiis have been submitted by Kisiiore industries to Show that suspoiies to it were stopped since it had agreed to take up job work for Strides Areoiabst Limited, a pharma company who was imooﬁingrtubes from sources ottier the OP. The Commission aisoeoioeerves that the functionai discount policy read with TMLA bind the convertera to promote tubes of the UP oniy for awaiting functiona! discount. This has an exciusionary effect on the competitors of the OP in upstream relevant market since if the conditions imposed by the OP are foiioweci by ali the converters, it would be difficuit for the competitors of the GP to get customers for their products.

391 However, at the same time, the Commission (totes not find that the aforesaid acts and practices of GP deny access to some essentiai faciiities due to which the other upstream menufatttires are not in a position to make entry in the market, as not oniy imports. are taking place in some measure out Nipro-: Triveni has aiso made entry in the market, aibeit with reiativeiy smaiier market share. "i'hez'efore, aithough there is 3 case against the C)? of induiging in acts and practices which limit the market and aiso that discounts of the OP have » excmsionary effects, it cannot be said that the actions of the €)P~have~.Eed to sun» issue 4: Whether the Q? has ieveraged its pnsiticn of dominance in reievant upstream market at nentrai i.iSP«»1 giass tubes tn enter into air protect the relevant downstream market ni cnrrtainers, i.e., ampnuies, wrists;

dentai cartriﬁges and syringes made cut of 'ﬁieutrai USF4 Bornsiiicate Giass Tubes ?

9.92 As has been brought nut in para 9.69 above, Prnfit before deprecistinn & tax of iv, Schcrtt Kaisha has increased considerabiy since 2008 when it was farmed. argued that prnfitahiiity of Schntt riaisha must be with reference to its ezffiiciency and aise to the past performance of Kaisha Manufacturing Private Limited . However, in this regard, the Commissian notes that prior to formations of N, the profit before depreciation and tax of Kaisiia Manufacturing Private Limited were very iow (xxx in 200?-0S),as compared to the period when JV was formed and became fully nperationai ( it was xxx % in 2008-89 and xxx % in 20i39~1i3). in fact the Profit before depreciaticm and tax of Kaisha before iv was never as impressive as after the formation of iv in 2908. Thus, the rising profits of Schott Kaishagiir' cannot be snieiy attriburted tn the efficiency and past performance of Kaisha Manufacturing Private Lirnited.

9.93 The Cnrnmissicm notes that as discussed in foregoing paras, the 3v is getting favourabie treatment on accaunit of ciiscaunts from the GP. in . addition, the price of tubes for 3V is aiso rziifferent and inweras compared tn other cnrwerters. As discusrseci in earlier paras at this order, as per Lang Term Tuning Suppiy Agreement §i:'bOtt AG with the iv, the price for "r-'.\<\ ""'"' ' <\.\.\.

supply cf tubes to Schott K3' 5 W O rnﬁaiiitat static for xxx years (Le. up to xxx). in its repiy befere D6, Schott Keisha has aise submitted that since met there has been no price increase in suppiy of tubes.

9.94 After xxx, the percentage price increase which Schett eeeiies regutarly fer other customers in the Hmiian market was to be appiied to Scihott-E<a§s§1e as weii. However, the basis for the inereese in price was to be kept as on xxx, instead of xxx as in case of other converters. During the period after the fermetion of N, re7ems reported that there has been about xxx % rise in price tititiheiitetiiesietirtﬁieﬁe for the other converters. Thus, the DP, having position of deminance in upstream market, with its Long Term Tubing Seppiy Agreement with Schott Keisha, its verticaiiy integrated firm, has ensured that eompetiters of the JV dc) not have a Ieve! piaying fieid.

935 The Commission notes that Schcatt Keisha, being the JV of Scrrett, has been given preferential treatment over the other converters in ensuring uninterrupted suppiies er the required sizes of the giass tubes to it. This has been a cause of major cempieinit. against the OP by the converters before DE.

9.96 The Cernmissien finds it reievant to take mate of rziause (5) under the heading no.3, 'ﬁeiiverieis, Payment Terms and Prices' of the Long Term Tubing Suppiy Agreement, which stipuiates that 'In suppiying products ta custemers in indict: Schatt wiil give priority to Keisha'. Thus, the OP is under ebiigatien ta make' sup.§3.¥§ese.to its JV, which is not avaﬁabiie te other converters.

$9? in his statement before President of SCHGTT Giess indie (the G?) has stated 'chef 5. 2 times in 2008 8; September 32 '3 / )\§ / 2010 when ii: was met abie to make timeiy supplies to its custcimers. However, even during such times pharma campanies sourcing their sugapiies fmm Schott Kaisha were assured of timeiy cieiiveries. The statement is indicative «of the fact that in making supplies, the JV is given preference over the other converters.

938 The Ccimmission aisa finds statements of the cenverters before' DG relevant in which it is confirmed that they face interruptirons in supplies whiie N is assured cf regular and uninterrupted suppiies. Repiy cf Ami! Emma: Gupta of Adi: Containers "5.Have you ever been a victim of SchGt'i"5 so cuffed abusive canduct? What do you really mean by abusive conduct?

Ans. Yes, we have suffered because of curtaiiment of supplies despite being «:1 big purchaser of $6! and a very prompt pay master. We were suppiiers of viais to Shanta Bic') Tech and Kaisha wanted ta enter in Shanta to make suppiies. To get us in fine, our tubing was suspended by 56'! so that we suppiy at the same prices as Kaisha (0: higher price} and also to demanstrate to Shanta that it is better to buy from Keisha if they want to have continuous Supply ofschoirt tube made product. ...... A130 our converting business for Strides Arcoiab Ltd. had to be canceiled on account of 'threats from Smart which did mt aiiaw us ' to undertake job work of canversion for tubes imparted by Strides from NEG Japan as this woufd have meant fewer cost of ﬁ)i:OCU:"'€i?"i€!7i' fer strides which was otherwise _._buy:'ng frcmfi i<ais§1i;t\~:-.

tubes from SC?! which wczufd gig ca L53 forced ts withdraw in the ma .£g_.{uficantly higher prices. We w§_3i'e Remy cf Kishere industries 'M/s. SCHOTT Giass India Pvt. Ltd. has insisted us to self our product at {I particuiar price to M/5. Bioccm i.td.{Bcmgaiore) and M/5. Strides Arcaicib Ltd. {ﬂengaiorej since their joint venture company was czise suppiying to these Pharmaceutical companies. As all this was verbai communimfion na ccrrespondence can be produced.

"....SCHGT'T Group has criweys been ijgjying to eiiminece competition of tubing by various means since their in-cepticmi in our country. Tiiereafter, they are also trying to eliminate competition of ampauies and vials by favouring their Joint Venture Converter Company. Also an many occasions they have stopped our supplies cm various pretests such as:

{at} Accepting Job work afﬁtrides Arcolczbs Ltd.

(£2) Offering scimpies of Vials manufczctured ivy other tubing.

(c) Prices offered to Pharmaceuticai Companies.

{d} Using any other tubing.

(e) Not giving the fist of our customers.

(f) Not ciisciosing the prices of our customers.

(g) Not signing their Licence Agreement in which penalty of Rs.?.C9 miiiien was imposed an us. ~~-»"

9.99 Certain ewmaiis exchanged between the GP and Kishure industries cm the issue of interruption in suppiies have 3130 been placed on record. in this V connection, the repiies of Dr. Anii Aggarwai cf Mak Ampouies and Sandeep Khemka of £36! aisg iniciicate \\ '3 'V... ,.\ Q}?-....§r:d its ether group ccmcerns are ,,.r,s,__,., promuting JV at the expense5=b?°e;eh:

V, '« . VKCV L:}O"57;'3g«g:

9.190 The SP has also ensured that the prices of ccmtainers in dawnstream market are maintained. On recarci, there is an evicience in form cf 2-: meeting czmwened by the OP on 81.08.2008 at How Sea Princess Liuhlu} in which issues regarding coordinaﬁan of prliclés 5',' the C)? which a convrericer could offer were discussed. A copy of the letter inviting the canverters for the said meeting, which has been sent by then GM af the §3§3, Shri Rakesh Srivastava, has been enclosed by converters. The letter reaﬁs as under:

"Dear Sir, All leading manufacturers of czmpoule and vials are in 0! very critical sltuatian. They have been experiencing huge increase in the prices of production inputs like tubing, gas, oxygen, electric, etc. To discover approach to serve Pharmaceutical wmpanies better, yau are invited to participate in rneeting at Hotel Sea Princess {.luhu) at 5.00 PM on 1" of August 2008. The meeting will be followed by cocktail dinner.

Please make yourself available to participant in the meeting. Best Regards, Rakes}? Srivastava' 9.101 The deliberations in the meeting a§___;5,t various colnverters before BG show that the DP was trying to V' could effer to the Pharma campanie 117 {E} Statement at Shari Anti Kumat Gupta, Managing Qttecter et edit Centainets Pvtttd "14. Please refer ta Annexure-J6 8: 1? of your reply wherein, the converters were tailed by Shri Raftesh Srivestava, DGM Scales and Marketing cf Schott Giass India Pvt.Ltd., on 1-$2008 for discovering approach to serve Phatrmacreuticai cemjeanies better. What happened in this meeting?

Ans. In this meeting the converters were asked to disciose the names of the custemers af their preducts aiongwith the""price'§ at which the supplies were being made to the Pharma Companies. They were tale' that no one else wilt enter the Pharma companies where each 0}' us was making supplies respectiveiy. However, eff of us were directed to make suppiies ersiy at prices dictated try 581/ Keisha which was higher than the prices prevailing then. The joint venture of Schott 'Keisha was just wheat to he operationaiized then. Therefore, we were restricted from expanding our customer base. It can be seen from Annexure-1? 0f our reply that the Keisha reserved for itseﬂt' virtuafiy the whole of the Pimrmaceuticai market and 51150 allowed some 0}' its favoured ccmverters iike Tube Giess, Kiasspack to have as greater share than warranted by their eperatiens. We had ta agree under duress as this was {I time of short suppiiy ef gfass tubes, i<.'epcar's tubing business had been shut, and we had na ea" .

118

iii) Statement 9% Dr.An§E Aggarwai, Managing Birecter, wife Peak Ampauies ?a:t.§.td. i ".10. There was as meeting of converters organized by Sim' Rakesh Srivestmre of SGI at Hotel Sea Princess (Ciuhu) cm.1.8.2008 cm the issue of pricing of the product. Souici yew tell briefly as to what was discussed in the said meeting?

Ans. Firstiy, Mrﬂakeeh Srivastavci cf SC-ii stated that he Wanted to prepare a data of GI!' Phermaceuticai companies using ampauies/vials with respective ncimie 0}' mnverters suppiying in that Compcvny." He then suggeeteci that no converter should approach another ::i3nverfer's customers and shouid stick to their respective customers as per the data sheet prepared in that meeting, He aiso stated that in case smother canveri'eir'5 customer is approached by us, then we have to first take the rate from the existing converter and net quote beiew the same.

12. Has the above direction o_f5{3i been compiieci by you in parficuiar and the other converters in generai? .

Ans. 1 had to campiy with the above stated ciiktmf as aiorigwith the same, they had issues?' threat to dismntinue my suppiy in case i did rm' abide by the same.

it is my belief that under ifhe threat sf stoppage of suppiies 5:11 the converters have compiied with the directions of the 56'! as stated above.'

(iii) Statement 0:' Shri iﬁrishan Mehra, Partner, M;/5 iﬁisiwre industries

111. Pieese refer ta Annexure«XVi__eaf yam' repiy wherein, fire mmrerters were calied by Shri Rakes}; Srimstmre, $aies arid ilrierkefing of §ci2ott Glass indie Pvt.i.td., on 1--e-2ea.§;:;;;§c»:§;r 2' .

Fhermiaceutimi compeniea better. 5 iiiiiﬁﬁf E}:

g '; E Ans. in this meeting Schott indie asked all the converters (apprczximateiy .20) to give the names of their customers (Pimrma companies} to which they are suppiyirig ampouies and via}: aiongwith the rates at wtiich the said euppiies are being made. In this meeting ivtrﬂairus Stﬂedachanji, the z:urreni' MD afﬁciwtt Keisha, was aiso present and this was prior to the N of Schatt indie arid Scizett Keisha. Aii the informatitzrri ceiiected in this meeting has been passed on to Schott Keisha and the same is used against the converters who were forced into parting with commereieily sensitive infermatian under fear cf Sciwtt India. We have experienced that the purchase oﬁicers of the Pharma companies have been made to understand by Schatt India that converters other 'than Schott Keisha are using sub stantiard raw materials and that their supplies frczm Sciwtt India shall not be consistent. As :3 result rnctrzy of the Pimrma companies have switched over to Schcitt Keisha for their procurement in preference to the nth er converters.' 9.102 Aithough the aforesaid statements of the converters pertain to the year 2008 before fotmaticn at JV, 3': the same time, these statements show that there was are attempt by the GP to get infarmaticm cf custcmers just befare the formation of JV, which couici be with a View ta heiping the IV in buiiding up its bursiness as has been aiieged by the converters. The informant has aiso submitted transcripts of retarded conversatian of meetings in 2010 with the representatives at OP, Schcztt group and converters in which prices at downstream market were ciiecusseci.

9.103 The Commisssion on the b'a;_§;§§""'33€5'$17§vt§te5aid Gbservee that it is evident that conduct of GP, who is in 9» market of tubes, has ccmtributeci to the iessenirig of tevei at competition in the downstream market in the favor of mint Venturei , the Schcitt Keisha. The Commission accordingiy hoicis that the said act on the part of 0? together with other greup concerns attract the previsien of Section 4 (2) (e) of the Act, iwhich stipuiates that net enterprise wiii use its domiriam: positieri in one market to enter into or protect other reievant market.

Subu issue 5 : Whether the GP has engegee in the practise at making the sale ernber tubes contingent aspen cemrerters buying cieer ttibes tram it in ceritraventien at previsimts of sectien 4(2){d) and any ether erevieiens at seaztien 4 of the Act?

9.104 As per aiiegatiens of the interment and findings of DE: , the Q? ieverages its menopoiy in' the amber segment of giass tubes to ensure tuii tine enforcement of its products on the ceriverters. The Cemmission notes in this regard that some ef the converters iike iiishere industries, Adit Containers and Mak Ampeuies have stated in their repiies that they are forced to meet their entire requirements from the GP oniy, taiiing which they wcmid be barred from getting suppiies from the OP.

9.105 The OP has denied this eiiegaticm in its defence dated 10.09.2910 stating that oniy 3 out of the cenverters examined by the DG have raised this aﬁliegatien and further rm eiocumeetery evicieince has been preciuceci te bring out that it makes the sate of amber boresiiicate giass_tui::es con>tin:gent upon the converters purchasing ciear borosiiicate glass tu ties.

\¢~ 9.1436 the GP has further submijgtﬁ tubes are seen ta be mare reiiabie in making supplies to the converters. Qiven these facts which cieariy indicate a preference by the converters ta its tubes, it is inmnceivabie why it wouid make suppiy {if its amber tubes contingent upcin purchasing it ciear giass tube.

9.10? The Cemmissian has game through variaus cententions cf the parties and ciacumerxts made avaiiabie on record and notes that one of {he (:cmverters,A Shri Krishan Mehre af Kiehere industries in hie statemeni: before DG, as has 23550 been reiieci upon by [343 white drawing cenciusiens, has steited as under:

'...............They wouid also insist on purchasing NSC tubes from them even when we required oniy NGA tubesfrom them .... .3' 9.108 The informant in its summary of {irai submissions dated 10.13.2011 has aiso produced a letter by the GP to one Adarsh industries in which it has been mentioned;

"' We have announced same quantity based discount scheme far neutrai glass tubes, but you can't avail quantity base discount. As per' our peiicy decision that scheme is applicable oniy on mix purchases of clear and amber tubings oniy. "' 9.109 The letter is dated 18.98.1999, however, it stiii has evidentiary mine which is evident from repiies dated 04.11.2311 of the GP to the questionnaire of the Cemmissicm en the issue of jugzi ' iqgfzs for iaimdiing discounts an the if-33. _ ' :;\

-.

5 intereiia submitted;

'"... both NGC and NGA tubes are manufactured on the same {older} preductien tanks. Therefore, the output of both NSC and NGA ts based on the same production tanks' The functioning cat the preductien tanks on a continued and staeie basis requires a stebﬁe demand for both NGC artd NGA giess tubes. Ensuring a stabie demand for both these varieties ef giass tubes has aiwevs been a chailenge for it. it is far this reason, that the NSC and N62'-t have been marketed jeintiy and with common incentives for its customers."

9.11!) On the iczasis of aforesaid, the Commission observes that it is an undeniabie fact that both the products are tied and marketed together and bundied discount is given to the customers on them. The Cemmission else notes that given that the GP has market share of around 93% in NGA and Finite): Amber, enjoying virtue! monopoly over these segrraerits, it has the pewer to leverage sate of the amber tubes centingerit upon saie csf ciear tubes. Whiie the dark Amber tube is imported, light shade variety preferred by pharma cempenies is produced oniy by the GP since thts shade cannet be imported as they cit: not match the requirements of pharma companies. Further many converters have repiieti like indian Scientiﬁc Giass industries (ISGi)_thet it is not cemmerciaiiy viatrie to import the entiire requirement of Amber Tubes due te rnaicir difference in price. The statements of the converters that the OP ieverages such power in the amber segment to enferce saie ef cieer tubes ﬁnds further farce when seen eiorag with the TMLA and evereti dtscounrt pciiicy at the OP, .z"'Z}*is\'°: <3"

pciiicy of bundled ciisceunt ferces _ _ ekprecure both the products from it. (sf W'/t {xx :3 ~;'c 7,. \z'c ".9 s~...i_t deer that the GiP;..threugh its 9.111 The Cemmissien further notes that tine GP in its repiies eiated C)-a'i.3.1.2iZ)11 in the context of ratienei of its discounts peiiey to meet exit cempetiticm, has stated that i\iipre--Triveni, aimther piayer in the market is having sufficient i<rmw--hew and reseurces to mamifacture NGA tubes and new aise has eemmenced manufacturing Amber tubes.

9.112; The Cemmissien en the basis ef foregeing observes that the eeiicv of the GP to market both the products jeintiy with common inceetives appears to be designed with a xiiew pretecting its deminance in the upstream market. it is the pressure from the potential manufacturers which forces it te bundie its products fer discounts as a measure at" quantity forcing which in a way reduces the demand for :pmducts ef rive! cempetiters by giving incentives to the converters to get their entire requirements from the OP oniy. As a dominant player, the GP wiii seek te maximize its revenues by seiiing two products together by providing bandied discounts en them- one, on which it exercises near monopoiy and the other product in which there are cempetiters in the market, , since that wouici Bead to more and additienai units of both the products being said in the market.

9.113 The Commission heids that conduct of the OP vioiative of ptevisions of A -

\ \ 'esiﬁori under subsection of an 124 :3) makes conciusion of contracts subject to acceptance by other parties of suooiernentary ohiigetions which by their nature or according to commereiai usage , have no connection with the subject of such contracts.

9.114 The Commission observes that the conduct of the GP is abusive because the converters are obligated topurrzhase Amber Tubes aiong with Ciear Tubes in order to avaii discounts in Vvioietion of provisions of section 4(2){d) of the Act. Furthergthrough this act, the 053' is also imposing unfair conditions of series of tubes which make converters to procure both kinds of tubes from the OP to avaii common discount, which is vioiative of provisions of section 4(2)(a} of the Act. White cieiineating reievent market(s) in the case, the Commission has considered upstream neutrai dear giass market as distinct from upstream neutrai amber giass market. in amber tube giass market, the OP enjoys a position of near monopoiy whiie in cieer tube glass market, there is some degree of competition due to the presence of since Niproiiriveoi in market and due to imports in some measure. Thus, through the act of iaundiing discounts on both the products, the GP in fact is protecting the market of rseutrai clear giass tubes by using its position of near mon:opoiy in neutral amber glass tubes market, which is vioiative of the provisions of section 2'-i(2)(e) of the Act which prohibits an enterprise from using its position of dominance in one reievant market to protect other reievant market, 9.115 The Commission hoids that the irnougneci act of the OP is anti»--» competitive with 3 View to exclude rivais by seiiing both NGA (a near T§é;:i:.fering combined discount on '- . \ kfgguéfehase' of the two products together tram the cempetitets of the DP, they might be she ta match the discounted price of GP in the market at NGC eniy and may not be state to compensate the cehverters fer the £055 of chscotmt en NGA, since it is' the OP which has a near monopoh; on it. As a resuit, the competiters, even if efﬁeﬁent in other respects but whe makes oniy NGC may not he abie ta cempete an equa! testing with the C29 in the market. Bunctiisng a near mohopeiy precinct with one that has potential of facing er has same degree cat competitive forces working on it may resuit in-~the~ evetait cemeetition in the market being distorteti.

Sub» issue 5 : Whether the GP has refused to deei with informant as has been ahegee, denying market access to it and éf yes, hes the BF contravened the ptevisiens of section 4 (2.) ﬁe) ef the Act?

9.3.3.6 The Commission notes from the énfermatioh avaitabie on recerd that eeriier the informant was engaged in the business of making berosiiicate giass tubes as wet! as glass ampeuies made out 0:' these tubes. The informant has aiieged that it was forced to go out of the business of manufacturing horosilicate giass tubes in 2068 due to antheompetittive praeticesv of the GP and now it is engaged soieiy in the business at manufacturing glass ampouies and ether containers. it has aﬁso been eiteged by the informant that the GP had stopped suppties to the informant as earty as 2{}{}:t which was net resumed even after the informant exited the tube manufacturing business in zoos. V 9.13.'? The SF in its defence has subm§1tet¥I.'th'e~t~g_iyen the previeus attempts of the informant to Ehtentionaiiy snfrxgsggggg gietnarks and ta fraudufentiy . ; f A 3 Cf E market borosiiicate giass tubes manufactured by it as borosiiicate glass tubes manufactured by the GP, it is reiuctant to supoiy its borosiiicate glass tubes to the informant. The O? has aiso contended that a party cannot be forced to snooty its products to a person who has by previous actions shown disregard for the inteiiectuai property rights of such party and has in fact attempted to defraud through misrepresentation, other movers in the verticai supply chain. it has atso been argued that there are other manufacturers in the market apart from Schott Giass india and its rofuisaiito suppiy Borosiiicate Glass Tubes to informant does not affect its abiitity to manufacture ampoutes.

9.118 The GP in support of its arguments aiso produced 3 copy of an order for .

printing fake iabeis of 'NGC Schott' and 'Made in India by Schott Glass india Pvt. Ltd,' under the signature of Director, Kapoor Giass (the informant), in View of which OP purportediy biackiisted the informant and decided not to enter into any suppiy arrangements with it.

9.119 The informant has contested the stand taken by the GP and has stated that Schott tnciia refused to deal with it vide its ietter dated 05.04..2Cr01, whereas the incident of aiieged attempt of infringement of Schotfs trademark is of 29.7.2002. Thus, it has averred that there is no correiation between Schott's refusai to deai with the informant and the aiieged incidents 9.120 The informant has further expiaineci its conduct in the matter reiating to use of labels of UP by stating that it,.tt rocure giass tubes from Bharat r .9' 9::-'\E,~\\ Gtass/Schott india to make aryf/o"%3i_ customers who wanted V E) V'< Mx t:ie?s¥a:3s they had stabiiized their amoouies made out of Bharat xx.

J' .\'-' '1" 3' ftirmuiations with such tubes. However, when GP refused to supply tubes ta the infarmant, it was thread to procure its tubes from other ampauie makers, who had excess stock at such tubes, in wider to retain its custemers in the market for ampouies. Tiwose ampouie makers however decided to supply Schott tubes to it on 'no names' basis and after removing the iaheis in order tn avoid getting noticed by Schatt. The informant has aiiscs stated that Sr:tmtt'5 iast suppiy of giass tubes ta it was on 12.10.2980 for an amount of Rs. 5,47, 140. .-

9.121 The informant has aiso stated that in order to make suppiies to Ranbaxy Latmratmies Ltd. in the year EOQZ, which wanted ampouies made from Schott india tubes, it had procured Sctmtt inciia tubes tram Aciit Containers Pvt. Lt::i., who suppiied the tubes vide invoice no. 980038 dated 04.07.2302 after removing the tabeis of GP. The interment has aiso submitted a copy of the excise invoice and extract of excise record for suppiies made by Adit Cnntainers t0 the informant and aisa 3 letter dated 29.{}€3.201O from Aciit Containers ccnnfirming the said position.

9.122 According to informant, as per the industry practice, Rantjaxy wanted to inspect its manufacturing piant before accepting ampouies from it. White it had been able ta procure tubes at OP from Aciit Csntainers, the said tubes' did not carry iabeis of GP. it has atsa stated that any attempt by it ta cmwince Ranbaxy that the tubes which did not bear Schcatt india iabeis were incised Schott tndia tubes was iikeiy to tzsktr tubes which wouid have res m.

g§§..§s"'passing aft' of another qtsaiity at of the orders and future long rtaacgzstettier.

term bUSH"i€S5 tram one at zitssrigost r ' \-

x.- 3 ' i 9.123 it has submitted that in order to pre-empt the situation wherein genuine tubes manufactured by the {JP ceuid be construed by the customers as different quaiity tubes, it was forced to take the extreme step of getting the iaheis printed but far the iimited purpose of affixing them ti: such tubes which were authentic: 'Sciietbinciia' tubes.

3.1124 On the basis of the facts of the case as above, the Cornmissien ebserves that the initiei act of refusai to suppiy by the GP to the informant had taken piece weii before 20.85.2009, the date of notititawtion of the provisions of section 4 of the Act. Norrnaiiy the aiieged competitive act that had ta ken piece before the notification of enforcement provisions weuici not be iiabie fer inquiry within the ambit of section 4 of the Act uniess the impugned act continues its take piece even after that. in the instant matter aitiiough the act of refusai goes back to the premotificetion period, since the same continues as on date as has been aiieged by the Act, the Commission deems it necessary to deal with this issue.

9.125 in this regard, en a careful consicietetien of the facts ef the case, The Commission observes that there are contesting claims by both the parties as regards eiieged fraudulent usage of Schott Labeis and products by the informant as discussed in foregoing paras. However, tram recorcis it is evident and aiso accepted by the infisrrnent that it has inciuiged in affixing iabels of the UP without its authorization, aitiiongn it has aise submitted that such usage was oriiy in i'es;eect of the precincts of the DP and net its own products.

9.126 Basea upon aforesaid, tiiiiesign observes that the GP was (J. 5 ~.;_'\_ thereifore within its rights to :

:_ (":~',.'J':.)--\\\_ _ to't;Eie\g_informant in order to protect i ';'< 5;.

its trademarks. The Commissien further observes that a manufacturer er a suppiier is not czbitged and cannot be forced to suppiy its products ta an entity which has used tts name and iabeis without its prior permissian in east.

9.127 in Eight ef foregcing, the Commissten does not find merit in the siiegatiens that the conduct of the DP in refusing to deal with the informant was or is to purposeiy deny access to its preducts in order to impasse restrain on the abiitty of the informant ta cempete in the market. Consequently, the OP carmet be heir} guitty of contravening provisions of sectien 4(2) (c) or any other provisions of the Act.

Subw tssue ? : Whether the GP has indutged in the practice at predatory hiring at employees at the interment arse if yes, can the practice be eatﬁed inconsistent with the requirements under section é(2){e) at the Act ? Further, can this act be satd ta be vieiative at prmrisiens ef section 5, {2}(b)£t) since it ts limiting and restricting the ability of the informant te predate genes as aiieged by the interment'?

9.128 The informant has aiieged that the DP tried to destahiiize it by pursuing a poiicy of predatory hiring of its key persrrmrzei who were aperating the high speed imported ﬁnes cf the informant and also by hiring of its manageriaf staff. it has furnished a isist at about 56 emptioyees who were hired by the Joint Venture Company, namely, Schett Keisha Pvt. Ltd. The informant has aiso 9.129 The informant has further aiieged that this act of predatory hiring of emptoyees of the informant by the OP is also vioiative of provisions of section 4 (2)(ti)(i) since this act has iimited and restricted its abiiity to produce goods. Further, thia act of the OP is aiso vioiative of provisions of section 4(2)(e) of the Act since it seeks to protect the downstream ampouiesi market in which it is operating through N by using its dominance in upstream tube market in violation of provisions of section 4(2}(e) of the Act.

9.130 As regards the aiiiegation of predatory hiring, the G? has ﬂenied the same and has atso submttted that the indian Competition Act does not recognize the concept of predatory hiring. it has submitted a iist of 30 emtiioyees who moved out of the informant from the period March 2003 tiii February 2310 and joined Keisha on their own accord, due to better terms and conditions of ernoioyment being offered. it has further stated that inability of the informant to retain its empioyees cannot be biamed on another ernpioyer that offers better terms and conditions of empioymerit.

9.131 The Commission notes that {JG has found the aiiegation of predatory hiring as unsubstantiated. The Commission, in this regard, observes that there is no doubt that there are evidences on record which show that the empioyees of the informant iriciudtng some key personnel have indeed joined Schott Keisha, a fact which has not even been disputed by the GP. However, the Commission fleets that such a movement is normaily observed across industries. Labour as one of the factors of orotiuction is free to move from one enterprise to another-to earn ;n.£I'ne§ratEon and gains, one such a .3.

.i2q'~?'".'\\ movement cannot per se be cT¥'e'§t-Oati the Endian Cempetition aise do not expressiy consider and prcwide fer such movement as an abusive practice on part of a deminant enterprise.

9.132 in View of the above, the Commissicm ccvncﬁudes that the mcwement of empioyees fmm the informant to GP and Schoti: Keisha cannot be attributed ta an abusive cenduet cm the part ef the GP in cantraventien of any of the prcwisions cf section 4 ef the Act. The issue as such does not raise any competition concern in the re¥e\tant market.

19. Drder unﬁer Section 2?' af the Act

10.: The Commission has found GP in centraventian of variaus provisians nf sectieon 4 of the Act. its acts and conduct have adverseiy affected cempetition on the reievant mar§<e't(s) delineated in the instant case. Due to unfair and dissinuﬁar discounts of the UP, the converters in the dawnstream market have been impacted adverseiy and their margins have aiso deciined.

19.2 As 3 aieminant player in market, there was speciai onus an the GP to ensure 'faﬁr mmpetiticm in the market. ﬂue to the abuseive acts and cenduct ef the OP, the smaii converters are net abie to mmpete an equeﬁ fasting with Schoti: Kaigha, Joint Venture cf the Sechott grcsup.

3.0.3 in View of aferesaid, the Commission decides to impese peraaity on the GP for its act of distorting coempetitéion j;r_1,.me.g;11a rket. Taking intcz account anti~ 5?' -3' 7 ' "" ﬁe -.\"e§eEevant ma-3r§<.et(s) in india, the Commission feeis that ends of §ustice waulé be met if penalty at a rate tn' 4% an the average nf three years turnover of the SP is impased as under;

Tajfnmvers of EEG! 2(307~O8 R5. 115.86 mare 2008-09 Rs. 153.22 crore 2009-18 RS. 155.29 Crnre ......,'.,.......-...-...........--....u-....-.

Totai RS1] 424.37 crare Average of Three years Turnover Rs. 141.46 cmre Penam; at rate of 4 % on Average of three years Turnover Q Rs. 5.66 more 10.4 In addition, the Commission aiso deems it ﬁt to» issue foiiowing cease ané desist order;

a) The SP shcsufd desist from appiying dissimiiaz' conditiczans whiie givmg discaunts to Schott Keisha vis---a«vis other wnverters.

b) The terms of transacticns far supply «of tubes to Sthott Keisha, the JV shouki be simiiar and non--dis::rimir2at<2ry vis-a via the other cmwerters.

C) The discount on both An"g_i;§ Fubes shouid not be §:om:inge:'1_t upon sake of each othezff /~.

1&5 The Cnmmission aiscs directs that gaenaity amcsunt as determined abmse smuid be demasiied within 66 days 0*? receipt 9% this maﬁa". Further, c:om;3%iance to the directiens in para 19.4 abcwe must be swapcsrted xurithéa three manths 0? receipt of this ardear.

11. The Cemmissaion decirﬁes acccsrciingééy.

12. The Secretary is directed to sené a cam; :31' the arder tax the parties in termg (If the rehavant gsrovisicms 0f the Act and the Reguiations made thereumeerf

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Competition Commission of India

Kapoor Glass Private Limited vs Schott Glass India Private Limited Main ... on 29 March, 2012