'Volume-Based Discounts Not Anti-Competitive' : Supreme Court Rejects CCI's Appeal

The Supreme Court today (May 13) dismissed the plea filed by the Competition Commission of India (CCI) challenging a glass manufacturing company's use of volume-based (target) rebates, holding that such rebates do not constitute an abuse of dominant position under the Competition Act, 2002 ("Act").The bench comprising Justices Vikram Nath and Prasanna B Varale heard the matter, where it was alleged that the Respondent- Schott Glass India Pvt. Ltd. (Schott India), a dominant player in the market for neutral borosilicate glass tubing used in pharmaceutical packaging, had violated Section 4 of the Competition Act, 2002 by using exclusionary pricing, discriminatory rebates, and restrictive agreements to foreclose competition by introducing four slabs, especially to the benefit of its joint venture, Schott Kaisha. The CCI ruled against the Respondent, holding that it had abused its dominant position; however, on appeal, the Competition Appellate Tribunal (“COMPAT”) overturned the CCI's ruling, observing that the Respondent's practices were commercially justified, uniformly applied, and were not anti-competitive. Aggrieved by the COMPAT's decision, the CCI moved to the Supreme Court. Affirming the impugned findings, the judgment authored by Justice Nath observed that the Respondent was not engaged in the abusive practices as the volume-based rebates offered by the Respondent was commercially justified because every customer who reached a slab, whether by one purchase order or by several, obtained the corresponding allowance on the entire year's turnover. The Court added that rebates were uniformly applied to all converters based on volume thresholds, not the buyer's identity, and the larger buyers (like Schott Kaisha) naturally secured higher rebates due to the large scale of volume. “In the present case, the record shows that, for the relevant period, Schott India circulated a single rebate ladder applicable to all converters. Four slabs of 2%, 5%, 8% and 12% were triggered exclusively by the aggregate tonnage of Neutral Glass Clear and Neutral Glass Amber collected within the financial year. Every customer who reached a slab, whether by one purchase order or by several, obtained the corresponding allowance on the entire year's turnover. The rebate therefore rose mechanically with volume and with nothing else; identity of the buyer was irrelevant. All converters were informed of the thresholds in advance, and none has suggested that any hidden concessions existed outside the ladder.”, the court said. In essence, the Court asserted that the rebate structure adopted by the Respondent was objectively tied to operational efficiencies, particularly the continuous operation of the Respondent's glass melting furnace, which benefits from predictable, high-volume offtake. “Stable, high-volume orders are therefore indispensable for efficient utilisation and for amortising the very substantial capital employed. A volume-contingent rebate transmits a share of those scale economies downstream, to the ultimate benefit of pharmaceutical customers. Such an objectively grounded incentive cannot be condemned as “unfair”, the court observed. No Evidence To Show That Volume-Based Rebates Throttled Competition The Court found that the rival converters increased their production and imports during the period in question, suggesting no actual market foreclosure. “It must also be noted that there is no evidence that the slab mechanism foreclosed alternative suppliers or throttled output in order to attract Section 4(2)(b)(i) of the Act. On the contrary, uncontested data placed by the Economic Member of the Commission and reproduced by the COMPAT record that, between 2007-08 and 2011-12, every major converter other than the informant increased both the tonnage purchased from Schott India and the tonnage sourced from imports or Nipro Triveni. Container prices to pharma companies remained broadly stable. These market facts are inconsistent with the argument of exclusion or limitation.”, the court said. In terms of the aforesaid, the court dismissed the appeal, holding that the rebate structure encouraged efficiency without distorting competition. Hence, no abuse was found under Section 4(2)(a) of the Act. Case Title: COMPETITION COMMISSION OF INDIA VERSUS SCHOTT GLASS INDIA PVT. LTD. & ANR. (and connected case)Citation : 2025 LiveLaw (SC) 557Click here to read/download the judgmentAppearance: For Appellant(s) Mr. An Haksar, Sr. Adv. Mr. Saurabh S Sinha, Adv. Ms. Chitra Y Parande, Adv. Mr. Gautam Prabhakar, Adv. Mr. Mrigank Prabhakar, AOR Mr. Amit Sibal, Sr. Adv. Mr. Arjun Krishnan, AOR Mr. Anand S Pathak, Adv. Mr. Shashank Gautam, Adv. Ms. Sreemoyee Deb, Adv. Ms. Anubhuti Mishra, Adv. Mr. Soham Goswami, Adv. Ms. Nandini Sharma, Adv. Ms. Anisha Bothra, Adv. Ms. Aashana Manocha, Adv. Mr. Abhijeet Singh, Adv. Mr. Saksham Dhingra, Adv. Mr. Rishabh Sharma, Adv. For Respondent(s) Mr. Percival Billimoria, Sr. Adv. Mr. Mahesh...

'Volume-Based Discounts Not Anti-Competitive' : Supreme Court Rejects CCI's Appeal

Yash Mittal

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'Volume-Based Discounts Not Anti-Competitive' : Supreme Court Rejects CCI's Appeal

Yash Mittal

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