LEGAL ASPECTS OF MARKETING IN INDIA (Cases) – V v Sople

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Case 1: Discount – Misrepresentation

DG(I) vs. Khaitan India Ltd. The complaint was lodged by Jai Engineering woks, against Khaitan India ltd (KIL) regarding the misrepresentation in the advertisement with regards to the discounts offered by them (Khaitan) on the range of ceiling and table fans manufactured and marketed by them. The discounts offered were Rs. 100/- on portable fans and Rs. 30/- on ceiling fans. .It was further complaint that the products of Khiatan India ltd are selling fans below list prices and over and above the discounts are also allowed and this is distorting the competition in the market. Based on the evidences gathered the, court held that the trade practices adopted by Khaitan is not prejudicial to the public or consumer interest. In fact the consumer is befitting as the Khaitan fans are available at lower prices. Even there were two upward revisions of the prices, there is no evidence that the discount offered are recovered partly or fully because of the product sold at very low price in the market. In addition the discounts offered were for limited period in the off season and even after the seven years of have elapsed, no complaint has been received from the consumer. Hence, court held that the said practices of Khaitan do not fall in purview of unfair trade practices as per Section 36A(1) of the MRTP Act, 1969. {Source: 2003 CTJ 36 (MRTP)}

Case 2: Price Fixing

Fined Indian commercial vehicle component company. Three firms have been

fined a total of £33,737 for price fixing in respect of automatic slack adjusters, which are brake safety devices for buses, trailers and trucks. The OFT uncovered price fixing agreements involving John Bruce (UK) Limited of Sheffield (the importer of automatic slack adjusters manufactured by Madras Engineering Industries Limited (MEI) in India and its distributors Fleet Parts Limited of Warrington and EW (Holdings) Limited (trading as Truck and Trailer Components) of Cowley which is part of the Unipart Group:

* John Bruce and Fleet Parts had an agreement to fix the selling prices to their customers of MEI automatic slack adjusters

* John Bruce and Truck and Trailer Components had an agreement to maintain fixed prices for MEI automatic slack adjusters.

The agreements were found by the OFT (Office of the Fair Trade) to be anti-competitive, infringing Chapter l of the Competition Act 1998. (UK) OFT regards price fixing as a serious infringement.

Powers under the Competition Act 1998 (UK)

  • The Act gives the Director General powers to investigate suspected infringements of the Act’s prohibitions:
  • Chapter I prohibition, prohibits agreements between undertakings, decisions by associations of undertakings or concerted practices which have the object or effect of preventing, restricting or distorting competition in the UK (or any part of it) and which may affect trade within the UK (or any part of it); and
  • Chapter II prohibition, prohibits conduct by one or more undertakings which amounts to the abuse of a dominant position in a market which may affect trade within the UK (or any part of it).
  • The Director General has the power to impose financial penalties under the Act and the approach he adopts is set out in the Director General of Fair Trading Guidance as to the Appropriate Amount of a Penalty, OFT 423 March 2000.

Case 3: Manipulation of Land Prices

Nav Sangam Co-op Hsing Soct vs. Delhi Dev Authority. Nav Sangam Soct made an application for allotment of land to its society as per the size of the membership and deposited Rs. 5 lacs as earnest money deposit as a part consideration of a price of the land to be allotted to it on leasehold basis. DDA confirmed the same indicating the rate of Rs. 975 per square meter and premium was fixed at Rs. 82,876,500/- and asked for 50% of premium to be deposited. Nav Sangam deposited 25% amount i.e. Rs. 9,25,000/- toward the allotment and balance 25% will be paid as a last installment prior to securing possession of land. The earnest money of Rest 5 lacs may then be adjusted as per the correspondence they had. Nav Sangam paid Rs. 20.25 lacs including Rs. 5 lacs EMD. However, to the surprise of the Nav Sangam DDA raised the premium rate from Rs. 975 to Rs. 1650/- and were asked them to pay the deposit as per the new rate. On resentment, Nav Sangam, asked for refund of the money paid. DDA refunded only Rs. 6.21 lacs keeping Rs. 4.04 lacs outstanding. Nav Sangam filed complaint with MRTP against DDA for alleged restrictive practices as per Section 2(o)(ii) and enquiry

was initiated as per Section 10(a)/ Sec 37 of MRTP Act , 1969. against DDA. Supreme court held that the practices adopted by DDA are restrictive trade practices and they indulged in manipulation of land prices towards providing real estate services. Therefore DDA were directed to pay the balance amount of Rs. 14.04 lacs with interest rate of @ 12% per annum from the date of request of payment.

{Source: 2003 CTJ 128(MRTP)}

Case 4: Fixation of Price Not Justified

Dugar Electronics v. Collector of Central Excise, Calcutta. Duggar Electronics is the manufacturer of the tape recorder. A third party supplied the mould and the other parts of tape recorder to Dugar Electronics free of cost. The third party sold the assembled tap recorders to a dealer at certain price. For calculating the excise duty, fixation of assessable value at rate (price) at which the third party sold goods to its dealers was done. Court held that above price fixation is not justified and should be done according to Section 4(1)(b) of Central Excises

Act (1 of 1944) and in accordance with Central Excise Rules. (Para 5)

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