On May 13, the Supreme Court dismissed the Competition Commission of India's (CCI) appeal challenging the use of volume-based (target) rebates by Schott Glass India Pvt. Ltd. The case revolved around allegations that Schott India, a dominant player in the market for borosilicate glass tubing used in pharmaceutical packaging, violated Section 4 of the Competition Act, 2002 by using exclusionary pricing and discriminatory rebates that allegedly foreclosed competition.
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The CCI initially ruled against Schott India, arguing that the company had abused its dominant market position by introducing four rebate slabs that favored its joint venture, Schott Kaisha. However, the Competition Appellate Tribunal (COMPAT) overturned this decision, finding that the practices were commercially justified, uniformly applied, and not anti-competitive.
The matter then reached the Supreme Court, where Justices Vikram Nath and Prasanna B. Varale examined the case. In its judgment, the Court upheld the findings of the COMPAT, ruling that Schott India’s volume-based rebates were not an abuse of dominance. Justice Nath emphasized that the rebate structure was “commercially justified,” as every customer who met the volume threshold received a rebate on their entire year’s turnover, regardless of whether they made one large or several smaller orders.
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The Court noted that the rebate system was based on the total volume purchased, not the identity of the buyer. This meant that larger buyers, like Schott Kaisha, naturally qualified for higher rebates, but this was simply due to their larger purchase volumes. "The record shows that Schott India circulated a single rebate ladder applicable to all converters," said the Court, emphasizing that the rebate was directly linked to operational efficiencies.
The Court also observed that there was no evidence that the rebate structure restricted competition. On the contrary, the Court found that rival companies had increased their production and imports during the relevant period. "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," the Court noted. The market facts, including stable container prices to pharmaceutical companies, did not support claims of exclusionary practices.
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The Supreme Court concluded that the volume-based rebate system was grounded in efficiency and did not distort competition, thereby dismissing the CCI’s appeal and affirming that no abuse had occurred under Section 4(2)(a) of the Competition Act.
Case Title: COMPETITION COMMISSION OF INDIA VERSUS SCHOTT GLASS INDIA PVT. LTD. & ANR. (and connected case)
Appearance:
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 Agarwal, Adv. Mr. Rahul Goel, Adv. Ms. Anu Monga, Adv. Mr. Rishi Agrawala, Adv. Mr. Ankur Saigal, Adv. Mr. Victor Das, Adv. Mr. Himanshu Saraswat, Adv. Mr. Yash Jain, Adv. Ms. Aditi Sharma, Adv. Ms. Kriti Khatri, Adv. Ms. Rachita Sood, Adv. Mr. Tushar Bathija, Adv. Mr. E. C. Agrawala, AOR Mr. Arjun Krishnan, AOR Mr. A N Haksar, Sr. Adv. Mr. Saurabh Sinha, Adv. Ms. Chitra Y Parande, Adv. Mr. Gautam Prabhakar, Adv. Mr. Mrigank Prabhakar, AOR
