CCI Dismisses Allegations Against LG Electronics India: No Anti-Competitive Conduct

CCI Dismisses Allegations Against LG Electronics India: No Anti-Competitive Conduct

The Competition Commission of India (CCI) has closed an information case against LG Electronics India, holding that no case of contravention of Competition Act is made out against the South Korean electronics major.

The order was passed by the three-member bench comprising of Ravneet Kaur (Chairperson), Sangeeta Verma (Member), and Bhagwant Singh Bishnoi (Member).

The informant- Perfect Infraengineers Limited (PIL) had approached CCI alleging contravention of Section 3 and 4 of the Competition Act 2002 (the Act).

PIL is engaged in providing air conditioning repair, sales and service. The informant, in collaboration with Suntrac, USA, had introduced ‘Hybrid Thermal Solar’ (HTS) panels in India which, as claimed by PIL, when integrated with the air conditioners, results in saving 30-40 per cent electricity consumption without causing any harm.

It was alleged that LG Electronics India had refused to allow the integration of the informant’s HTS panels with its Variable Refrigerant Flow (VRF) ACs installed at Delhi Metro Rail Corporation (DMRC) premises.

Similarly, permission was denied for PIL’s HTS Panels to be supplied to Envirocare, Thane for LG VRF ACs.

PIL contended that LG Electronics India’s refusal caused immense prejudice and hardship to Envirocare, DMRC, and the informant.

PIL had urged CCI to direct LG Electronics India to permit installation of HTS Panels for DMRC and Envirocare-owned ACs and to honour the contract of maintenance to provide spares of AC machines when required by both of them.

On the other hand, LG stated that the relevant market is the sale of variable refrigerant flow air conditioners for heating, ventilation, and cooling. LG emphasized that Daikin is the market leader with a 44% average market share over the past three years, while LG's share was only 16% during the same period.

The company submitted that the reason behind the refusal was based on valid technical reasons to protect itself from potential claims and liabilities. It contested the credibility of the test reports cited by PIL, alleging bias and lack of third-party verification.

The CCI observed that the characteristics and advantages of VRF/VRV AC systems were highlighted by LG, indicating their superiority over traditional air conditioning systems. Considering the homogeneous conditions of competition across India, the entire country can be deemed the relevant geographic market.

Thus, according to CCI, the relevant market, in this case, was defined as the ‘market for manufacture and sale of VRF HVAC Air conditioners in India.’

The bench noted that PIL had not provided any information about the dominance of LG Electronics India in the ‘market for manufacture and sale of VRF/ VRV HVAC Air Conditioners in India.’

“The presence of large number of players makes the market contestable and provides several options for the consumers and therefore, acts as a competitive constraint for LG Electronics India. In the absence of dominance, no case of contravention of the provisions of Section 4 of Act (Competition Act) is made out,” the bench affirmed.

While observing the market construct and the nature of allegations, the question of contravention of provisions of Section 3(1) of the Act, CCI noted that the informant had failed to provide information on how LG's conduct falls within the purview of Section 3.

Resultantly, the Commission was of the opinion that no case of contravention of the provisions of the Act was made out, and the Information filed was directed to be closed forthwith in terms of the provisions of Section 26(2) of the Act.