CCI rejects Udaan's plea to procure Parle-G biscuits directly

CCI rejects Udaan's plea to procure Parle-G biscuits directly

The competition watchdog had recently dismissed a similar plea by the unicorn against Britannia

The Competition Commission of India (CCI) has rejected a plea filed by the B2B e-commerce unicorn Udaan against Parle Products Private Ltd, the manufacturer of Parle-G biscuits.

In September last, Udaan filed an anti-trust case alleging abuse of its dominant position in the market by Parle and sought direct access to the biscuits.

In response, in its July order, CCI stated, "As far as allegations under the Competition Act are concerned, the Commission does not find any abuse, as the informant (Udaan) has failed to establish any right on its part."

Udaan, in its plea, claimed that it was facing a competitive setback, as Parle was refusing to directly supply its highly-demanded products 'without any objective justification.' It further claimed that all Parle SKUs had high consumer demand and a lack of direct supply from it had forced the e-commerce startup to procure the biscuits from the company's existing distributors in the open market.

(The product in contention was Parle's highly-sought after Parle-G biscuits, which Udaan claimed commanded a market share of around 83 percent).

In response to Udaan's contention about Parle-G biscuits being 'must stock' items, the CCI noted that 115 out of 235 vendors from whom the retailers of Udaan could purchase on the B2B platform were Parle's distributors. The competition watchdog also agreed with Parle's argument that the company was free to choose its business partners.

CCI further observed, "The type and nature of distributors that a manufacturer desires to partner with, is an essential part of the autonomy of its business, and the Commission cannot ipso facto substitute its regulatory wisdom to that of the commercial wisdom of the businesses."

"Even amongst the distributors, it may not be out of place to subject them to different terms of trade when stated to be based on sound commercial logic and not in derogation of any governing laws. Therefore, equal treatment is not any bounden obligation cast in iron and stone," the order added.

CCI's remarks came in response to a terse submission by Parle, which took pot shots at Udaan's business model.

Parle stated that the business model of the e-commerce giant was "based on accumulating massive debts through raising funds from venture capitalists and other markets and, as per publicly available information, it is a massive loss-making enterprise year-on-year."

Parle contended that it had concerns over long term viability of Udaan as a reliable partner, as opposed to Parle's run-of-the-mill brick-and-mortar distributors.

Udaan referred to a July 2021 case involving the termination of a distributorship in Uttar Pradesh's Varanasi by Parle for supplying products to Udaan. It alleged that the company employed exclusionary practices.

The CCI pulled up Udaan for filing the information later in a rejoinder to Parle's response even though the incident took place months before Udaan filed the case in September last.