India: A Done Deal? Comment On Snapdeal v. Kaff

Last Updated: 12 October 2015
Article by Anand & Anand

E-tailers are more often than not unwilling to maintain resale price according to what the manufacturer expects. So much so that, along with the ease of 'cash on delivery', consumers in India have now come to expect lower prices for products they buy online.

The Competition Commission of India (CCI) recently ordered an investigation against Kaff Appliances for alleged resale price maintenance based on information supplied by Snapdeal. The CCI expressed a view that Kaff had a share of 28% in the market of 'supply and distribution of kitchen appliances in India', and the condition to maintain a minimum resale price imposed by Kaff on its dealers is prima facie likely to have appreciable adverse effect on competition in the said market.

This order could be a preliminary seal of approval of the e-tailing business model where players are unwilling to maintain resale price according to the manufacturer's expectations. But what does this mean for the manufacturers and brick and mortar stores? Increased sales of goods, even if some dealers undercut others, must mean good business for the manufacturer. Then why is Kaff insisting on maintaining a minimum resale price – Are the brick and mortar retailers behind this?

This comment explores these questions and the likely impact of this order on the e-tailing sector, the manufacturers and brick and mortar stores.

What is resale price maintenance?

Simply put, resale price maintenance is when an upstream supplier (say, a manufacturer) enters into agreements with downstream sellers (retailers) that they will sell the goods at a pre-fixed minimum or maximum price.

Why would a manufacturer want to maintain a minimum resale price?

As discussed in the opening comments, increased sales of goods, even if due to the fact that some dealers undercut others, must mean good business for the manufacturer. If we give the benefit of the doubt to the manufacturer, he will maintain a minimum resale price only if there are some efficiencies associated with it (We explore situations where the manufacturer may not get the benefit of the doubt in the next section).

Minimum resale price maintenance is seen to increase inter brand competition, even if it decreases intra brand competition. Once the manufacturer gets its retailers to, well, stop competing on price, it can make them compete on add-ons like services which can build a stronger brand for the manufacturer. This is likely to increase inter brand competition.

Now, this gets us to a very interesting question - what exactly is competition law promoting – intra brand competition or inter brand competition?

Another reason to not burn 'minimum retail price maintenance' at the stake is the impact it has on new entrants – it facilitates entry of new manufacturers. New entrants to the market can use minimum resale price maintenance as an incentive to get retailers on board.

Yet another reason for resale price maintenance is to avoid 'free riding'. Let's take an example - if retailers are competing on resale price, they would try to undercut each other. This means they are likely to cut costs such as those involved in maintaining a big showroom, employing the best sales persons with more knowledge about the product etc. In this situation, a consumer can go to the retailer that provides the best showroom experience but buy the product from the one that is sells it at the lowest price.

Lastly, imposing a resale price maintenance condition may be seen as the least restrictive option to achieve the above efficiencies in some markets as the alternative will be that the manufacturer engages in vertical integration which may be wasteful in the concerned market.

Can minimum resale price maintenance be anticompetitive?

Most jurisdictions remain suspect of minimum resale price maintenance. Even in India, such conduct is condemned under the Competition Act, 2002 if it has 'appreciable adverse effect on competition' in India.

Minimum resale price maintenance may aid in forming a retail cartel where downstream players with market power force the upstream supplier to fix prices to eliminate intra brand competition.

Minimum resale price maintenance may also aid in setting up an arrangement where the manufacturer and retailers keep the price of the product artificially high and share the profits. This situation is akin to the manufacturer acting as the ring master of the retailers' cartel.

Snapdeal has alleged the presence of such a cartel in its complaint against Kaff. Interestingly, the CCI has not ordered an investigation for looking into horizontal agreements and has limited the direction to the Director General to look into violation of Section 4 of the Competition Act.

Another theory of harm in cases of minimum resale price maintenance is that it aids in the operation of a manufacturers' cartel. When the resale price is fixed, it is easy to spot cheaters, if any, in a cartel. Snap deal has not alleged this theory in the complaint against Kaff.

In cases where the manufacturer is also operating at the retail level, it may be argued that minimum resale price maintenance agreements are in fact horizontal and should not be treated as vertical agreements.

Is the free riding problem more prevalent in e-tailing?

At least in the Indian context, free riding seems more pronounced in the e-tailing versus brick and mortar context. Now, this problem may be more pronounced for some products than others. For example, consumers may simply buy books online after reading reviews on the internet. On the other hand, when a consumer is looking to buy a phone, he or she is likely to go to a store and assess the product before buying it.

What about the warranty issue?

Snapdeal also raised the issue of 'refusal to deal' in its complaint since Kaff allegedly declined to honour warranty of its products sold online by Snapdeal. Snapdeal relied on the spare parts case to argue that Kaff could not have a blanket refusal to honour the warranty of goods, unless it is justified in some cases for reasons such as safety of consumers. Interestingly, the CCI has not directed an investigation for such conduct.

Kaff may have a justification to not provide warranty if it can prove trademark violation. Recent consumer forum decisions indicate that a right holder is obligated to provide warranties even for unauthorized sales unless the right holder approaches the court to stop the unauthorized sale.

Did the CCI get it right?

The absence of a well defined market and any analysis for checking whether Kaff exercised market power, a prima facie view taken by the CCI may be vulnerable to error, especially when minimum resale price maintenance is justified in some cases. Since this is only an order directing an investigation, its impact at this stage may be limited and manufacturers should buttress their case for such restraints in the meantime to prepare for the upcoming fight.

Originally published on The Legal 500

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions