1. INTRODUCTION
1.1. In a pivotal ruling for India's competition law regime, the Hon'ble Supreme Court of India ("SC"), in Competition Commission of India v. Schott Glass India Pvt. Ltd. & Anr1., upheld the decision of the erstwhile appellate tribunal – Competition Appellate Tribunal ("COMPAT") and dismissed appeals filed by the Competition Commission of India ("CCI") and Kapoor Glass India Pvt. Ltd. ("Kapoor Glass"). The SC affirmed that discount schemes/ rebates which are volumebased/premised on performing certain functions, when applied consistently and backed by sound commercial reasoning, represent a legitimate business practice and do not, by themselves, amount to discriminatory or exclusionary conduct.
1.2. Further, the SC reaffirmed the importance of adopting an 'effects-based analysis' in cases pertaining to abuse of dominance, an approach earlier championed in the National Company Law Appellate Tribunal's ("NCLAT") decision in Alphabet Inc. & Ors. v. Competition Commission of India & Anr 2 ("Google Case"). The NCLAT endorsed an effects-based approach, recognising that conduct which enhances consumer welfare may co-exist with market power and should not be condemned.
1.3. In addition to the substantive findings, the SC underscored the importance of procedural fairness, particularly emphasising the denial of cross-examination during the CCI's enquiry. The SC noted that the Director General, CCI's ("DG") findings relied heavily on oral testimonies, yet Schott Glass India Pvt. Ltd. ("Schott India") was not afforded the opportunity to cross-examine the witnesses, whose statements formed the basis of the allegations/evidence against Schott India. This amounted to breach of principles of natural justice, undermining the legitimacy of the investigative process. By upholding the right to cross-examination, the SC reinforced that procedural safeguards are not ancillary, but integral to fair adjudication under the competition law framework.
2. BACKGROUND
2.1. An information was filed before the CCI by Kapoor Glass alleging that Schott India, a key manufacturer of neutral USP-I borosilicate glass tubing had abused its dominant position in the market of the manufacture and sale of neutral USP-I borosilicate glass tubing, whether clear or amber in India ("Relevant Market") by: (i) offering exclusionary volume-based discounts3 to Schott Kaisha Pvt. Ltd. ("Schott Kaisha"); (ii) imposing discriminatory terms on converters4; and (iii) engaging in selective refusals to supply5. While forming the prima facie opinion, the CCI directed the DG to investigate the matter.
2.2. The DG, in its report, concluded that Schott India had contravened the provisions of the Competition Act, 2002 ("Act") as: (i) Schott India's volume-based discounts were discriminatory and exclusionary in effect; (ii) the functional discounts6 lacked objective justification and were selectively applied; (iii) the pricing arrangement and the Long-Term Tubing Supply Agreement ("LTTSA")7 with Schott Kaisha amounted to a margin squeeze,8 impairing the ability of downstream rivals to compete effectively in the Relevant Market; and (iv) the supply of Neutral Glass Clear ("NGC")9 with Neutral Glass Amber ("NGA")10 tubes constituted tying under the provisions of the Act. During the DG investigation, Schott India was denied the opportunity to cross-examine key witnesses whose oral statements were central to the DG' findings. 11
2.3. Relying on the DG's findings, the CCI found Schott India guilty of abuse of dominance ("CCI Order")12, and: (i) imposed a penalty of INR 5.66 crores (approximately USD 0.66 million) 13 on Schott India @ of 4% of its average turnover for the years 2007-08 to 2009-10; and (ii) inter alia directed Schott India to cease-and-desist from applying dissimilar conditions while giving discounts to Schott Kaisha vis-à-vis other converters.
2.4. Schott India challenged the CCI Order before the COMPAT14, contending that the investigation was procedurally flawed and that no appreciable adverse effect on competition had been demonstrated. Kapoor Glass also filed an appeal before the COMPAT, seeking a broader relief and reiterating its refusal-to-supply grievance. The COMPAT allowed Schott India's appeal, set aside the CCI's penalty, and found no evidence of abuse of dominance. It also dismissed Kapoor Glass's appeal and imposed costs.
2.5. Aggrieved by the decision, both the CCI and Kapoor Glass filed appeals before the SC, seeking restoration of the CCI's original findings on market foreclosure and abuse of dominance by Schott India in the Relevant Market.
3. SC'S FINDINGS
Nature of volume-based discounts and market foreclosure
3.1. The SC noted that Schott India's volume-based target discount scheme was uniformly applicable across all qualified converters and reflected a commercially rational pricing which was aligned with the operational efficiencies in borosilicate glass production. Emphasizing on the absence of foreclosure effects or exclusion of competing converters, the SC held that the scheme did not amount to any discrimination and therefore, an anti-competitive conduct.
Validity of Rebate Programme
3.2. The SC further examined the validity of Schott India's functional rebate programme, including: (i) the "No-Chinese" policy, which incentivised buyers to avoid sourcing from Chinese manufacturers; and (ii) the subsequently adopted trade-mark license agreement that allowed converters to use Schott India's brand under specified quality standards. The SC held that both arrangements were voluntary, uniformly applied, and did not impose coercive conditions on buyers and neither the practice hindered market access nor restricted competition. Critically, the SC noted that other converters in the Relevant Market such as Nipro-Triveni not only remained active but expanded their operations during the relevant period, indicating a competitive and thriving market. There was no evidence of systematic foreclosure attributable to Schott India's conduct. Hence, the SC concluded that the functional rebate programme did not amount to an abuse of dominance in the Relevant Market.
No margin squeeze in long-term supply arrangements
3.3. On the question of whether the LTTSA between Schott India and Schott Kaisha gave rise to a margin squeeze, the SC ruled in the negative. The issue arose from allegations that Schott India, entered into a LTTSA with its joint venture Schott Kaisha, allegedly on preferential terms, thereby disadvantaging other downstream converters. However, the SC found that: (i) the LTTSA was a commercially viable bulk procurement agreement with no exclusionary sourcing or pricing conditions; and (ii) independent converters continued to operate profitably, with no evidence of systematic foreclosure or competitive disadvantage. Accordingly, the SC held that the arrangement did not constitute abuse of dominance in the Relevant Market.15
Allegations with respect to Tying and bundling
3.4. The SC rejected the allegation that Schott India engaged in tying or bundling NGA and NGC tubes. It was alleged that Schott India's rebate scheme that offered discounts based on the combined purchase of both tube types (i.e., NGA and NGC tubes), was to coerce buyers into purchasing products they might not have otherwise chosen. However, the SC held that: (i) the two products were not economically distinct, as both served overlapping functions in pharmaceutical packaging; and (ii) there was no evidence of coercion or conditional sales. It further noted that the aggregated rebate structure served a legitimate business objective optimizing furnace efficiency and encouraging balanced procurement across the product range. In the absence of demonstrable foreclosure or competitive harm, the SC found no violation in relation to tying or bundling.
Effect-based analysis and evidentiary standards
3.5. In addressing the analytical framework adopted by the CCI, the SC underscored that an effectsbased approach is a necessary and non-negotiable component in assessing allegations of abuse of dominance. The SC found that the CCI had failed to discharge this obligation, relying on unverified statements, outdated pre-2009 correspondence, and anecdotal material, none of which established any tangible harm to the competitive process. Further, the SC placed reliance on empirical evidence which revealed that rival converters had expanded output and margins, downstream prices remained stable, and there was no evidence of foreclosure or exclusion. Based on the aforesaid it was concluded that the CCI had undertaken no credible analysis and failed to establish any appreciable adverse effect on competition. The SC held that the CCI's findings were unsustainable and affirmed the COMPAT's decision to set aside the directions and the penalty. In the absence of a substantiated effects analysis, the SC held that the CCI's findings could not be sustained.
Procedural improprieties and denial of natural justice
3.6. The SC held that the denial of Schott India's request to cross-examine critical witnesses breached the principles of natural justice16, which guarantees a fair hearing in adversarial proceedings.
3.7. The SC further observed that the DG's findings and the CCI Order relied heavily on contested oral testimonies from competing converters. In such a context, the denial of cross-examination compromised procedural fairness and due process. The Hon'ble SC concluded that the failure to permit cross-examination undermined the evidentiary integrity of the investigation and rendered the CCI's findings unsustainable.
4. INDUSLAW VIEW
4.1. The SC's judgment not only brings much-needed clarity to the treatment of discounts and rebates but also reinforces the core principles of procedural fairness and evidence-based competition enforcement. It was held that not every conduct of a dominant player is harmful unless it results in demonstrable foreclosure of competition or consumer harm. The SC's observation that volume or "target" discounts, while not inherently anti-competitive, must be examined for their real world effects, rightly places emphasis on whether such practices in fact foreclose the market or harm equally efficient competitors. The insistence on empirical assessment strengthens the credibility of competition enforcement in India. Thus, this judgment provides relief to vertically integrated players whose business model involves volume rebates/discounts.
4.2. The SC's endorsement of an effects-based analysis in abuse of dominance cases (on the heels of the recent Google Case) brings the Indian competition law regime in alignment with global antitrust trends, particularly those followed in jurisdictions like the European Union and the United States of America, where economic analysis plays a central role in competition assessments.
4.3. The SC's decision also aligns with the Delhi High Court's reasoning in Cadila Healthcare v. CCI17, which affirmed that the right to cross-examination is integral to ensuring procedural fairness. Hence, the mandate to the CCI is to follow due process and rely on comprehensive market studies, economic data, and behavioral analysis when investigating potentially anti-competitive practices, so that their decisions are robust and reflect the market realities.
Footnotes
1. 2025 INSC 668, Competition Commission of India v. Schott Glass India Pvt. Ltd., order dated May 13, 2025, available at: https://api.sci.gov.in/supremecourt/2014/19707/19707_2014_5_1501_61745_Judgement_13-May-2025.pdf
2. 2025 NCLAT 216, Alphabet Inc. & Ors. v. Competition Commission of India & Anr., order dated March 28, 2025.
3. Volume-based discounts are price reductions offered based on the total quantity purchased over a specified period.
4. A converter transforms USP-I borosilicate glass tubing into pharmaceutical containers like vials and ampoules. The dispute arose because Schott India allegedly gave preferential volume-based discounts to Schott Kaisha, an affiliate of the Schott group and a converter. Kapoor Glass, a competing converter, claimed this created an uneven playing field and restricted market access.
5. In the present case, Schott India was accused of denying supply of USP-I borosilicate glass tubing to Kapoor Glass while continuing to supply Schott Kaisha. This conduct was alleged to disadvantage independent converters and constitutes as a selective refusal to supply.
6. Functional discounts are granted in exchange for the buyer undertaking specific functions such as warehousing, marketing, or after-sales services. The DG observed that Schott India's application of such discounts lacked transparency and objective criteria, thereby resulting in discriminatory pricing practices that confer preferential treatment on certain downstream players in the Relevant Market.
7. The LTTSA is an exclusive supply agreement between Schott India and Schott Kaisha, for USP-I glass tubing. In this case, the DG found that the LTTSA enabled Schott India to offer preferential pricing and supply terms to Schott Kaisha while denying similar terms to rival converters thereby creating a margin squeeze in the Relevant Market.
8. A margin squeeze occurs when a vertically integrated entity sets upstream input prices and downstream sale prices in a manner that squeezes competitors' margins. The DG found that Schott India, through its LTTSA with Schott Kaisha, offered preferential terms while denying comparable access to rivals in the Relevant Market.
9. NGC tubes are transparent USP-I borosilicate glass used in pharmaceutical packaging. Schott India was accused of limiting their supply to certain converters in the Relevant Market.
10. NGA tubes are USP-I glass with light-protective properties. Schott India was accused of tying their sale to NGC supply.
11. The SC observed this to be in violation of natural justice, as it deprived Schott India of a fair chance to contest the evidence relied upon by the CCI.
12. Case No. 22 of 2010, Kapoor Glass Pvt. Ltd. v. Schott Glass India Pvt. Ltd., order dated March 29, 2012, available at: https://cci.gov.in/antitrust/orders/details/877/0.
13. INR converted to USD at 1 USD=INR 85.40.
14. 2014 COMPAT 91, M/s. Schott Glass India Pvt. Ltd. v. Competition Commission of India & Ors., order dated April 2, 2014, available at: http://www.compat.nic.in/upload/PDFs/aprilordersApp2014/02_04_14.pdf
15. Schott India's LTTSA with Schott Kaisha was alleged to cause a margin squeeze by offering it better prices. However, the SC found the agreement to be a fair bulk purchase deal, noting that other converters remained profitable and competitive.
16. As per Competition Commission of India (General) Regulations, 2009, Reg. 41(5), available at https://www.cci.gov.in/images/legalframeworkregulation/en/cci-general-regulations-20091652176202.pdf.
17. Cadila Healthcare Ltd. v. CCI, 2018 SCC OnLine Del 11229
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