Case Note - Competition Commission Of India v. Schott Glass India Pvt. Ltd. Civil Appeal No. 5843 Of 2014 | Supreme Court Of India

On 13 May 2025, the Supreme Court of India ("Supreme Court") issued its judgment in Competition Commission of India v. Schott Glass India Pvt. Ltd., upholding the order of the erstwhile Competition Appellate Tribunal ("COMPAT") finding that Schott Glass India Pvt. Ltd. ("Schott India") had not abused its dominance in the market for manufacture and sale of neutral USP-I borosilicate glass tubing ("Upstream Market") by offering volume rebates and functional rebates to converters, entering into a Long-Term Tubing Supply Agreement ("LTTSA") with its joint venture, and tying / bundling clear and amber tubes.

The Supreme Court ruling is notable for establishing the centrality of an effects-based analysis for abuse of dominance cases, clarifying that an assessment of (a) actual or likely anticompetitive effects; and (b) objective justifications is required to conclude on conduct being anti-competitive. The decision also clarifies that volume-based rebates are not automatically anti-competitive so long as they have been applied uniformly across similarly situated suppliers and are based on objective rationale.

I. Legal Background

The case was initiated based on an information filed by Kapoor Glass India Pvt. Ltd. ("Kapoor Glass") under section 19(1)(a) of the Competition Act, 2002 ("Act"), alleging that Schott India, the principal domestic manufacturer of neutral USP-I borosilicate glass tubing, had abused its dominant position by offering exclusionary volume-based discounts, imposing discriminatory contractual terms, and refusing supply. By way of the majority order dated 29 March 2012, the Competition Commission of India ("CCI") held that Schott India had abused its dominance by: (a) foreclosing competition in the Upstream Market by volume-based "target" rebates, the trademark-linked "functional" rebates, and the LTTSA; (b) tying clear and amber tubing for the purpose of achieving higher rebate slabs; and (c) temporarily curtailing supplies to certain converters ("CCI Order"). Accordingly, the CCI imposed a cease-and-desist order and levied a penalty at 4 percent of Schott India's average turnover for the last three-years, i.e. ~ INR 5.66 crore.¹

In cross appeals filed by Schott India and Kapoor Glass, the COMPAT held that there was no proof of discriminatory rebates, margin squeeze or tying, and the CCI committed a serious procedural lapse by not subjected statements that constituted a large part of the evidence against Schott India to cross-examination. Accordingly, the COMPAT set aside the penalty and cease-and-desist order, and dismissed Kapoor Glass' appeal with costs of INR 1,00,000 ("COMPAT Order").²

II. Supreme Court's Judgement

In appeals filed by the CCI (Civil Appeal 5843 of 2014) and Kapoor Glass (Civil Appeal 9998 of 2014) (collectively referred to as the "Appellants") against the COMPAT Order, the Supreme Court identified two distinct upstream product markets for Neutral Glass Clear ("NGC") and Neutral Glass Amber ("NGA"). Based on the market share of Schott India, its economic strength and vertical integration and the lack of competitive constraints and countervailing buyer power, the Supreme Court concluded that Schott India holds a dominant position in the two upstream markets.

The Supreme Court, however, found that Schott India has not abused its dominance through any of the alleged practices.

A. Uniform, transparent volume-based rebate schemes do not constitute abuse of dominance if they are objectively justified and offered to all similarly placed purchasers:

Schott India had circulated a single rebate "ladder" with slabs of 2 percent, 5 percent, 8 percent and 12 percent, triggered solely by the aggregate annual volume of NGC and NGA bought by a converter. Every customer who reached a threshold—whether through one purchase order or several—received the corresponding rebate on the whole year's turnover; the buyer's identity was irrelevant, and all converters were informed of the thresholds in advance. Schott Kaisha's routine attainment of the 12 percent rebate, the Supreme Court observed, merely reflected its larger volumes and did not evidence unequal treatment, as no converter purchasing an equivalent tonnage had been denied the same benefit. The scheme was further objectively justified by demonstrable efficiency gains. Therefore, the scheme cannot be held to be unfair or discriminatory under Section 4(2)(a) of the Act.

In respect of the argument of the Appellants that the quarterly settlement created a "retroactive claw-back" risk³ which deterred dual sourcing, the Supreme Court noted that the system was adopted to ease cash-flow and neither rewarded nor penalised purchases from competitors.

Finally, the Supreme Court noted that there is no evidence on record to show that the rebate scheme foreclosed alternative suppliers or curtailed output. To the contrary, upstream supply expanded during the relevant period and container prices remained broadly stable. Accordingly, there cannot be exclusion or limitation to warrant application of section 4(2)(b)(i) of the Act.

Notably, prior to this decision, only limited orders passed by the CCI or COMPAT weighed in on the issue. In Grasim Industries⁴, the CCI stressed that a dominant firm must communicate its pricing policies transparently, while in Intel⁵, the CCI accepted that incentivising distributors to sell slower-moving products is a reasonable and commercially sensible business practice.

The only comprehensive guidance came from the COMPAT Order, which recognized that the grant of target discounts can be legitimate provided they: (a) are embedded in efficiencies and economies of scale; (a) treat equivalent transactions alike; and (b) do not distort competition by disadvantaging buyers relative to each other. By upholding those principles and aligning them with the European Court's approach in Intel v. Commission,⁶ which focusses on demonstrating foreclosure effects and allows objective justifications, the Supreme Court has now brought welcome clarity to the legality of volume-based rebate schemes in India.

B. Uniform and objectively justified functional rebates do not violate sections 4(2)(a) and 4(2)(b) of the Act:

Schott India offered functional rebates⁷ of eight percent to converters that (a) achieved their annual purchase targets, (b) refrained from using Chinese tubing, and (c) adhered to "fair-pricing" commitments in their container sales. With effect from 1 April 2010, the qualifying conditions were restated in a TMLA paired with a Marketing-Support Agreement. Execution of the TMLA conferred a royalty-free right to emboss the "SCHOTT" mark on finished containers in exchange for limited inspection rights and a INR 70 lakh bank guarantee to safeguard against misuse.

The Supreme Court ruled that the functional rebates were non-discriminatory as evidence did not disclose any instance where two converters performing the same function were subjected to different net prices. Importantly, there was no adverse effect on competition in the Upstream Market or the downstream market for 'the sale of pharmaceutical containers—ampoules, vials, cartridges and syringes—made by converters' ("Downstream Market").

In fact, each eligibility condition was found to be objectively justified, as they were directly linked to the legitimate goals of safeguarding patient safety and protecting brand integrity, and were proportionate to those aims. Accordingly, and entirely in line with the established precedent on price discrimination⁸ and availability of objective justifications,⁹ the Supreme Court concluded that Schott India had not violated sections 4(2)(a) or 4(2)(b)(i) of the Act. The Supreme Court, however, additionally clarified that differential timing unaccompanied by differential rates, does not amount to price discrimination.

C. Essential conditions for Margin-squeeze:

Schott India had entered into a three-year LTTSA with Schott Kaisha, a joint venture between Schott India and Kaisha Manufacturers, under which the Schott Kaisha undertook to source at least 80 percent of its requirements (roughly 30 percent of Schott India's capacity) from Schott India, in consideration of a price concession, a three-year price freeze and priority dispatch during periods of tight supply. Kapoor Glass contended that the LTTSA produced a margin squeeze contrary to section 4(2)(e) of the Act.

Lacking an Indian precedent on the legal test to establish a margin squeeze,¹⁰ the Supreme Court adopted the criteria articulated by the ECJ in TeliaSonera Sverige AB v. Konkurrensverket.¹¹ A complainant must demonstrate, cumulatively, that:

1. the dominant enterprise is itself active in the downstream market;
2. the wholesale-to-retail spread (of price) is insufficient to allow an equally efficient competitor to survive; and
3. the compression threatens competitive harm.

As to the first condition, the Supreme Court clarified that mere supply to a related undertaking is insufficient to prove that the upstream entity used its dominance to enter or protect its position in the downstream market. In the instant case, Schott Kaisha is a separate company, jointly owned (50-50) by the global Schott AG and Kaisha promoters, with no common board member, management or audited accounts. Therefore, Schott India cannot be said to be present in the Downstream Market.

Regarding the second condition, a price differential constitutes a squeeze only if it would drive an equally efficient competitor into loss. However, in the instant case, evidence showed that independent converters recorded rising volumes, profits, and year-on-year margins, while Schott Kaisha's ampoules and vials were quoted at or above competitors' prices. In such a situation, an equally efficient converter could, and did, operate profitably notwithstanding the LTTSA.

On the third condition, no foreclosure was evident based on factors listed under section 19(3) of the Act as imports rose, Nipro-Triveni (another competitor) expanded its melting capacity and no converter exited the Downstream Market.

The Supreme Court further found the LTTSA to be objectively justified as the guaranteed offtake permitted Schott India to operate its continuous-fire furnace at optimal throughput, unlock economies of scale and underwrite the capital expenditure required for a costly rebuild. The Supreme Court observed that it is established precedent that such "take-or-pay" commitments are legitimate where the pro-competitive efficiencies outweigh any restrictive tendency.

Accordingly, the Supreme Court concluded that the LTTSA did not contravene Section 4(2)(e) of the Act.

D. Aggregating of two alternative specifications of one input for the purpose of calculating rebates does not amount to tying or bundling section 4(2)(d) of the Act:

Schott India operated a single rebate ladder that aggregated the annual tonnage of NGA and NGC purchased by each converter. Kapoor Glass contented that this amounted to tying under bundling section 4(2)(d) of the Act.

Mirroring the established Indian¹² and European¹³ precedent, the Supreme Court stated the legal test for tying under section 4(2)(d), that is, where a dominant enterprise:

1. supplies two distinct products;
2. makes the supply of the tying product conditional upon acceptance of the tied product; and
3. thereby forecloses competitors in the tied-product market.

Applying the test, the Supreme Court held that Schott India was not liable for violation of section 4 of the Act as:

1. No distinct products: NGA and NGC are drawn from the same continuous-melt furnace; the sole difference is that iron oxide added to the common batch for production of NGA. Converters order whichever variant their downstream pharmaceutical customer specifies, and there is no independent demand for NGA unconnected with photo-sensitivity. The grades are therefore alternative specifications of one input, and not separate products.
2. No coercion: The evidence relied on by the CCI to assert that converters were coerced to buy the two together was inadequate. First, the witness statements not being subjected to cross-examination despite repeated requests by Schott India materially weakened their evidentiary value. Second, the circular dated 18 August 1999 relied on by the Appellants predated the commencement of Sections 3 and 4 of the Act, and therefore cannot become the ground for imposing liability for the relevant period. Third, the Appellants failed to furnish any purchase order, invoice or contractual clause that makes the supply of NGA contingent upon an order for NGC. Merely aggregating the annual volumes of the two grades for the purpose of computing rebates is a multi-product volume discount, and not tying.
3. No foreclosure: There was no foreclosure as there was an increase in the output of every converter as well as imports.
4. Existence of objective justifications: The Supreme Court observed that both products draw from a common furnace, and if there are sharp month-to-month swings in the ratio, jeopardise furnace integrity. Thus, aggregating the two grades when calculating rebates leads to manufacturing efficiency, which is a legitimate business consideration and has not been shown to harm consumers.

E. An effects-based (harm) analysis is an essential component of an inquiry under section 4 of the Act:

The Supreme Court has unequivocally affirmed that an effects-based analysis is indispensable when examining alleged abuse of dominance under section 4 of the Act. It observed that section 4 of the Act does not prohibit per se dominance, but rather abuse. Consequently, every inquiry under section 4 must establish, first, that the impugned conduct falls within one of the illustrative categories in section 4(2)(a)–(e) and, second, that the conduct has caused, or is likely to cause, an appreciable adverse effect on competition ("AAEC").

The Supreme Court identified three legislative signposts that make explicit the effects requirement in the statute.

1. The Preamble states that the Act is enacted "to prevent practices having adverse effect on competition";
2. The definition of 'dominant position' under Explanation to Section 4 of the Act refers to the power "to affect ... the relevant market in its favour", thereby necessitating an inquiry into whether the power has in fact been exercised to that effect; and
3. Section 19(4)(i) of the Act obliges the CCI, while analysing dominance, to consider the "relative advantage, by way of contribution to economic development", thereby recognising that conduct which enhances consumer welfare should not be condemned.

To further bolster its interpretation, the Supreme Court relied on the effects-oriented approach reflected in the "key questions for adjudication on abuse of dominance" in the Raghavan Committee Report (2000), the blueprint of the Act, and on the interpretation of Article 102 of the Treaty on the Functioning of the European Union by the Court of Justice of the European Union.¹⁴ Further, given the presumption of AAEC mentioned under Section 3(3) of the Act is rebuttable,¹⁵ a fortiori, any presumption not mentioned in Section 4 of the Act cannot be treated as conclusive.

In fact, the CCI itself has previously undertaken a "fairness or reasonableness test",¹⁶ which needs to be applied uniformly in all cases to comply with Article 14 of the Constitution.¹⁷ Accordingly, the Supreme Court rejected CCI's argument that section 4(2) of the Act is a "deeming provision", ipso facto condemning the listed practices.

On facts, the Supreme Court ruled that competitive harm is absent in the instant case since evidence demonstrates that: (a) all independent converters expanded output and margins; and (b) pharmaceutical buyers paid identical or higher prices for containers purchased from Schott Kaisha. The Supreme Court therefore upheld the COMPAT Order, setting aside the CCI Order, holding that the regulator had failed to undertake any credible assessment of harm.

The ruling has settled a long-debated issue regarding the necessity of an effects assessment in abuse of dominance cases. While the decisional practice leaned towards deploying an effects-based approach while evaluating abusive conduct,¹⁸ the essentiality of an effects test was not uniformly recognised. In Google LLC v. Competition Commission of India,¹⁹ the National Company Law Appellate Tribunal (NCLAT) accepted that effects (actual or likely) must be analysed. The Supreme Court has now confirmed that competitive harm must be demonstrated through evidence. Therefore, in holding any conduct as abusive under section 4 of the Act, the CCI must analyse the effects of such conduct, weighing pro- and anti-competitive effects under section 19(4) of the Act, based on actual evidence. Merely observing the theoretical potential of the conduct to cause competitive harm may not be enough.

While this may impose a demanding evidentiary burden, particularly in digital markets where actual harm may not yet have manifested and the inquiry must focus on likely effects, the requisite standard will vary according to the facts of each case. Further, one cannot rule out the possibility of false positives in an assessment of 'likely effects' – accordingly, it would be prudent for the CCI to consider the available evidence and weigh it against market dynamics, growth projections and possibilities of dynamic entry in the market before arriving at a determination.

F. The DG investigation and the CCI Order are vitiated by denial of cross-examination and allied breaches of natural justice:

Under section 36(2) of the Act and Regulation 41(5) of the CCI (General) Regulations, 2009, the inquisitorial powers of the DG are bounded by the fundamental rule that evidence adduced against a party must be open to challenge, thereby weaving in the principle of audi alteram partem in the statutory framework.

In this case, the DG questioned only nineteen converters, each singled out by the informant and commercially hostile to Schott India, and did not undertake any independent verification of their assertions. The CCI then adopted the same material without independent scrutiny. Therefore, the DG and CCI relied entirely on uncorroborated testimony for every adverse inference against Schott India.

The Supreme Court noted that if cross-examination had been permitted, it may have demonstrated that many converters increased their output, raised prices independently of Schott India, and freely imported tubing, thereby negating any suggestion of foreclosure. Instead, the CCI cherry-picked inculpatory statements, while ignoring exculpatory material, "precisely the mischief the law guards against".

Schott India's requests to cross-examine the deponents were denied by the CCI merely on the ground that a separate application was not filed, rather than upon weighing necessity or prejudice, as demanded by the statutory framework. This is contrary to established precedent,²⁰ where the Supreme Court has observed that disallowing cross-examination of witnesses whose statements were made the basis of the decision is a serious flaw and amounted to a violation of principles of natural justice, thus nullifying the decision. Further, in Cadila Healthcare Ltd. v. CCI,²¹ the Delhi High Court reached the same conclusion, emphasising that the statutory discretion to allow or refuse cross-examination must be exercised judicially and must not be defeated by procedural technicalities or mere dissatisfaction with the justifications given for seeking cross-examination.

The 2024 amendment to Regulation 41(2) further underscores the indispensable nature of the right of the opposite party to cross-examine where the DG has relied on such oral evidence for their findings. However, it is important to note that the Supreme Court decision does not bless a blanket right of cross-examination qua any party. It recognizes the importance of allowing a cross-examination in cases where such denial is bound to cause prejudice to the opposite party – if the DG intends to rely on oral statements made against the opposite party and does not have sufficient documentation to corroborate those statements, then it would be prudent for the DG to allow cross-examination in such cases so as to arrive at a complete picture and give the opposite party a fair opportunity to defend itself.

III. Conclusion

Through this judgment, the Supreme Court has decisively reaffirmed the centrality of effects-based analysis in Indian abuse-of-dominance jurisprudence, making clear that intervention under the Act must be predicated on rigorous economic evidence of actual or likely competitive harm. Further, the Supreme Court has provided much-needed clarity on the legality of volume-based rebate schemes. The decision underscores the necessity for robust, procedurally fair investigations, backed by evidence of harm, and serves as a caution against reliance on untested or procedurally flawed evidence. At the same time, it recognises that commercial strategies grounded in efficiency are unlikely to offend the Act. In doing so, it seeks to ensure that competition law takes cognizance of anti-competitive conduct without chilling legitimate business objectives or deterring investment. The judgement thus articulates that the true purpose of antitrust laws is to ensure that markets remain contestable without throttling genuine achievement. The opening paragraph of the judgment reflects this sentiment in the context of India's economic stature: "Preserving this symmetry between discipline and encouragement is essential if the statute is to nurture robust rivalry while sustaining the confidence of domestic and global investors who increasingly view India as a premier destination for enterprise and innovation."

Footnotes

1. Kapoor Glass Private Limited v. Schott Glass India Private Limited, Case No. 22 of 2010.

2. Schott Glass India Pvt. Ltd. v. Competition Commission of India, Appeal No. 91 of 2012.

3. Retroactive rebates occur when the purchaser's bonus is granted for all purchases, even below a triggering threshold, once the threshold is attained.

4. In re: XYZ and Grasim Industries, Case No. 62 of 2016.

5. M/s ESYS Information Technologies v. Intel Corporation (Intel Inc.), Case No. 48 of 2011.

6. Case C-413/14. In this case, the European Court of Justice ("ECJ") dispensed with automatic illegal categorisation of exclusivity rebates and directed that foreclosure effects must be established. Moreover, the ECJ confirmed that rebates may be objectively justified by advantages and efficiencies, which benefit the consumer.

7. The rebate offered by a seller to repay a buyer for performing any extra function like storing stock, advertising the brand, or providing repairs. Airlines, for example, pay travel agents a commission for marketing flights. If the rebate merely covers the cost of that task and is open to any buyer willing to do the same, competition law is not violated.

8. Prasar Bharati (Broadcasting Corp of India) v. TAM Media Research Pvt. Ltd., Case No. 70 of 2012 [9.4]; Travel Agents Federation of India v. Lufthansa Airlines, Case No. 136 of 2009.

9. M/s ESYS Information Technologies Pvt. Ltd. v. Intel Corporation (Intel Inc.), Case No. 48 of 2011 [8.4.18]; Singhania & Partners LLP v Microsoft Corporation (I) Pvt. Ltd., Case No. 36 of 2010. .

10. The CCI had merely explained the meaning of a margin squeeze in Together We Fight Society v. Apple Inc., Case No. 24 of 2021, as "A margin squeeze may occur where, as in the present case, a vertically-integrated company sells a product or service to competitors on an upstream market where it is dominant (i.e., the App Store) and competes with those companies in a downstream market for which the product or service is an input.", without returning a finding on the issue.

11. Case C-52/09.

12. Harshita Chawla v. WhatsApp Inc, Case No. 15 of 2020; Khemsons Agencies v.Mondelez India Foods Private Limited, Case No. 17 of 2018; Baglekar Akash Kumar v. Google LLC, Case No. 39 of 2020.

13. Microsoft Corp. v. Commission of the European Communities, Case T-201/04.

14. Intel Corporation Inc. v. European Commission, Case C-413/14 P.

15. Rajasthan Cylinders v. Union of India, (2020) 16 SCC 615.

16. Indian National Shipowners' Association v. ONGC, (2019) SCC OnLine CCI 26.

17. Excel Crop Care Ltd. v. CCI, (2017) 8 SCC 47.

18. COMPAT Order; XYZ v. REC Power Distribution Company Ltd., Case No. 33 of 2014; Yogesh Pratap Singh v. PVR Ltd., Case No. 40 of 2022; ESYS Information Technologies Pvt. Ltd. v. Intel Corporation (Intel Inc.), Case No. 48 of 2011; Meet Shah v. Union of India, Ministry of Railways,Case No. 30 of 2018.

19. Competition Appeal (AT) No. 1 of 2023 and Competition Appeal (AT) No. 4 of 2023.

20. Raymond Woollen Mills Limited v. Director General (Investigation and Registration), (2008) 12 SCC 73; State of Kerala v. K.T. Shaduli Grocery Dealer Etc., (1977) 2 SCC 777; Andaman Timber Industries v. Commissioner of Central Excise, Kolkata-II, (2016) 15 SCC 785.

21. 2018 SCC OnLine Del 11229.

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