India – CCI Directs Probe Into The Conduct Of Intel Corporation And Intel Technology India Private Limited.

8 October, 2019

 

On August 9, 2019, CCI directed the Director General to investigate into the allegations by Matrix Info Systems Private Limited (‘Informant’) for contravention of Sections 3 and 4 of the Act against Intel Corporation (‘Intel Corp.’) and Intel Technology India Private Limited (‘Intel India’) (collectively ‘Intel’). [1]

 

The allegations pertain to an amendment in the warranty policy for ‘Boxed Micro-Processors’ sold by Intel where Intel stopped its practice of providing a warranty on ‘Boxed Micro-Processors’ in India, that may have been purchased from any country other than India and initiated a practice of entertaining warranty requests for Intel Boxed Processors in India only when the same is purchased form an authorized Indian distributor of Intel in India. The Informant alleged that the amended warranty policy limits and restricts business of other resellers and parallel imports and denies market access to them and would give Intel’s Indian distributors exclusive selling rights in India in violation of sections 3(4)(c) and 3(4)(d) (exclusive distribution agreement and refusal to deal respectively) of the Act. It was further alleged that Intel’s practice to not acknowledge warranty on Intel’s Boxed  Micro-Processors purchased from sellers other than Intel’s authorised  distributors in  India is in violation of Section 3(4)(e) (resale price maintenance) of the Act.

 

CCI defined the relevant market as market for ‘Boxed Micro-processors for Desktop PCs in the territory of India” and “the market for Boxed Micro-processors for Laptop PCs in the territory of India’. On the issue of dominance, CCI relied on precedents and latest publically available reports on Intel’s market shares in the relevant market. After analyzing the amended warranty policy, CCI observed that differentiated warranty policy of Intel limits the choice of consumers and also has the potential to lead to denial of market access to the parallel importers and resellers of Intel ‘Boxed Micro-processors’ in India who are competitors of Intel’s Indian authorized distributors ultimately leading to a risk of prevalence of high pricing by Intel’s Indian authorized sellers.

 

Accordingly, CCI formed a prima facie view that the amended warranty policy is unfair in nature and violative of Section 4 of the Act. However, with respect to the allegations under Section 3(4) of the Act, CCI observed that the agreement between  Intel and  its  authorised  distributors is not in the  nature of  an exclusive distribution agreement and its authorised distributors may sell micro-processors of any  other brand. Based on the above analysis, CCI directed the Director General to initiate an investigation.

 

[1] Case No. 16 of 2018.