On February 6, 2020, CCI dismissed the complaint of the Assam Plywood Manufacturers’ Association (‘APMA’) alleging abuse of dominant position under Section 4 of the Act by Assam Petrochemicals Limited (‘APL’)[1]. The APMA is an association of plywood manufacturers in the state of Assam, and APL is a public sector undertaking by the Government of Assam, established for the manufacture of ethanol and formalin.

Formalin is used by the plywood units for the manufacture of resin, which, in turn, is used as a binding agent in the manufacture of plywood. The APMA alleged that APL, being the sole producer of formalin in Assam and the North-East states, indulged in discriminatory pricing by charging a higher price for formalin from plywood manufacturers in Assam, and a lower price from those in other states.

APL responded that it receives most of its revenue from outside the states of Assam, Nagaland and Arunachal Pradesh. APL submitted that the prices charged by it in other states are based on the prices charged by its competitors in those markets, i.e., APL is compelled to sell below the cost price because of the low prices charged by other sellers of formalin in those markets. Moreover, APL stated that even in the states of Assam, Nagaland and Arunachal Pradesh, its prices for formalin are below the price charged by its competitors.

CCI observed that there are multiple sellers in the market and the buyers can switch from one seller to another without incurring significant costs. The choice for buyers continues to exist irrespective of whether the relevant geographic market is defined narrowly i.e., it is limited to the states of Assam, Nagaland and Arunachal Pradesh, or broadly to include West Bengal as well. The presence of other players indicates that APL cannot operate independent of the competitive forces in the market or affect consumers in its favour, and therefore APL does not enjoy a dominant position. Accordingly, CCI dismissed the complaint.

[1] Case No. 34 of 2019.