Brands will battle it out in courts

NEW DELHI: Corporate houses are set to lose one key platform where they now fight instances of rivals disparaging their brands — something that is common in the Indian advertisement world. That is because the Competition Commission of India (CCI), which would replace the MRTP Commission, has no power to deal with such cases currently taken care of by the latter.

Companies will have to resort to litigation at the already burdened High Courts, which has no specialised knowledge in the area. This has immense implications for the industry, particularly the FMCG sector.

The market has witnessed numerous disputes of alleged disparaging of rival’s popular brands in segments like pain killers, tooth paste, mosquito repellents and water tanks. One notable dispute was Colgate-Palmolive’s legal battle with Hindustan Lever Ltd which claimed that its Pepsodent was 102% superior to the leading brands in the market. In the services sector too there are examples of one four-wheeler dealer unfairly claiming to be better than others dealing in the same brand.

The proposed amendments to the competition law does not provide for new such cases to be handled by the Competition Commission or its appellate tribunal. It only provides for such existing cases to be transferred to the competition appellate tribunal if the MRTPC could not clear them in two years after the CCI comes into force. This leaves companies with no option but to move High Courts to seek justice whenever such disputes occur in the future.

Besides, the rest of the unfair trade practices — where a company’s behaviour hurts a consumer’s interest — would go to the national commission set up under the consumer protection law. Lawyers say that unfair trade practices adopted by all the players in an industry such as credit cards are likely to escape regulatory attention since consumer courts only take up individual grievances for awarding compensation.

Existing MRTP law provisions allow the regulator to initiate investigation on its own against one or more players in a sector and ask all of them to stop a practice that is prejudicial to public interest. Experts say that MRTP Commission could be converted into a fair trade commission with the mandate to address this regulatory gap in the new competition regime. The other offences under the MRTP law — monopolistic trade practices and restrictive trade practices — are classified as abuse of dominance and anti-competitive agreements in the competition law.