CCI Dismisses Unicorn Udaan’s Plea Against Parle For Direct Access To Products

The Competition Commission of India (CCI) rejected a plea filed by Udaan against Parle Products Private Ltd, the manufacturer of Parle-G biscuits, that sought direct access to the biscuits.

In September last year, the B2B ecommerce unicorn filed an antitrust case alleging abuse of dominant position in the market by Parle. 

“As far as allegations under Section 4 of the Act are concerned, the Commission does not find any abuse, more so as the Informant (Udaan) has failed to establish any right on its part,” the CCI said in its order dated July 6. 

Udaan, in its plea, claimed that it was facing a competitive setback due to Parle refusing to directly supply its highly-demanded products ‘without any objective justification.’

Udaan also claimed that all Parle SKUs had high consumer demand and a lack of direct supply from Parle had forced the B2B ecommerce startup to procure the biscuits from the company’s existing distributors in the open market.

The product in contention was Parle’s highly-sought Parle-G biscuits, which Udaan claimed commanded a market share of around 83%.

In response to Udaan’s contention about Parle-G biscuits being ‘must stock’ items, the CCI noted that 115 out of 235 vendors from whom the retailers of Udaan could purchase on the B2B platform were Parle’s distributors.

The competition watchdog also agreed with Parle’s argument that the company was free to choose its business partners.

“The Commission in this regard observes that the type and nature of distributors a manufacturer desires to partner with is an essential part of the autonomy of its business, and the Commission cannot ipso facto substitute its regulatory wisdom to that of the commercial wisdom of the businesses,…”, noted CCI.

“…even amongst distributors, it may not be out of place to subject them to different terms of trade when the same is stated to be based on sound commercial logic and not in derogation of any governing laws, and therefore, equal treatment is not any bounden obligation cast in iron and stone,” the order added.

The CCI’s remark came in response to a terse submission by Parle which took potshots at Udaan’s business model. In its plea, Parle stated that the business model of the B2B ecommerce giant was “based on accumulating massive debts through raising funds from venture capitalist and other markets and, as per publicly available information, it is a massive loss-making enterprise year on year”.

Parle said it had concerns over long-term viability of Udaan as a reliable partner, as opposed to Parle’s run-of-the-mill brick and mortar distributors.

In its order, the CCI dismissed Udaan’s allegations of exclusionary practices employed by Parle. It said Udaan was unable to demonstrate any exclusionary practice on behalf of Parle under the Act. 

Udaan referred to a July 2021 case involving termination of a distributorship in Uttar Pradesh’s Varanasi by Parle for supplying products to Udaan to allege that the company employed exclusionary practices. The CCI pulled up Udaan for filing the information later in a rejoinder to Parle’s response even though the incident took place months before Udaan filed the case in September last year.

This is the second major blow to Udaan in a matter of a month. Earlier this month, the CCI dismissed a similar plea filed by the B2B giant against another biscuit manufacturer Britannia.