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Surana & Surana loses CCI complaint vs Dell for selling computers too cheaply, then too dearly

Chennai-based law firm Surana & Surana has lost in its Competition Commission of India (CCI) complaint against computer maker Dell India, which the law firm alleged had entered “the Indian market of computers and computer hardwares via predatory pricing and it offered its products at ridiculously low prices compared to what was offered by its competitors in India”.

Read full CCI Order.

Surana had bought servers and software for only Rs 15,900 in 2005, while the market price was Rs 40,000, and wanted to buy more computers from Dell in 2014 since it was advantageous to keep all servers from the same supplier, but it was unable to get competing quotes from other Dell distributors after it had received the first quote from one distributor.

Surana alleged that due to Dell’s position as “second largest vendor of ‘x86 server’ in Indian market”, it was in a dominant position and by prohibiting distributors from giving competitive price quotes, it violated section 4 of the Competition Act, and that such an anti-competitive agreement with its distributors violated section 3(4)(d) ("refusal to deal"), and that it denied market access to the law firm and distributors under section 4(2)(c).

The commission held that the relevant market was the “market of x86 server in India”, which was homogenous since Intel and other manufacturers’ x86 servers could be sold by other manufacturers too. In this market, Dell had 23%, according to a 2014 report, while its nearest rival HP had 37%, with the remaining 40% of the market divided by IBM, Cisco, Lenovo and others.

In 2013, Dell had only a 16% marketshare, while HP had 33% and other companies were “big players” “indicating presence of competitive constraints” on Dell. The Commission was therefore of the “prima facie view that [Dell] is not in a dominant position”, and there could therefore have been no abuse.

Furthermore, its conduct in preventing its vendors from bidding freely against each other did not “give rise to appreciable adverse effect on competition”, since the x86 server market was very wide and served by Dell’s competitors.

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