The Competition Commission of India has closed a case against Coimbatore-based Lakshmi Machine Works that alleged the company had abused its dominant position in the textile machinery business.

Shahi Exports had approached the Commission alleging that LMW had abused its dominant position in sale of spinning machinery for textiles.

‘Dominant position’

Shahi Exports had said that LMW had unilaterally increased prices and imposed unfair terms and conditions in a contract the two parties had signed, given its dominant position in the market.

CCI examined the information and found that, despite LMW being a dominant player, it had not contravened the provisions of Section 4 Competition Act (abuse of dominance).

During the arbitration proceedings with the complainant, Lakshmi Machine Works had submitted that the price increase was due to increase in costs of raw material and labour.

Not discriminatory

“... despite the fact that the opposite party (Lakshmi Machine Works) was a dominant player in the relevant market, mere increase in prices by the opposite party for valid economic reasons for all of its customers cannot amount to imposing of unfair or discriminatory conditions in purchase or sale of goods or services,” the Commission said in its order.

CCI noted that Lakshmi Machine Works had been “increasing the price of its products at regular intervals and was not discriminating against any of its customers but had increased prices for all its customers alike”.

(This article was published on February 20, 2013)
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