In a blow to Nikhil Nanda-owned JHS Svendgaard Laboratories, Competition Commission of India has rejected allegations of anti-competitive practices by FMCG major Procter and Gamble.
BSE-listed JHS, a third-party manufacturer, had alleged that the FMCG chain did not honour its commitment after its contract expired earlier this year.
According to JHS, it had set up a plant in Himachal Pradesh exclusively to make Tide detergent, Oral B toothbrushes and toothpastes after P&G had promised a long-term association.
The complainant also alleged that through contract agreements P&G restricted JHS from taking orders from any of its direct competition.
Through contract agreement (supplementary agreement of September 30, 2011 for toothpaste), P&G restricted it (JHS) to take orders from any direct competition. Similar agreements were also made in toothbrush and detergent agreement, JHS had said in its complaint.
JHS said that due to conditions imposed by P&G and the latter not giving enough orders as promised earlier, it had to keep its plant idle, incurring losses, and also phase out production for Dabur.
US-registered P&G has subsidiaries in over 80 countries and serves over 650 million consumers in health, beauty and other segments. JHS Svendgaard undertakes manufacturing for global and domestic brands.
CCI after examining all materials on record said the present case was a contractual dispute and the remedy lies elsewhere.
“There does not exists a prima facie case for causing an investigation to be made by the Director General ... It is a fit case for closure under section 26(2) of the Act and the same is hereby closed,” the Commission said.