The Competition Commission of India (CCI) on Thursday imposed a penalty of Rs 27.38 crore on the Intel Corporation for abusing its market dominance in the boxed micro processors (BMPs) market in India. The competition regulator said that Intel violated section 4 of the Competition Act by changing its warranty policy in India in April 2016 which entertained warranty requests for its BMPs only when they were purchased from an authorised Indian distributor of Intel. The CCI stated that such separate warranty policy for India versus the rest of the world was arbitrary and unfair towards the Indian market and consumers.
Arbitrary Restrictions
“This implies that Intel’s BMPs purchased from authorised distributors anywhere in the world except India will not be able to receive warranty service in India, unlike in the other countries where a world-wide warranty is available to all Intel consumers and re-sellers,” the order said.
The CCI held Intel to be dominant in the BMP market for desktops in India, and found that India-specific warranty policy was discriminatory in comparison with Intel’s warranty policies in China, Australia and rest of the world. Intel, however, defended its market dominance stating that as per the IDC report, its BMPs are constrained by significant competition due to rapid technological developments, evolving user preferences and frequent improvements in products.
Curbing Parallel Imports
The case originates from a complaint by Matrix Info Systems, a parallel importer of Intel micro-processors in India. Matrix argued that parallel imports are beneficial for consumers as import of goods from a country with lower prices force authorised sellers in India to reduce prices. Further, Matrix said that the change in warranty policy was made without any legitimate justification and by doing so, Intel was behaving in a differential manner within the Indian market.
While imposing the penalty, the CCI took into the account the duration of the India-specific warranty policy – 8 years – and penalised Intel at 8% of its average relevant turnover. “However, considering the mitigating factors including the discontinuation of the aforesaid policy from April 2024, the commission reduced the amount. The commission also directed Intel to widely publicise the withdrawal of the impugned warranty policy, and submit a compliance report,” the order said.