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Dismissal of Case on Appeal of Compensation for Imposing Unfair Condition on Professionals: Competition Commission

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A case filed by Ms Prachi Agarwal against Urbanclap Technologies Private Limited under Section 3 (4) and Section 4 of Competition Act, 2002 has been dismissed by the Competition Commission of India.

Facts of the Case

In the case, the informant has appealed in the Commission that a company named Urbanclap Technologies India Private Limited, an online platform that provides various beauty and housekeeping services such as electricians, plumbing, cleaning, pests, etc., to their customers through the web and mobile app, forces the professionals registered on their platform to purchase the products/materials used by them, only from their company itself. The informant further claimed that the opposite party sells products from only selected brands to its professionals and in case the professional fails to procure the quantity quantified by the Opposite Party on the basis of the services given by the professional to their customers by roughly calculating the number of products that may have been used for the services, the Opposite Party deducts the amount from the account of the professional and dispatches the product arbitrarily, i.e., without prior information to the professionals.

The informant has alleged that the Opposite Party is imposing unfair condition in the purchase of goods under Section 4(2)(a)(i) of the Competition Act, 2002 stating the reason that the professionals are not given any option but to purchase the product from the Party which in some cases may be expensive as compared to the open market, and also forcing the consumers to use the brands offered by the Opposite Party only. The conditions set by the opposite party is denying the access of the market to both the professionals and the customers by violating Section 4(2)(c) of the Act. The informant has also claimed that Section 3(4)(b) and Section 3(4)(d) of the Act has also been violated as the opposite party is restricting the professionals in two ways, by forcing them not to buy products from the open market and by only restricting the purchase of other brands.

Pleadings before the Court

In the case, the opposite party pleaded that the products that the Opposite Party purchases in the beauty segment and sell to its Partners are selected on the basis of consumers’ choice, affordability and demand and are professional products that are used in beauty parlours across India. The opposite party claimed that they do not restrict its Partners for procuring products from them, the Partners need to purchase the initial kit from the Opposite Party at the time of enrolling on its platform, which contains products that are considered necessary for the Partner to begin providing a certain quality of service to customers, that is a one-time purchase only. 

The Opposite Party has also argued contrary to the Informant’s allegations that it is not mandatory for Partners to purchase these products from the Opposite Party and there is no such condition imposed on the Partners, which is covered under Section 4 of the Act.

Against which the informant pleaded that the Opposite Party has not submitted any evidence to support their claims. The Opposite Party ensures that the partner/professional works only through the application of the Opposite Party and if the same is not observed, the team of the Opposite Party calls the professional/partner to ensure conformity. The Opposite Party conceded that it gets the items in mass at value benefit and affirms its authentic nature which itself says a lot about the motivation behind why the Opposite Party in a roundabout way guarantees the inventory of something similar to its accomplices.

Court’s Observation

The claims of the Informant depend on the supposed direct of the Opposite Party that it confines the selection of its Partners as far as source just as brands of the items to be utilized for delivering administrations. In any case, the Opposite Party has earnestly kept such impulse on the part from getting the experts. The Opposite Party has likewise given a duplicate of the help arrangement entered with magnificence experts on the side of its disputes. The Commission has deliberately examined these entries. The health and excellence industry in India is advancing quickly with the development of new and diverse conveyance models to offer more noteworthy simplicity and customized administrations to buyers. One of the models that are acquiring expanding conspicuousness is that of on-request at-home administrations encouraged through online innovation stages. A blend of variables impacts shopper decision for magnificence/salon administrations which thusly have a heading on the substitutability between various methods of conveyance and diverse specialist co-ops. These are nature of administration, accommodation, cost, brand picture and so on, with the overall significance of every one of these components relying upon customer inclination as likewise on the particular classes of excellence administrations. Assurance of substitutability and depiction of the region of compelling rivalry for the Opposite Party should represent these subtleties and intricacies relevant to salon administrations.

Court’s Judgement

The court observes that there does not appear to be any case against the Opposite Party under Section 3(4) of the Act as well. In view of the above, the Commission is of the view that no case is made out against the Opposite Party for contravention of the provisions of Section 3(4) as well as Section 4 of the Act and the Information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act.

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