Indian e-commerce startup Udaan has lost its antitrust case against Parle Products.
Last year, Udaan had filed a complaint with the competition commission of India (CCI) against the Mumbai-based food-processing multinational. It said Parle was “abusing its dominant position” by refusing to supply its products directly to the startup.
The business-to-business platform alleged that the world’s largest-selling biscuit maker had even ignored emails seeking a business relationship. Udaan said it had to buy Parle-G, a popular glucose biscuit brand, in the open market, raising its input costs and causing a competitive disadvantage against Parle’s existing distributors.
In a July 6 order, the competition watchdog rejected Udaan’s plea: “The commission does not find any abuse, more so as the informant (Udaan) has failed to establish any right on its part.”
Why CCI sided with Parle over Udaan
Parle’s market position: Parle commands approximately 83% of the glucose biscuit market share in India. But that’s too narrow a lens, Parle argued. The relevant consideration, it said, should be the “market for biscuits in India” or even the “market for sweet biscuits in India.” By these definitions, Parle Products holds no market power, leave alone dominance.
Especially since behemoths like Britannia, ITC, Cremica, and Patanjali, “do pose competitive restraints on it,” the CCI order said.
No business loss for Udaan: Udaan said Parle’s refusal would deter retailers from using its platform, leading to business loss and even closure. But it did not present any evidence of this.
CCI explicitly dismissed Udaan’s claim that Parle-G is a “must stock” item. The online portal has several alternatives to choose from, its order said. And since Udaan caters to thousands of product segments across India, it’s not significantly dependent on Parle’s products, it said.
Parle’s products aren’t out of reach either. Of Udaan’s 235 vendors, 115 are also Parle distributors.
Parle’s right to choose: Merely wanting to do business with Parle can’t get Udaan on the former’s distributors’ list.
The century-old firm, which carefully handpicks distributors across
A loss-making entity like Udaan does not fit the bill for the biscuit maker which “desires distributors who are capable of surviving in the long run.” Only a few weeks ago, Udaan fired up to 5% of its workforce to cut costs.
Why Amul, Parle, and others avoid startups like Udaan
India’s legacy food and beverage players have spent decades forming exclusive partnerships with distributors. Online B2B platforms like Udaan can jeopardise these networks, experts believe.
“If B2B platforms like Udaan start supplying to retailers on cheaper terms, which amounts to undercutting, it directly hurts our partnerships with existing distributors,” the sales head of a large FMCG company, which had curbed some direct supplies to Udaan, told the Economic Times anonymously last year.