We wish to bring to your notice a highly monopolistic and anti-consumer move by country’s leading telecom operator Airtel. Through a directive, the company has barred online recharge companies from offering to their consumers discounts above 4%.

Airtel has compelled all online recharge companies to reduce discounts on its recharges. Airtel has issued a directive w.r.t consumer offers and discounts provided by online sites. They have “directed” that the consumer discounts should be capped at 4% for prepaid recharges.

Furthermore, this cap of 4% is to cover ALL forms of customer incentives – such as Cash Back in Wallet, Upfront Discount, and Talk-time higher than recharge value.

Also they have instructed that if any online site does not comply with this “directive” and in case of any “violation” identified by Airtel, they (Airtel) would have rights to discontinue recharge services for online sites across all interfaces (Web, Mobile App etc).

They have issued a deadline of Wednesday, 16th September, 2015 for online sites to comply with this “directive”.
It prevents consumers from getting better value for their money and is a blatant attempt to fix price.

The legal term for this monopolistic action is resale price maintenance, an attempt by a player to fix prices of goods down the distribution chain. In other words, Legally known as Resale Price Maintenance whereby a manufacturer and its distributors agree that the distributors will sell the manufacturer’s product at certain prices, at or above a price floor (minimum resale price maintenance) or at or below a price ceiling (maximum resale price maintenance).

Typically, if a reseller refuses to maintain prices, either openly or covertly, the manufacturer may stop doing business with it.

Legal Definition1: Resale Price Maintenance (RPM) is a form of price fixing. Whenever, a manufacturer sets the price at which a retail shop, which he does not own must resell his products to the public, or at which a wholesale business he does not own must resell the product to the retailer, the practice is known as resale price maintenance.

What CCI says on Floor price?
The CCI has clearly stated that a floor price is anti competitive – “Putting a floor (price) is also anti-competitive. Why put a floor? If you can sell below that, it is good. That is under investigation,” Shri Ashok Chawla Chairman CCI, PTI in an interview, Source: The Economic Times Aug 12, 2015s