India’s competition regulator has penalized HP India and a group of its channel partners 1.4 billion rupees, about $14.4 million, after finding that the company helped coordinate reseller behavior in government computer tenders and printer-supply sales.
The Competition Commission of India said HP India worked with reseller partners in arrangements covering PCs, ink cartridges, toner, and other printing consumables, including graphic and digital manufacturing supplies. The regulator said the conduct was aimed at improving HP partners’ chances in public procurement and limiting reseller movement toward products HP characterized as counterfeit.
How the regulator says the scheme worked
In one order, the CCI said HP India coordinated with five resellers on bids for government contracts. The regulator fined HP India 1.3 billion rupees, about $13.1 million, for that conduct.
According to the CCI’s order, some resellers asked HP India to help set up arrangements that would improve their odds against other HP resellers seeking the same government supply contracts. The requests described by the regulator included keeping resellers from other territories out of local tenders, dividing accounts or tenders among selected partners, and limiting manufacturer’s authorization forms, known as MAFs, to designated resellers.
The CCI also said the resellers sought “corrective action” when rival bid prices came in below prices on India’s Government e Marketplace procurement platform or below rate-contract prices. The order also referred to HP India facilitating what the regulator called “cover” bids.
The regulator separately imposed a 119.8 million rupee penalty, about $1.2 million, on HP India for cartelization in the sale and supply of toner, cartridges, and other consumables used with printers. The CCI also fined 21 HP resellers a combined 35.2 million rupees, about $365,335.
WhatsApp messages and HP’s defense
In a separate order, the CCI said WhatsApp records showed HP India and 16 Tier-2 reseller partners operating in a collusive arrangement from 2017 to 2020. The regulator said the messages showed bid rigging, price fixing, customer allocation, and cover bidding, with HP India playing a central role.
HP India told the regulator, according to the order, that high prices for printing supplies had led some resellers to threaten to move to lower-cost counterfeit products so they could compete on price. The order said HP India argued it was commercially forced to support the arrangement adopted by the Tier-2 resellers.
The company also objected to the CCI’s characterization of its role. According to the order, HP India said it “humbly objects” to being described as the “kingpin” of the collusive arrangement.
The CCI ordered HP India and its channel partners to cease the anti-competitive conduct and run competition compliance training programs within 60 days. HP has not publicly commented on the penalties.
This story draws on original reporting from Ars Technica.
