The Indian government has fined HP India and its partners a total of 1.4 billion rupees (about $14.4 million) for working with reseller partners in the “cartelization” of computers, ink cartridges, and toner.
The Competition Commission of India (CCI) said this week that it found HP India had colluded with some channel partners to drive up the cost of bids for government contracts for computers, as well as for selling ink cartridges, toner, and other printing supplies, including graphic and digital manufacturing supplies.
It said that HP was aiming to outcompete other OEMs and discourage resellers from selling “counterfeit” ink and toner.
In an order, the CCI said that HP India worked with five resellers to coordinate their bid prices for government contracts to increase the chances of an HP partner winning the contracts. The company was fined 1.3 billion rupees (about $13.1 million).
[C]ertain resellers approached HP India to help facilitate an arrangement that would enhance their chances of securing Government supply contracts against other competing HP India resellers. These requests included: (a) restricting participation of resellers from other territories in local tenders; (b) seeking support in dividing the accounts/relevant tenders amongst themselves; (c) restricting the number of MAFs [manufacturer’s authorization forms] issued to other resellers or to issue MAFs to some designated resellers only; (d) addressing instances where bid prices offered by other resellers were below the [Government e Marketplace, India’s online procurement platform] platform price or rate contract prices, through corrective action, and (e) facilitating “cover” bids.
HP was also fined 119.8 million rupees (about $1.2 million) for “indulging in cartelization in sale and supply of supplies products comprising of toner, cartridges, and other consumable used with print hardware products,” CCI said in its announcement.
The agency also fined 21 HP resellers 35.2 million rupees (about $365,335).
In a separate order, the CCI said that WhatsApp records showed that HP and 16 of its Tier-2 reseller partners operated “in a collusive arrangement” and that the messages show the companies engaging in “bid rigging, including cover bidding, price fixation, and customer allocation during 2017–2020.” HP India played a central role, the regulator said.
Per the order, HP India said that high printing supply prices led some resellers to threaten to “shift to low-cost counterfeit products to compete on price.”
“HP India was commercially forced into a position where it had to support the collusive arrangement adopted by the Tier-2 resellers,” the order reads.
For its part, the order said that HP India “humbly objects to HP India’s role being characterized as a ‘kingpin’ of the entire collusive arrangement.”
Still, the revelation that some HP resellers are struggling with the exorbitant price of printer ink and toner underscores a problem many printer users face. The economic challenge is exacerbated by HP’s tendency to block third-party ink in already-purchased printers through firmware updates. At the same time, with even its own partners threatening to take their ink business elsewhere, HP is pressured to get more HP printer users to only use HP-brand ink and toner.
The CCI also ordered HP India and its channel partners to “cease and desist from anti-competitive conduct” and to hold competition compliance training programs within 60 days.
