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RIL owned Reliance Fresh drags Bharti Retail to court over price comparisons

NEW DELHI: Reliance Fresh has draggedBharti Retail to court over what it claims are misleading price comparisons, signaling an escalation of tension between the two groups who will soon be pitted against each other in the telecom market as well. 

The RIL-owned retail company has asked the Delhi High Court to stop Bharti Retail from claiming that the same products are available in the 
Easyday stores at cheaper prices as compared to Reliance Fresh outlets. It has also demanded damages from Bharti Retail, though the amount is not very substantial. 

Reliance Fresh, a unit of Reliance Retail Ltd, has said Bharti Retail has made these claims through leaflets and newspaper inserts in various cities. "They are misleading the public," said a person familiar with the Reliance case. "It is unfair depiction of prices we charge." 

Another person said Easyday has been undertaking the comparative price campaign for months in various cities nationwide, including Ghaziabad, Aurangabad, Ludhiana, Jaipur among other cities. 

A Bharti spokesperson said it has not received any court notice in this regard. "We are not aware of any such development, nor have we received any notice from any authority on the matter quoted in your query," the spokesperson said in an e-mailed reply. 

The Delhi High Court has issued notice on May 3, according to the court's website. Reliance Retail did not respond to an email. 

The court case adds a new chapter in the long-standing rivalry between Bharti and 
RILBSE -0.65 % that dates back to the early 2000s when both companies fought a lengthy battle over the issue of allowing CDMA operators to offer full-fledged mobile services. This was followed by a period of truce as the ownership and management of RIL's telecom business was transferred to Anil Ambani, as part of the family settlement of 2005. 

But RIL's ambitious re-entry into the telecom sector has reignited the old rivalry, with analysts anticipating a dramatic confrontation between the country's largest private company and the country's largest telecom company. 

Bharti to Grow Retail Business

The two groups also compete against each in retail. RIL's retail business crossed the Rs 10,000-crore revenue mark in 2012-13, and it currently operates 1,400 stores nationwide. Bharti runs 200 stores and is a much smaller player in this business, but it is expected to grow the retail venture aggressively along with its partner Walmart, now that the government has allowed foreign investment in this sector. 

The court case comes two weeks after the two groups announced a rare partnership, a submarine cable network sharing deal. They also said they would consider mutual areas of cooperation to leverage their assets in the telecom sector. 

Analysts say this is perhaps the first time that a comparative price campaign in the Indian retail sector has landed in court. Both Debashish Mukherjee, partner at A T Kearney and Asitava Sen, senior director for food and agri research at Rabo Bank, said they had not heard of such a case before. 

In a price -sensitive country like India, shelf rates are big determinants of footfalls and purchase decisions. "All modern retailers, especially in the grocery space, compete on prices," said Abhishek Malhotra, a partner with consulting firm Booz & Co. "Almost 95% of their (promotional) messages are on price saving. It's a powerful tool as Indian consumers are always looking for prices and prices are big determinant of purchases," he added.

Bharti Retail has been aggressively emphasing the price angle, not just vis-a-vis Reliance Retail, but also with respect to other retailers as well. On Tuesday, for instance, the Easyday store in Sector 61 in Noida displayed a trolley-full of grocery items including packets of flour, sugar, a large bottle of Coca Cola soda among various others grocery items and pasted two comparative bills, one of itself and the other of Spencer's Retail convenience store located right on top of it on the first floor of the mall. 

A display placard compared Spencer's price at Rs 5,752 with Easyday's price of Rs 5,552, and claimed: "You save 200.70 against competition". Spencer's Retail said it has shot three legal notices to Bharti Retail over the years protesting against comparisons, though it has not gone to court so far on this issue. 

A Spencer's spokesperson said the company had received a reply to only one of the three legal notices where Bharti denied undermining Spencer's brand or products, and said its promotions are targeted to bring "clarity and benefits" to consumers. 

"It is our view that only comparing prices of a select set of products is misleading consumers and disparaging in nature. The usage of a select list suggests that it is an attempt to confuse the consumers and build wrongful perception and to confuse reality," the spokesperson said in an e-mailed reply. "Comparing products such as staples like rice, sugar, pulses etc, is unfair in nature as the price of agri-products varies according to quality grade and geographical area. 

Thus, it is our opinion that comparisons should not be discriminatory, depreciative and only a means and attempt to discredit others reputation," the spokesperson added.