Fixing Rate: How FPBAI's Currency Markup Became A Competition Law Flashpoint

In Pranav Gupta v. Federation of Publishers' and Booksellers' Association in India (Case No. 38 of 2021), the Competition Commission of India (CCI) investigated the FPBAI's long-lasting practice of fixing currency conversion rates, albeit through its Good Offices Committee (GOC). The Competition watchdog held that such a practice amounted to price fixing under Section 3(3)(a) of the Competition Act, 2002. What was carried forward as a legacy “standardisation” exercise was soon found to be an anticompetitive cartel-like practice, profiting a few importer-booksellers but adversely affecting thousands of smaller players.

The 3% That Cost More Than Money

The Federation of Publishers' and Booksellers' Associations in India ('FPBAI') is an umbrella body/ association of publishers and booksellers in India. Since January 2017, FPBAI has been adding a 3% extra charge on top of the RBI's exchange rate for all foreign currencies when calculating the price of imported books and journals. The rates were published monthly via GOC circulars and disseminated to FPBAI members, libraries, and institutions nationwide.

However, this markup, though seemingly minor created a cascading price effect. For example, a book priced at 100 GBP would cost ₹10,400 at a GOC rate of ₹104/GBP versus ₹10,100 at a bank rate of ₹101/GBP. For large institutional procurements, such as purchases made by universities, government libraries, research institutions, this meant significant price differences. But more than pricing, the concern was coercion, i.e., the booksellers were “forced” to buy at GOC rates but could only sell to libraries at RBI or bank rates, leading to unsustainable losses.

While the FPBAI claimed the rates were “suggestive,” and not binding, the Commission was of the view that the market didn't behave that way. Booksellers bought at GOC rates but had to sell at bank rates. The Commission held this what it was: price fixing, plain and simple.

Legacy or Liability? The Antitrust Lens

FPBAI's defence largely rested on the notion of legacy. The GOC, formed in the 1980s in collaboration with the Ministry of HRD and the Indian Library Association, was originally intended to bring consistency in billing. However, the CCI held that the plea taken by the FPBAI of it being a legacy practice cannot absolve them from the liability of indulging in anticompetitive practices.

It emphasized that price coordination even in the form of published "conversion rates" constitutes a violation when it influences market behaviour, creates entry barriers, or facilitates collusion. Whether mandatory or not, the publication of such rates by a dominant trade association had a chilling effect on price competition in the book trade sector.

Further, the Commission found that the beneficiaries of this scheme were few , mostly importer booksellers based in Delhi. And the harm, however, was industry-wide

The Discount That Refused to Die

Another issue in hand was the “discount control”. In 2021, the CCI had already directed FPBAI to stop prescribing discounts to members. Yet, old GOC circulars capping discounts at 10% kept surfacing, despite the Commission having issued a cease-and-desist order in this regard in Case No. 33 of 2019. The Federation, however, did not publish any public declaration that discount control policy is no longer applicable. Whether this was inertia, neglect, or quiet defiance, FPBAI showed no interest in changing its ways. It simply let the old rules float around under the guise that the order prescribed no such communication.

The CCI held that the presence of such erstwhile circulars in the public domain, even post Commission's decision in Case No. 33 of 2019, indicated lackadaisical attitude on part of FPBAI. Due to FPBAI's perceived ambiguity regarding compliance with the 2021 order, the Commission opted not to initiate proceedings under Section 42 of the Act. Instead, it directed FPBAI to raise awareness among its members and regional associations about the anticompetitive conduct.

Fixing the Fix: What the Commission Found

The CCI's investigation, led by the Director General (DG), found that GOC rates were 3–5% higher than prevailing bank rates. It was found that these rates were circulated and followed mandatorily by many booksellers. Additionally, no disclaimers in the circulars indicated that the rates were “suggestive” until after the investigation began. Furthermore, booksellers faced economic pressure and the threat of exclusion if they did not follow the GOC-prescribed rates. Moreover, libraries often rejected GOC rates and insisted on RBI rates, leaving intermediary booksellers squeezed between a higher procurement cost and a lower sale ceiling.

While the FPBAI argued that GOC rates were merely suggestive and that many members did not follow them, the CCI noted that internal communications, minutes of meetings, and member testimonies revealed otherwise. Even FPBAI's own Secretary admitted to suffering losses due to the forced use of GOC rates.

What This Means for Trade Associations

The FPBAI case offers several key takeaways for trade and professional bodies in India:

1. Price guidance can cross the line into price-fixing: Even if recommendatory, industry-standard rates published by an association can function as de facto collusion if members feel pressurised to comply.
2. Legacy is no defence: Historical practices do not immunize organisations from the coming under the scrutiny. In fact, they may worsen the penalty if found to reflect deep-rooted cartelisation.
3. Harm to a subset still counts
   : Even if some members benefit from coordinated practices, if others suffer, the Commission will intervene.
4. Self-regulation must not lead to exclusion: Publishing advisory rates or discount caps that end up penalising or sidelining non-compliant members amounts to controlling market access and is a clear red flag under Section 3 of the Act.

It must be noted that trade associations such as FPBAI serve a vital role in streamlining practices, offering platforms for grievance redressal, and promoting fair trade. But when they move from facilitation to enforcement, especially on pricing, they begin to resemble cartels more than councils. By striking down the GOC's rate-fixing practice, the CCI establishes that regulatory convenience cannot come at the cost of market freedom. Associations must introspect on how well-intentioned practices may become tools of control. And as this case shows, a 3% markup, when applied systematically and unevenly, can become a competition law issue of national consequence. The FPBAI verdict is a reminder that in the free market, even small numbers can have large legal consequences.

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