2018 (1) TMI 969 - AT - Companies Law

Selection of CFS services at Port - Forced diversion of the ships to Pipavav or forced the ships to visit both Pipavav as well as GTIPL - Held that - CCI found that OP-1 is also providing facility of Direct Port Delivery which facilitates direct delivery of goods without intervention of any CFS operator to accredited and approved consignees. CCI found no substance in the claim that OP-1 is in vertical anti-competitive agreement. The impugned order concluded that no case of contravention of any of the provisions of Section 3(4) Act has been made out. It can be seen that by providing Direct Port Delivery facility, O.P.-1 has provision of better services. When in market a service provider is giving better services, merely pointing out market share, it is attracting is not enough. We find that the impugned order is well reasoned and the submission made by Appellant questioning this order do not find force. The case of the Appellant that the OP-1 blocks the Terminals at Jawaharlal Nehru Port with its own ships to force ships to dock at Papavav suffers from a basic fallacy. The Appellant has relied on chart to show movement of ships. From the chart it is pointed out that ships visiting GTIPL also visit Pipavav Terminal and vice versa. If this is so, there is no substance in the argument that OP-1 was blocking the Terminals at Jawaharlal Nehru Port so as to divert the ships to Papavav. If the ship was visiting GTIPL and then visiting Pipava Terminals also, by that itself it cannot be stated that prima facie case is made out that the Appellant forced diversion of the ships to Pipavav. The entries made in the chart relied on, cannot be said to be making out a prima facie case. There has to be some evidence worth the name to show that it was the OP-1 who forced diversion of the ships to Pipavav or forced the ships to visit both Pipavav as well as GTIPL. There could be various reasons including need of delivery or pick up of cargo at both Terminals and merely pointing out the chart is not enough to start an investigation under the Act.

Summary

Issues Involved:
1. Alleged abuse of dominant position by OP-1.
2. Relevant market determination.
3. Market share analysis and competitive constraints.
4. Alleged diversion of shipping traffic.
5. Evidence of anti-competitive practices.
6. CCI's reasoning and conclusion.

Issue-wise Detailed Analysis:

1. Alleged abuse of dominant position by OP-1:
The Appellant alleged that OP-1, having a major market share in providing Container Terminal Services at Jawaharlal Nehru Port, was abusing its dominant position by diverting traffic to Pipavav Port for commercial advantages. The Appellant claimed OP-1 was coercing ships to use Pipavav Port, where tariffs were higher, thus earning higher profits and avoiding revenue sharing with JNPT.

2. Relevant market determination:
The CCI accepted the Appellant's submission that the relevant market was the "provision of Container Terminal Services in Jawaharlal Nehru Port, Mumbai." This was a crucial determination as it set the context for assessing the alleged abuse of dominance.

3. Market share analysis and competitive constraints:
The CCI observed that OP-1's market share had been declining over the years: 45.16% in 2013-14, 45.06% in 2014-15, and 41.42% in 2015-16. Additionally, the presence of multiple operational terminals, including JNPCT and NSICT, acted as competitive constraints on OP-1. The CCI noted that the quay length and capacity of other terminals, such as BMCTPL, further constrained OP-1's ability to act independently of market forces.

4. Alleged diversion of shipping traffic:
The Appellant argued that OP-1 was blocking capacity at JNPCT and NSICT to force ships to divert to Pipavav. However, the CCI found no evidence supporting this claim. The chart relied upon by the Appellant showed that ships visiting GTIPL also visited Pipavav, indicating independent commercial decisions by shipping lines rather than coercion by OP-1.

5. Evidence of anti-competitive practices:
The CCI concluded that the Appellant failed to provide cogent material or documentary evidence to support allegations of anti-competitive agreements. The chart presented by the Appellant did not substantiate claims of forced diversion. The CCI also noted that the selection of Container Freight Station (CFS) services was often the prerogative of the consignee, further weakening the Appellant's case.

6. CCI's reasoning and conclusion:
The CCI found that OP-1 was not in a dominant position in the relevant market due to the presence of multiple competitors and declining market share. The provision of "Direct Port Delivery" by OP-1 indicated better services rather than anti-competitive behavior. The CCI's order was deemed well-reasoned, and the Appellant's submissions lacked force. Consequently, the appeal was dismissed with costs.

Conclusion:
The appeal was dismissed with costs quantified at ?1 Lakh, to be equally divided and paid by the Appellant to Respondent Nos. 2 & 3. The CCI's order was upheld, finding no contravention of the Competition Act, 2002 by OP-1.