2018 (11) TMI 679 - Commission - Indian Laws

Anti-competitive conduct of the OP - grievance of the Informant is the alleged denial of access by the OP to all files/ documents/ information necessary for enabling the Informant to design/ develop and manufacture its own Server-Boards which are compatible with the Micro-Processors manufactured by the OP, in a discriminatory manner. Held that - The Commission is of the opinion that there exists a prima facie case of contravention of the provisions of Section 4 of the Act by the OP in the matter. The Commission holds that the OP being in a dominant position in the market for Processors for Servers in India has, by refusing to provide access in a non-discriminatory manner to the complete set of files/ information necessary for the Informant to design its own Server-Boards which are compatible with the Micro-Processor manufactured by the OP, prima facie, denied market access to the Informant in contravention of Section 4 (2) (c) of the Act. Further, the OP through its conduct has also prima facie, limited and restricted the production of Servers and the market therefor and has also limited the technical/ scientific development relating to Servers in the market in violation of Section 4 (2) (b) of the Act. The DG is directed to cause an investigation into the matter to ascertain whether the OP has abused its dominant position in contravention of the provisions of Section 4 of the Act by denying to the Informant access to its reference design files for Server-Boards and/ or simulation files for the same, in a discriminatory manner, not at par with the ODMs/ OEMs, without any reasonable justification for the same.

Summary

Issues Involved:
1. Alleged abuse of dominant position by Intel Corporation (OP) under Section 4 of the Competition Act, 2002.
2. Denial of access to reference design files and simulation files by OP to Velankani Electronics Private Limited (Informant).
3. Determination of the relevant market.
4. Analysis of dominant position in the relevant market.
5. Alleged discriminatory treatment by OP.
6. Impact on the market and technical/scientific development.

Detailed Analysis:

1. Alleged Abuse of Dominant Position:
The Informant accused the OP of contravening Section 4, particularly Sections 4(2)(b), 4(2)(c), and 4(2)(e) read with Section 4(1) of the Competition Act, 2002. The Informant argued that the OP, being in a dominant position, arbitrarily and unreasonably declined business dealings and stipulated unreasonable business terms, effectively denying market access.

2. Denial of Access to Reference Design Files and Simulation Files:
The Informant alleged that the OP refused to provide necessary reference design files and simulation files required for designing Server-Boards compatible with the OP’s Micro-Processors. Initially, the OP did not refuse but later conditioned the provision of files on the execution of a Service Level Agreement (SLA). After 10 months, the OP refused access citing insufficient technical and sales scope and expertise of the Informant.

3. Determination of the Relevant Market:
The Commission first delineated the relevant market as "Processors for Servers in India." The Informant argued that the denial of reference design files pertained to the market for "Processors for Servers," while the OP contended that the relevant market should be "Server-Boards" or "Servers."

4. Analysis of Dominant Position in the Relevant Market:
The Commission found that the OP holds a dominant position in the relevant market of "Processors for Servers in India," with a market share exceeding 80%. The Commission referenced a previous decision (ESYS Information Technologies Private Limited v. Intel Corporation) to support this conclusion.

5. Alleged Discriminatory Treatment by OP:
The Informant claimed that the OP provided reference design files to other competitors (ODMs/OEMs) but not to the Informant, thereby placing it at a disadvantage. The OP argued that it provided access to reference design files through its Intel Business Link (IBL) portal and that certain files did not exist for all products. The Commission noted that the OP failed to provide a reasonable explanation for not providing IBIS files to the Informant while giving access to other ODMs/OEMs.

6. Impact on the Market and Technical/Scientific Development:
The Informant argued that the OP's conduct deprived consumers of competitively priced Servers, kept the cost of procurement high, and hindered the Informant's qualification under the Preferential Market Access (PMA) Policy. The Commission observed that the OP's actions prima facie limited and restricted the production of Servers and the market, thereby affecting technical/scientific development.

Conclusion:
The Commission found a prima facie case of contravention of Section 4 of the Act by the OP. The OP, being in a dominant position, prima facie denied market access to the Informant in a discriminatory manner without reasonable justification. The Commission directed the Director General (DG) to investigate the matter to ascertain whether the OP abused its dominant position by denying access to reference design files and/or simulation files to the Informant. The DG is also directed to investigate the role of responsible persons/officers of the OP and any other anti-competitive conduct discovered during the investigation. The order does not express a final opinion on the merits of the case.