2015 (2) TMI 1410 - AT - Law of Competition

Abuse of dominant position by the appellant - determination of relevant market - guilty of contravention of Section 4(2)(c) of the Competition Act 2002 - rule of audi alteram partem/principles of natural justice - HELD THAT - The ambit and scope of principles of natural justice has been considered by the Courts across the globe. In India the High Courts and Supreme Court have invoked these principles in innumerable cases and quashed administrative quasi judicial or even judicial orders the ground of violation thereof. The judgment in State of Orissa vs. Dr. (Miss) Binapani Dei and others 1967 (2) TMI 96 - SUPREME COURT contains a lucid exposition of the principles of natural justice and their applicability to what was then thought as purely administrative action. The facts of that case were that the respondent had been retired from service by the State Government by relying upon the date of birth which was unilaterally changed by the competent authority. The Orissa High Court quashed the retirement of the respondent by declaring that it was punitive and amounted to removal from service within the meaning of Article 311 of the Constitution. The High Court further held that the order of retirement was vitiated because the writ petitioner had not been given a reasonable opportunity of showing cause against the proposed change in the date of birth recorded in her service book. In Kothari Filaments and another vs. Commissioner of Customs (Port) Kolkata and others 2008 (12) TMI 28 - SUPREME COURT the Supreme Court considered the correctness of an order passed by the Calcutta High Court dismissing the writ petition filed by the appellant against the order of the Customs Excise and Gold (Control) Appellate Tribunal Calcutta which in turn approved the order of confiscation and penalty passed by the competent authority under the Customs Act 1962. In State (NCT of Delhi) v. Navjot Sandhu 2005 (8) TMI 663 - SUPREME COURT the Supreme Court held that print outs taken from the computers/servers by mechanical process and certified by a responsible official of the service providing Company can be led into evidence through a witness who can identify the signatures of the certifying officer or otherwise speak to the facts based on his personal knowledge. This would make the call records admissible. The Supreme Court went further on to state that irrespective of the compliance of the requirements of Section 65B of the Evidence Act which is a provision dealing with admissibility of electronic records there is no bar to adducing secondary evidence under the other provisions of the Evidence Act namely Sections 63 65. The Court held that merely because a certificate containing the details in sub-Section (4) of Section 65B is not filed in the instant case does not mean that secondary evidence cannot be given even if the law permits such evidence to be given in the circumstances mentioned in the relevant provisions namely Sections 63 65. The finding recorded by the Commission on the issue of abuse of dominance is legally unsustainable and is liable to be set-aside because the information downloaded from the net and similar other material do not have any evidentiary value and in any case the same could not have been relied upon by the Commission without giving an effective opportunity to the appellant to controvert the same. The discussion made by the Commission in the context of clause 9.1(c)(i) of the media agreement is also vitiated due to breach of principles of natural justice because the same was neither referred in the order passed under Section 26(1) nor the Director General recorded any finding qua its validity or otherwise and on this count the appellant did not get an opportunity to defend the said clause. The impugned order is set aside and the matter is remitted to the Commission for fresh disposal in accordance with law - Appeal allowed.

Summary

Issues Involved:

1. Violation of Section 4(2)(c) of the Competition Act, 2002.
2. Determination of the relevant market.
3. Abuse of dominant position by the appellant.
4. Procedural fairness and principles of natural justice.

Issue-wise Detailed Analysis:

1. Violation of Section 4(2)(c) of the Competition Act, 2002:
The Commission found the appellant guilty of contravening Section 4(2)(c) of the Competition Act, 2002. The Commission directed the appellant to cease and desist from practices denying market access, to set up an internal control system, and to delete the violative clause 9.1(c)(i) in the Media Rights Agreement. A penalty of Rs. 52.24 Crore was imposed, calculated as 6% of the average annual revenue of the appellant for the past three years.

2. Determination of the Relevant Market:
The Director General (DG) identified the relevant market as "underlying economic activities which are ancillary for organizing the IPL Twenty-20 cricket tournament." However, the Commission defined the relevant market as "Organization of Private Professional Cricket Leagues/Events in India." This change in the definition of the relevant market was not communicated to the appellant, and no opportunity was given to contest this new definition, leading to a violation of the principles of natural justice.

3. Abuse of Dominant Position by the Appellant:
The Commission held that the appellant, owing to its regulatory role, monopoly status, control over infrastructure, and players, was in a dominant position in the relevant market. The Commission found that the appellant abused its dominant position by imposing unfair conditions in the Media Rights Agreement and other related agreements, which had an appreciable adverse effect on competition.

4. Procedural Fairness and Principles of Natural Justice:
The appellant argued that the Commission violated principles of natural justice by not providing notice or opportunity to contest the new definition of the relevant market and by relying on information not disclosed to the appellant. The appellant contended that the findings on the abuse of dominance were based on TRP ratings, news reports, and other materials not part of the DG's report, and these were not proved through witnesses. The Tribunal found merit in these arguments, holding that the Commission's reliance on undisclosed materials and the change in the relevant market definition without notice breached the principles of natural justice.

Conclusion:
The Tribunal allowed the appeal, set aside the Commission's order, and remitted the matter for fresh disposal in accordance with the law. The findings on the abuse of dominance and the definition of the relevant market were found to be vitiated due to procedural unfairness and violation of natural justice principles.