2024 (11) TMI 943 - CCI - Companies Law

Contravention of provisions of Sections 3 and 4 of the Competition Act, 2002 - abuse of dominant position by the OPs - OPs have a monopoly in respect of provision of logistic services including cold storage facilities and movement of goods at the Visakhapatnam Port - HELD THAT - The Commission has perused the Information and observed that the Informant appears to be aggrieved by the following conduct of the OP i.e. the lease agreement being camouflaged as a Leave and License Agreement for the purpose of avoiding stamp duty and registration charges to the State exchequer; enforcing the lock-in-period clause in the Leave and License Agreement and refusal by the OPs to adjust the rental arrears against the security deposit; repeated threats to forfeit the security deposit and restricting access of Informant's staff to the cold storage plant and threatening to switch off the power supply to the cold storage plant. The Commission observes that the Informant entered into Leave and License Agreement with OP-1 for a period of 5 years for a portion of the cold storage plant with a lease rent of INR 17,38,800/- per month and on payment of security deposit of a sum of INR 52,16,400/- (equivalent to 3 month s rent). The said agreement also contains a clause pertaining to a lock-in-period of 18 months from the date of taking possession of the cold storage plant during which the said agreement cannot be generally terminated unless there is a breach of the terms and conditions of the said agreement. The Commission notes that the alleged conduct of OPs of the lease agreement camouflaged as a Leave and License Agreement for the purpose of avoiding stamp duty and registration charges to the State exchequer is not a competition issue and does not fall within the four corners of the Competition Act, 2002 - The alleged actions do not appear to give rise to competition concerns as envisaged within the provisions of the Competition Act, 2002. The Commission is of the view that there is no prima-facie case of contravention of provisions of the Act warranting an investigation into the matter - the Information is ordered to be closed forthwith in terms of Section 26(2) of the Act. Consequently, no case for grant for relief(s) as sought under Section 33 of the Act arises.

Summary

Issues:
Alleged abuse of dominant position by the Opposite Parties in contravention of Sections 3 and 4 of the Competition Act, 2002.

Detailed Analysis:

1. Factual Background:
The case involves an Information filed by the Informant, a storage facility provider, against two Opposite Parties (OP-1 and OP-2) alleging contravention of Sections 3 and 4 of the Competition Act, 2002. The Informant engaged in providing storage facilities to various consumers, including FMCG companies and pharmaceutical companies, through a temperature-controlled cold storage plant leased from OP-1.

2. Allegations by the Informant:
The Informant alleged that the lease agreement was camouflaged as a 'Leave and License Agreement' to avoid stamp duty, and the terms were unilaterally set by the OPs, putting the Informant in a 'take it or leave it' situation. The Informant also claimed that the OPs had exclusive control over the temperature control mechanism in the cold storage units, leading to threats of power supply disconnection for non-compliance.

3. Legal Dispute:
The Informant further contended that the actions of the OPs, including enforcing a lock-in period, threatening to forfeit the security deposit, and restricting access to the cold storage plant, amounted to an abuse of dominant position under Section 4 of the Act. The Informant sought various reliefs, including the removal of stored goods, refund of the security deposit, and imposition of penalties on the OPs.

4. Commission's Decision:
After considering the Information and allegations, the Commission found that while some actions by the OPs raised concerns, they did not fall within the purview of the Competition Act, 2002. The Commission noted that the issues raised, such as the lock-in period enforcement and threats of power supply disconnection, appeared to be contractual disputes between the parties rather than competition law violations.

5. Conclusion:
Consequently, the Commission held that there was no prima facie case of contravention of the Act warranting an investigation. The Information was ordered to be closed under Section 26(2) of the Act, and no relief under Section 33 was granted. The Secretary was directed to communicate the order to the Informant, bringing the matter to a close.