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Law of Competition - Case Laws
Showing 181 to 200 of 341 Records
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2019 (4) TMI 2107
Anti-Competitive agreements - Constitutional Validity of provisions of Sections 22(3), 27(b), 53A, 53B, 53C, 53D, 53E, 53F and 61 of Competition Act, 2002 and the notification dated 31.03.2011 amending Regulation 48 (1) of the Competition Commission of India (General) Regulations, 2009 and in relation to the appellate remedies to the Competition Appellate Tribunal (COMPAT) - indulging in abusive behavior in regard to the spare parts market.
HELD THAT:- This Court notes in conclusion, that the Competition Act is an attempt by Parliament to improve – in the light of experience gained from a modern liberalized economy and corresponding state retreat in key areas of economic activities, the prevalent laws governing concentration of market power. The MRTP Act, 1969 was its first attempt (in a closed economy) to control monopolies and restrictive practices. In the light of experience gained and the felt necessities of the changed times – and having seen the experience gained by other nations, in the course of their legislation with competition, the Act was introduced, with due deliberation. Recent decisions have emphasized the importance of the CCI in imbuing the market place with the culture of competition, and even underlined that sectoral regulators‟ decisions or regulations (within the frame works of their parent legislations) cannot foreclose enquiry and consequential action by the CCI in its overarching concerns with respect to market domination and anti-competitive behaviour of erring entities.
In Competition Commission of India v Bharti Airtel Limited And Ors. [2018 (12) TMI 1683 - SUPREME COURT] this was emphasized and underlined having taken note of the skillful exercise which the TRAI is supposed to carry out, such a comment vis-a-vis TRAI may not be appropriate. No doubt, as commented by the Planning Commission in its report of February, 2007, a sectoral regulator, may not have an overall view of the economy as a whole, which the CCI is able to fathom. Therefore, our analysis does not bar the jurisdiction of CCI altogether but only pushes it to a later stage, after the TRAI has undertaken necessary exercise in the first place, which it is more suitable to carry out.
Parliamentary effort to innovate and legislate new market regulations, gained in the light of previous experience and teaching gained from the experience in other countries, led it to enact the Competition Act. The raison d‘etre of such laws is its objective of promoting competition, - and eliminating disparities that would ensue in the event of market dominance by a few, resulting in concentration of resources of the nation (which Article 39 of the Constitution of India, enjoins the State to avoid). Speaking of the Sherman Anti-Trust Act, in Essential Communications Sys, Inc. v AmTel & Tel Co the third Federal Circuit Appellate Court held The Sherman Act, embodying as it does a preference for competition, has been since its enactment almost an economic constitution for our complex national economy. A fair approach in the accommodation between the seemingly disparate goals of regulation and competition should be to assume that competition, and thus antitrust law, does operate unless clearly displaced.
The need to experiment and bring in new legislation to face the challenges of the changing times and the legislature duty to do so- as well as the correct approach that courts should adopt was outlined in New State Ice Co. v. Liebman, where Justice Brandeis stated The Court must therefore adjudge the constitutionality of such legislation by the generality of its provisions and not by its crudities or inequities or by the possibilities of abuse of any of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues.
The following conclusions are recorded and directions issued:
(i) Section 22(3) of the Competition Act (except the proviso thereto) is declared unconstitutional and void;
(ii) Section 53E (prior to the amendment in 2017) is declared unconstitutional and void: however, this is subject to the final decision of the Supreme Court in the writ petitions challenging the Finance Act, 2017;
(iii) All other provisions of the Competition Act are held to be valid subject to the following orders:
(a) The CCI shall frame guidelines with respect to the directions contained in para 179 of this judgment, i.e. to ensure that one who hears decides is embodied in letter and spirit in all cases where final hearings are undertaken and concluded. In other words, once final hearings in any complaint or batch of complaints begin, the membership should not vary- it should preferably be heard by a substantial number of 7 or at least, 5 members.
(b) The Central Government shall take expeditious steps to fill all existing vacancies in the CCI, within 6 months;
(c) The CCI shall ensure that at all times, during the final hearing, the judicial member (in line with the declaration of law in Utility Users Welfare Association, (supra) is present and participates in the hearing;
(d) The parties should in all cases, at the final hearing stage, address arguments, taking into consideration the factors indicated in Excel Crop Care [2017 (5) TMI 542 - SUPREME COURT] and any other relevant factors; they may also indicate in their written submissions, or separate note, of submissions, to the CCI, why penalty should not be awarded, and if awarded, what should be the mitigating factors and the quantum- without prejudice to their other submissions.
(iv) Since the petitioners had not availed the remedy of appeal (and had approached this Court) it is open to such of them who wish to do so, to approach the Appellate Tribunal, within 6 weeks; in such eventuality, the Appellate Tribunal shall entertain their appeals and decide them on their merits in accordance with law, unhindered by the question of limitation.
The writ petitions are partly allowed.
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2019 (4) TMI 314
Penal offence under Section 42(3) of the Competition Act - It is argued that since failure to pay penalty under Section 43 is not failure to comply with the orders or directions within the meaning of Section 42(2), such failure cannot lead to prosecution for the offence under Section 42(3) - Held that:- It is well settled that use of a comma and word “or” between two parts of a clause makes the two parts disjunctive.
Noticeably, in the clause defining the offence punishable under Section 42(3), the failure to pay the fine imposed under sub-section (2) of Section 42 is included as one of the possible reasons leading to such criminal action, it being provided by a disjunctive clause, the words “or fails to pay the fine imposed under sub-section (2)”being preceded and followed by a comma. The comma (,) appearing prior to the said words separates it from the words “if any person does not comply with the orders or directions issued”. The use of comma (,) is with a purpose. It indicates that a cause of action for criminal complaint to be filed in the court of CMM arises in two possible situations, viz., (1) there has been a failure on the part of a person to “comply with the orders or directions” issued to him under the law or (2) on account of failure to pay fine imposed for non-compliance with orders or directions of the Commission under specified provisions (i.e., Sections 27, 28, 31, 32, 33, 42A and 43A), the Commission, after inquiry, having found absence of “reasonable cause”.
The suggested interpretation of Section 42(3) of the Competition Act does not commend itself to this court.
Double jeopardy - Held that:- The argument of double jeopardy can be rejected by pointing out that the penalty under Section 43 is civil in nature imposed by the statutory authority (the Commission) in exercise of the powers conferred on it by the law, the criminal complaint alleging offence under Section 42(3) carrying the additional element of failure to comply further with the said direction, the criminal action even otherwise being not violative of Article 20(2).
The petitioner in the second and third captioned matters has raised questions of fact about extent of his responsibilities, his ignorance, non-service of some of the notices or processes, generally referring to cessation of his role as the Honorary Secretary of FDA after 30.10.2013. These questions of fact would need inquiry and scrutiny of evidence. The forum of Section 482 Cr.P.C. is not the correct one to embark upon such inquiry.
Petition cannot be accepted and is dismissed.
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2019 (2) TMI 2122
Anti-competitive action - collusive bid rigging - whether the CCI erred in undertaking an exercise itself to determine whether or not the allegation of inter-alia collusive bid rigging leveled against Respondent No. 2 & 3 has been established without ordering an investigation in terms of Section 26(1) of the Competition Act, 2002?
HELD THAT:- CCI is empowered to inquire into any alleged contravention of provisions contained in Section 3(1) or Section 4(1) of the Competition Act, 2002 on its own motion or on receipt of an information from any person, consumers or their associations or trade associations or upon a reference made to it by the Central Government, State Government or Statutory Authority. Section 26 of the Act provides that upon receipt of a reference or upon its own knowledge or upon information received from any person, the Commission, if of opinion that there exists a prima facie case, shall direct the Director General (DG) to cause an investigation to be made into the matter. On a bare reading of this provision, it is abundantly clear that causing of investigation to be conducted by Director General is entirely dependent on existence of a prima facie case warranting such investigation. Unless the Commission is satisfied that a prima facie case exists, the Informant (where information has been received from any person) has no vested right to seek investigation into alleged contravention of provisions Section 3(1) or Section 4(1) of the Act.
The Appellant – Informant who was neither an OEM nor an SI and was not in the fray for bidding qua the tender in question raised competition concerns on the basis of wild allegations without any substance. The circumstances projected by him, in absence of any incriminating evidence, would not justify drawing inference of complicity of Respondents 2 and 3 in bid rigging/ collusive bidding. The Appellant-Informant has miserably failed to make out a prima facie case warranting causing of an investigation by DG. The impugned order passed by the Commission is based on application of mind and does not suffer from any legal infirmity.
Conclusion - The Appellant-Informant has miserably failed to make out a prima facie case warranting causing of an investigation by DG. The impugned order passed by the Commission is based on application of mind and does not suffer from any legal infirmity.
Appeal dismissed.
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2019 (2) TMI 1947
Liquidation Order - Section 33(1) of the Insolvency & Bankruptcy Code - HELD THAT:- The liquidator should act in terms of the directions of the Appellate Tribunal and take steps under Section 230 of the Companies Act. If the members of the ‘Corporate Debtor’ or the ‘creditors’ approach the company through the liquidator for compromise or arrangement by making proposal of payment to all the creditor(s), the Liquidator on behalf of the company will move an application under Section 230 of the Companies Act, 2013 before the National Company Law Tribunal.
The steps should be taken for outright sale of the ‘corporate debtor’ so as to enable the employees to continue in service on such outright sale.
Appeal disposed off.
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2019 (2) TMI 1938
Rejection of renewal of consent to operate - Section 27 of the Water Act and Section 21 of the Air Act - HELD THAT:- An appeal is a creature of statute and an appellate tribunal has to act strictly within the domain prescribed by statute. It is obvious that an appeal would lie from an order or decision of the appellate authority Under Section 28 of the Water Act to the NGT only Under Section 33B(a) of the Water Act read with Section 16(a) of the NGT Act. Similarly, an appeal would lie from an order or decision of the appellate authority Under Section 31 of the Air Act to the NGT only Under Section 31B of the Air Act read with Section 16(f) of the NGT Act. Obviously, since no order or decision had been made by the appellate authority under either the Water Act or the Air Act, any direct appeal against an original order to the NGT would be incompetent. NGT's jurisdiction being strictly circumscribed by Section 33B of the Water Act, read with Section 31B of the Air Act, read with Section 16(a) and (f) of the NGT Act, would make it clear that it is only orders or decisions of the appellate authority that are appealable, and not original orders.
On the facts of the present case, it is clear that an appeal was pending before the appellate authority when the NGT set aside the original order dated 09.04.2018. This being the case, the NGT's order being clearly outside its statutory powers conferred by the Water Act, the Air Act, and the NGT Act, would be an order passed without jurisdiction.
In the present case, it is clear that Section 16 of the NGT Act is cast in terms that are similar to Section 14(b) of the Telecom Regulatory Authority of India Act, 1997, in that appeals are against the orders, decisions, directions, or determinations made under the various Acts mentioned in Section 16. It is clear, therefore, that under the NGT Act, the Tribunal exercising appellate jurisdiction cannot strike down Rules or Regulations made under this Act. Therefore, it would be fallacious to state that the Tribunal has powers of judicial review akin to that of a High Court exercising constitutional powers Under Article 226 of the Constitution of India - the State Government order made Under Section 18 of the Water Act, not being the subject matter of any appeal Under Section 16 of the NGT Act, cannot be "judicially reviewed" by the NGT.
We are cognizant of the fact that the Respondent's plant has been shut down since 09.04.2018. Since we have set aside the impugned judgments of the NGT on the ground of maintainability, the order dated 22.01.2019 passed by the TNPCB, being a consequential order, is also set aside - Appeal disposed off.
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2019 (1) TMI 2052
Abuse of dominant position - alleged contravention of Section 4(2)(b)(ii) and Section 4(2)(c) of Competition Act, 2002 - basic grievance of the Informant is that by giving unfair preferential access to some trading members of its co-location services, the OP has limited and restricted the provision of services to other trading members availing the co-location service which resulted in 'denial of market access' to others to whom such unfair access was not given - HELD THAT:- The Commission observes that as per the policy of the OP as enshrined in its circular dated 31.08.2009, the co-location services are to be provided by the OP for a cost on a non-discriminatory basis. Apparently, the fee levied by the OP for providing the co-location services was uniform to all the trading members availing the services and the OP was required to provide equal benefits of the co-location services to the said trading members. However, as per the Informant, because of the alleged practices followed at OP, some trading members of the OP allegedly received preferential and unfair access to trading information, over others thereby enabling them to reap benefits viz. getting the price feeds and other data before other trading members to whom such preferential access was not provided, despite having availed co-location services.
The Commission observes that discriminatory and abusive conduct which falls foul of the provisions of the Act falls within the jurisdiction of the Commission and can be independently examined by the Commission based on cogent facts and evidence. However, the allegations against the OP are yet to be established in an appropriate proceeding and also there is not sufficient information and data before the Commission about the role attributable to the OP, in the provision of discriminatory co-location services qua certain trading members, as alleged in the Information to arrive at a prima facie view.
Thus, it may not be apposite for the Commission to delve into the allegations contained in the Information at present - The matter is ordered to be closed forthwith in terms of the provisions of Section 26(2) of the Act.
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2018 (12) TMI 2008
Hearing of appellants - issuance of notice to the Directors / Persons In-charge of the Company - vicarious liability of persons In-charge and responsible for the conduct of business of the Company.
Whether before deciding the appeal in the case of Cadila [2018 (9) TMI 844 - DELHI HIGH COURT], the Division Bench was required to hear the appellants as the Division Bench has pronounced on the correctness of the CCI orders in two cases in Ministry of Agriculture v. M/s. Mahyco Monsanto Biotech Limited and connected matter [2016 (7) TMI 1705 - COMPETITION COMMISSION OF INDIA (LB)], which were under challenge in two writ petitions filed by the appellants herein? - HELD THAT:- No doubt the judgment passed by the CCI in Ministry of Agriculture and connected matter was under challenge before the learned Single Judge of this Court; the said judgment having been approved by the Division Bench in the case of Cadila, the appellants were required to be heard. In any case we have also heard the learned counsel for the appellants on the issues, which they had raised in their writ petitions or at least in their applications for amendment for additional grounds and which have been incorporated in these appeals and accordingly, proceed to decide the same. So, to that extent, the grievance of the appellants has been addressed.
It is also necessary to note the only issue, which the Division Bench in Cadila has framed for its consideration, which has a bearing on the judgment passed by the CCI in Ministry of Agriculture and which was under challenge before the learned Single Judge by the appellants is question No.4 which reads, “Whether DG could have issued notice to Cadila Officials under Section 48”.
That apart, the issue whether the penalty could have been imposed on the Officers / Directors only for contravention of Sections 42 to 44 of the Competition Act or also for contravention of Sections 3 and 4 of the said Act, is an issue, which was neither raised nor considered by the Division Bench in Cadila.
Whether no notice can be issued to the Directors / Persons In-charge of the Company till the CCI returns a finding against the Company that it has indulged in anti-competitive activities under Sections 3 and 4 of the Competition Act? - HELD THAT:- The Division Bench in Cadila [2018 (9) TMI 844 - DELHI HIGH COURT] held that proceedings against company officials could occur without a prior finding against the company. The court referenced the judgment in Aneeta Hada, which clarified that the commission of an offence by the company is a condition precedent for vicarious liability. The court agreed with the interpretation that proceedings against individuals could occur simultaneously with those against the company, rejecting the appellants' contention that such proceedings should be separate.
Whether Section 48 of the Competition Act, which provides for vicarious liability of persons In-charge and responsible for the conduct of business of the Company, will apply only on contravention of orders of CCI or DG under Sections 42 to 44 of the Competition Act and not to contravention of Sections 3 and 4 of the Competition Act? - HELD THAT:- There cannot be any dispute that if the Company and the Officers / Directors are being proceeded against for violation of Sections 3 and 4, there has to be a consequence for violation - there would not be any stipulation of penalty to be imposed on Officers / Directors even if they are found to be violating Sections 3 and 4. That cannot be the intent of Sections 27(b) and 48. Such a stipulation, surely requires a purposive interpretation.
Further, it has been held by the Supreme Court in Board of Muslim Wakfs Rajasthan v. Radha Krishna & ors [1978 (10) TMI 149 - SUPREME COURT], that the construction which tends to make any part of the statute meaningless or ineffective must always be avoided and construction which advances the remedy intended by the statute should be accepted.
The impugned order needs no interference. The appeals are dismissed.
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2018 (12) TMI 1773
Implementation of Ethanol Blended Petrol (EBP) on mandatory basis - Chemical industry has been suffering from a long time from shortage of ethanol - basic objective of Ethanol has not been achieved due to shortfall in supply by the ethanol suppliers - HELD THAT:- It is apparent from inception, the EBP factored in purchase of ethanol by OMCs, which are public sector units, at prices to be decided by the Central Government. This was part of its overall strategy of not only ensuring cleaner fuel, and lowering emission, but increasing eventually bio fuel component to 10%. The material on record shows that from an initial low of about 1.75% in 2009, the EBP achieved upto 3.5% of bio-fuel element in the petroleum sold. The various cabinet notes and decisions also indicate that a key component in EBP and its envisioned success was on the basis of sustained supply of ethanol at prices determined by the Central Government. This, it was felt, would act as incentive to those supply ethanol, for the EBP. The February 2010 minutes suggests that the Saumitra Chowdhury Committee was set up at the behest of the Central Government.
The petitioner’s challenge to the EBP is two-fold : a constitutional challenge on the basis that the policy is an unsustainable restriction, as it is not founded even on a statute; and two that its continued existence is arbitrary, since it has the effect of driving up the price of ethanol, which has applications other than for biofuel purposes, especially in the chemical industry.
So far as the first issue is concerned, It is therefore, evident that not all activities of the State, carried out through its executive powers, need to be based on legislation. The State can do the robes of a trader, and enter into commercial relationships; it can procure goods, set price limits for procurements of article by its officers and agencies and in the course of commerce or other multifarious activities it engages in, fashion guidelines including pricing parameters, ceiling limit in respect of nature of articles, or the spelling out the kind of services it wishes to procure, or set out the standard terms of contract. This freedom to contract is fettered only to the extent that it should be aimed at securing public interest and inuring to the larger public good.
As to the second argument that the decision to continue with the EBP is unfair, as it results in artificial and tends to drive up prices of ethanol and that without such intervention, whereby the oil manufacturing companies are directed to procure the product at specified prices, the Court recollects that in the exercise of policy framing and implementation, the State has flexibility in its approach.
It is thus, apparent that the Court’s jurisdiction is limited to examine the validity or legal efficacy of a policy and ensuring that it does not violate any statutory canon or is not the outcome of an irregular or unfair procedure; nor tainted by mala fides. In the facts of the present case, what the petitioner frontally challenges is not just the legality of the EBP but its efficacy as well, contending that it has not yielded the benefits envisioned on the one hand, and on the other, is wreaking havoc on its business - it is unfeasible for this Court to venture into the area of a merits review of that policy, purely because the procurement price fixed, tends to drive up prices of ethanol for use by industrial consumers, like the petitioner.
Petition dismissed.
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2018 (12) TMI 1683
Anti-competitive agreements - Cartel - cartel having been formed by three major telecom operators, namely, Bharti Airtel Limited, Vodafone India Limited and Idea Cellular Limited - existence of prima facie case or not - Section 19 of the Competition Act - width and scope of the powers of the CCI under the Competition Act, 2002 pertaining to telecom sector - Jurisdiction of the CCI - Maintainability of petition before Bombay High Court - findings on merits or not.
Jurisdiction of the CCI - HELD THAT:- In the wake of globalisation and keeping in view the economic development of the country, responding to opening of its economy and resorting to liberalisation, need was felt to enact a law that ensures fair competition in India by prohibiting trade practices which cause an appreciable adverse effect on competition within markets in India and for establishment of an expert body in the form of Competition Commission of India, which would discharge the duty of curbing negative aspects of competition, the Competition Act, 2002 has been enacted by the Parliament - the CCI is entrusted with duties, powers and functions to deal with three kinds of anti-competitive practices. The purpose is to eliminate such practices which are having adverse effect on the competition, to promote and sustain competition and to protect the interest of the consumers and ensure freedom of trade, carried on by the other participants, in India. For the purpose of conducting such an inquiry, the CCI is empowered to call any person for rendering assistance and/or produce the records/material for arriving at even the prima facie opinion. The Regulations also empower the CCI to hold conferences with the concerned persons/parties, including their advocates/authorised persons.
The functioning of the telecom companies which are granted licence Under Section 4 of the Telegraph Act is regulated by the provisions contained in the TRAI Act. TRAI is a regulator which regulates the telecom industry, which is a statutory body created under the TRAI Act - with the advent of globalisation/liberalisation leading to free market economy, regulators in respect of each sector have assumed great significance and importance. It becomes their bounden duty to ensure that such a regulator fulfils the objectives enshrined in the Act under which a particular regulator is created. Insofar as the telecom sector is concerned, the TRAI Act itself mentions the objective which it seeks to achieve. It not only exercises control/supervision over the telecom service providers/licensees, TRAI is also supposed to provide guidance to the telecom/mobile market. 'Introduction' to the TRAI Act itself mentions that due to tremendous growth in the services it was considered essential to regulate the telecommunication services by a regulatory body which should be fully empowered to control the services, in the best interest of the country as well as the service providers.
Having taken note of the skillful exercise which the TRAI is supposed to carry out, such a comment vis-a-vis TRAI may not be appropriate. No doubt, as commented by the Planning Commission in its report of February, 2007, a sectoral regulator, may not have an overall view of the economy as a whole, which the CCI is able to fathom. Therefore, our analysis does not bar the jurisdiction of CCI altogether but only pushes it to a later stage, after the TRAI has undertaken necessary exercise in the first place, which it is more suitable to carry out.
Whether the writ petitions filed before the High Court of Bombay were maintainable? - HELD THAT:- Even when we do not agree with the approach of the High Court in labeling the impugned order as quasi-judicial order and assuming jurisdiction to entertain the writ petitions on that basis, for our own and different reasons, we find that the High Court was competent to deal with and decide the issues raised in exercise of its power Under Article 226 of the Constitution. The writ petitions were, therefore, maintainable.
Whether the High Court could give its findings on merits? - HELD THAT:- Once we hold that the order Under Section 26(1) of the Competition Act is administrative in nature and further that it was merely a prima facie opinion directing the Director General to carry the investigation, the High Court would not be competent to adjudge the validity of such an order on merits. The observations of the High Court giving findings on merits, therefore, may not be appropriate.
Since we are upholding the order of the High Court on the aspect that the CCI could exercise jurisdiction only after proceedings under the TRAI Act had concluded/attained finality, i.e. only after the TRAI returns its findings on the jurisdictional aspects which are mentioned above by us, the ultimate direction given by the High Court quashing the order passed by the CCI is not liable to be interfered with as such an exercise carried out by the CCI was premature - appeal dismissed.
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2018 (11) TMI 1969
Direction to cause an investigation into the matter and submit an investigation report within 60 days from the receipt of the said order - allegation against the manufactures is that they were controlling the prices of the oral diabetes drugs containing the Active Pharmaceutical Ingredient (API) Vildagliptin - HELD THAT:- Upon receiving the information from any person including Central Government, State Government, Statutory Authority or on its own knowledge under Section 19 (1)(a) of the Act, the commission is expected to satisfy itself and express its opinion that a prima facie case exists and then pass a direction to the Director General to cause an investigation into the matter in terms of Section 26(1) - This direction under Section 26(1) to the Director General may be passed with or without seeking assistance from any other quarters including experts of eminence or the affected parties themselves. The aggrieved / affected parties cannot claim a right to notice or hearing at this stage.
The subject provision does not contemplate any adjudicatory action on the part of the Commission. The Commission is not expected to give notice to the parties and hear them at length. It is of a very preliminary nature.
There are no merit in the appeal, and the same is dismissed.
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2018 (11) TMI 1932
Misuse of dominant position - Contravention of the provisions of Section 4 of Competition Act, 2002 - Abuse of dominant position - selling goods below cost price also result in denial of market access to the individual sellers who are not backed by VC funds and investors and thereby such acts also contravene the provisions of Section 4 (2) (c) of the Act - using its dominance in the relevant market by leveraging its position to enter into another market by way of extending discounts and manufacturing products under private labels.
HELD THAT:- The relevant product market in this case may be considered as “Services provided by online marketplace platforms” - Further, as per the provisions of the Act, relevant geographic market comprises the area in which conditions of competition are distinctly homogeneous. For online market platforms, the conditions of competition are homogeneous pan India and as such, the relevant geographic market in this case may be taken as ‘India’ - the relevant market in the instant case may be defined as “Services provided by online marketplace platforms for selling goods in India”.
Issue of dominance - HELD THAT:- Flipkart India is not dominant in the relevant market of “Services provided by online marketplace platforms for selling goods in India”; therefore, the issue of abuse of dominant position does not arise. The Commission, however, deems it appropriate to take on record the submissions made by Flipkart denying abusive conduct by its entities. In regards to Flipkart India, it has been submitted by Flipkart that the arrangements of Flipkart India with its B2B customers are neither exclusive nor do they impose any restraints on any reseller who chooses to sell their products on the Flipkart platform. Further, Flipkart India does not impose any exclusivity requirements on its B2B customers with respect to either procuring the products from Flipkart India or with respect to reselling these products to any third parties, or selling on/ through the Flipkart marketplace. The option of dealing with Flipkart India is available to any vendor. There is no restriction on any entity desirous of dealing with Flipkart India as a B2B customer. Further, the B2B customers are independent third party vendors with whom Flipkart India has arm’s length arrangement.
The Commission is of the opinion that no case of contravention of the provisions of Section 4 of the Act is made out against the Opposite Parties and the Information is ordered to be closed forthwith in terms of the provisions contained in Section 26(2) of the Act.
Application disposed off.
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2018 (11) TMI 1043
Competition commission - Overlap in production and supply of films to third-party distributors and exhibitors for theatrical release in India - proposed combination relates to the acquisition of 21CF, including its film and television studios, cable and international TV businesses, by TWDC - whether horizontal overlaps resulting from the proposed combination are not likely to result in any appreciable adverse effect on competition in any of the business segments - Held that:- Markets is characterized either by insignificant presence of the Parties or presence of significant competitors. Therefore, the Commission is of the view that post combination, the Parties would not have the ability to foreclose the market for other competitors.
In addition, the vertically related markets involving upstream segment of operation and wholesale supply of TV channels and downstream segment of retail supply of audio visual content through DTH are also identified for possibility of any vertical foreclosure.
In the upstream segment relating to operation and wholesale supply of TV channels, for reasons already discussed above it is noted that there is no likelihood of AAEC in this business segment as well as in its various sub-segments. Further, for the downstream segment, the Commission notes that though 21CF holds certain equity shares of Tata Sky but the proposed combination is not likely to foreclose the market for other competitors as TRAI has issued various regulations, tariff orders and directions, etc. to generate competition and ensure fair play in the industry. Further, there are competitors of the Parties such as Tata Sky, Dish TV, Airtel DTH, Sun Direct etc. that would continue to provide competitive constraint to the Parties, post-combination. Therefore, the abovesaid vertical relationship is not likely to result in any vertical foreclosure.
Considering facts on record, details provided in the notice given under sub-section (2) of Section 6 of the Act and assessment on the basis of factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have an appreciable adverse effect on competition in India. This order shall stand revoked if, at any time, the information provided by the Acquirers is found to be incorrect.
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2018 (11) TMI 1042
Partition of property - private injury - dishonor of the cheques issued by the OPs and cancellation of development agreement - contravention of the provisions of Sections 3 of the Act or not? - Held that:- The Commission notes that though the Informant has alleged contravention of the provisions of Sections 3 of the Act, yet looking at the nature of the allegations, the provisions of Section 3 of the Act have no application to the present case as the Informants and the OPs are neither operating at the same level in the market, i.e Section 3(3) of the Act, nor are they part of the same production/ supply chain, i.e. under Section 3(4) of the Act.
The facts disclosed in the instant case are purely a consumer/ contractual dispute, beyond the purview of the Act. The allegation of non-performance of the conditions of the Development Agreement, does not raise any competition concern as there is no Appreciable Adverse Effect on competition from the same. Further, dishonor of the cheques issued by the OPs and cancellation of development agreement, as alleged in the instant case, are not the mandate of the Commission - the facts disclosed in the instant case are purely a consumer/ contractual dispute, beyond the purview of the Act. The allegation of non-performance of the conditions of the Development Agreement, does not raise any competition concern as there is no Appreciable Adverse Effect on competition from the same.
The Commission is of the opinion that no case of contravention of the provisions of Sections 3 of the Act is made out against the OPs - application disposed off.
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2018 (11) TMI 851
Anti-competitive practice of mandating a No-Objection Certificate prior to the appointment of stockists in the State of Gujarat - monetary penalties imposed on the erring associations and pharmaceutical companies - Held that:- Monetary penalties have been levied upon them at the rate of 10% (in case of office bearers of the erring associations) and 1% (in case of officials of the erring pharmaceutical companies) of their respective average incomes, based on the income tax returns (ITRs) for the three previous years as filed by them - In terms of Section 27 read with Section 48 of the Act, the Commission deems it appropriate to calculate penalties on the four individuals named supra, at the rate of 1% of their respective incomes based on their income tax returns (ITRs) for three years.
The Commission is of the view that benefit of these mitigating factors also need to be extended qua its officials, namely Shri Srinivasa Reddy and Shri Bharat Pandya, and accordingly, they also deserve a remission in their respective penalties by 40%.
Application disposed off.
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2018 (11) TMI 679
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.
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2018 (11) TMI 94
Rectification/modification of the interest amount on penalty imposed - Section 43A of the Competition Act, 2002 - case of appellant is that there being partial order of stay and part of the amount having been deposited with the COMPAT and later on total amount of ₹ 2,00,00,000/- (Rupees Two Crores) having been deposited with the COMPAT, the Appellants are not liable to pay any interest.
Held that:- Similar issue fell for consideration before the Hon’ble Supreme Court in State of Rajasthan and Anr. Vs. J.K. Synthetics Limited and Anr. [2011 (7) TMI 1300 - SUPREME COURT OF INDIA], where it was held that whenever there is an interim order of stay in regard to any revision in rate or tariff, unless the order granting interim stay or the final order dismissing the writ petition specifies otherwise, on the dismissal of the writ petition or vacation of the interim order, the beneficiary of the interim order shall have to pay interest on the amount withheld or not paid by virtue of the interim order.
As the case of the Appellants is covered by the decision of the Hon’ble Supreme Court in J.K. Synthetics Limited, we are not inclined to interfere with the demand notice, so far it relates to interest - appeal dismissed - decided against appellant.
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2018 (10) TMI 2046
Seeking stay on impugned order for a period of fifteen days for the petitioner to approach the Division Bench of this Court - HELD THAT:- Considering that the interim order passed on 15.05.2017 in these petitions merely clarified that "any action taken by the respondents in terms of Section 43 of the Competition Act, 2002 shall he subject to further orders of the Court it would not be apposite to pass any order as requested.
Petition dismissed.
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2018 (10) TMI 229
Cartilisation - Bid rigging - Violation of provisions of Section 3(3)(d) of the Competition Act, 2002 - appellants/suppliers of Liquefied Petroleum Gas (LPG) Cylinders to the Indian Oil Corporation Ltd. (for short, ‘IOCL’) had indulged in cartilisation, thereby influencing and rigging the prices - penalties inflicted on the suppliers stand reduced - collusive tendering - situation of oligopsony - Held that:- 12 new entrants cannot be considered as entry of very few new suppliers where the existing suppliers were only 50. Identical products along with market conditions for which there would be only three buyers, in fact, would go in favour of the appellants. The factor of repetitive bidding, though appears to be a factor against the appellants, was also possible in the aforesaid scneario. The prevailing conditions in fact rule out the possibility of much price variations and all the manufacturers are virtually forced to submit their bid with a price that is quite close to each other. Therefore, it became necessary to sustain themselves in the market. Hence, the factor that these suppliers are from different region having different cost of manufacture would lose its significance. It is a situation where prime condition is to quote the price at which a particular manufacturer can bag an order even when its manufacturing cost is more than the manufacturing cost of others. The main purpose for such a manufacuring would be to remain in the fray and not to lose out. Therefore, it would be ready to accept lesser margin. This would answer why there were near identical bids despite varying cost.
Insofar as meeting of bidders in Mumbai just before the date of submission of tender is concerned, some aspects pointed out by the appellants are not considered by the CCI or the COMPAT at all. No doubt, the meeting took place a couple of days before the date of tender. No doubt, the absence of agenda coming on record would not make much difference. However, only 19 appellants had attended that meeting. Many others were not even members or did not attend the meeting. In spite thereof, even they quoted almost same rates as the one who attended the meeting. This would lead us to the inference that reason for quoting similar price was not the meeting but something else. The question is what would be the other reason and whether the appellants have been able to satisfactorily explain that and rebut the presumption against them?
The explanation is market conditions leading to the situation of oligopsony that prevailed because of limited buyers and influence of buyers in the fixation of prices was all prevalent. This seems to be convincing in the given set of facts. The situation of oligopsony can be both ways. There may be a situation where the sellers are few and they may control the market and by their concerted action indulge into cartelization. It may also be, as in the present case, a situation where buyers are few and that results in the situation of oligopsony with the control of buyers.
Monopsony consists of a market with a single buyer. When there are only few buyers the market is described as an oligopsony. What is emphasised is that in such a situation a manufacturer with no buyers will have to exit from the trade. Therefore, first condition of oligopsony stands fulfilled. The other condition for the existence of oligopsony is whether the buyers have some influence over the price of their inputs. It is also to be seen as to whether the seller has any ability to raise prices or it stood reduced/eliminated by the aforesaid buyers.
On a hollistic view of the matter, we find that the appellants have been able to discharge the onus by referring to various indicators which go on to show that parallel behaviour was not the result of any concerted practice.
After taking note of the test that needs to be applied in such cases, which was laid down in Dyestuffs and accepted in Excel Crop Care Limited, we come to the conclusion that the inferences drawn by the CCI on the basis of evidence collected by it are duly rebutted by the appellants and the appellants have been able to discharge the onus that shifted upon them on the basis of factors pointed out by the CCI. However, at that stage, the CCI failed to carry the matter further by having required and necessary inquiry that was needed in the instant case.
In such a watertight tender policy of IOCL which gave IOCL full control over the tendering process, it was necessary to summon IOCL. This would have cleared many aspects which are shrouded in mystery and the dust has not been cleared.
We, thus, arrive at a conclusion that there is no sufficient evidence to hold that there was any agreement between the appellants for bid rigging. Accordingly, we allow these appeals and set aside the order of the Authorities below. As a consequence, since no penalty is payable, appeals of the CCI are rendered infructuous and dismissed as such. All the pending applications stand disposed of.
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2018 (9) TMI 2129
Anti-competitive agreements - Joint tender floated by Public Sector Oil Marketing Companies (PSU OMCs/OMCs) on 02.01.2013 for procurement of anhydrous alcohol - quoting an exorbitant price for supply of ethanol to OMCs - contravention of the provisions of Section 3 of Competition Commission Act, 2002 - levy of monetary penalty.
Whether the joint tender floated by OMCs is in violation of provisions of Section 3(1) read with Section 3(3) of the Act? - HELD THAT:- The Commission holds that floating of joint tender by OMCs for procurement of ethanol per se cannot be construed as anti-competitive particularly when such process has evident efficiency benefits, as detailed above. Resultantly, the Commission finds no merit in the allegations levelled by the Informants in laying challenge to the joint tendering resorted to by the OMCs. In this connection, the Commission notes that even the presumption of appreciable adverse effect on competition is not applicable in respect of agreements entered into by way of joint ventures if such agreements increase efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services by virtue of the proviso engrafted to Section 3(3) of the Act.
In the factual matrix of the present case, OMCs have demonstrated efficiencies resulting from the joint tendering process and in the absence of any rebuttal thereto or any other material available on record, the Commission has no hesitation in holding that no case whatsoever has been made out against OMCs of contravention of the provisions of Section 3 of the Act due to the impugned act of floating a joint tender. Such a system is beneficial to suppliers and all other stakeholders as it has demonstrable efficiency in improving the production and distribution of ethanol in an equitable manner.
Before concluding on this count, the Commission is constrained to note the brazen conduct of India Glycols Limited in laying repeated challenges to the joint tendering process which was evidently adopted by PSU OMCs in order to avoid multiplicity of tendering exercise and to attain equitable distribution of procured ethanol amongst OMCs, to carry out the mandate of the Government. Such a procedure has also saved wastage of time, money and resources of the stakeholders besides minimizing the attendant costs to the national exchequer.
Whether the tender floated on 02.01.2013 by PSU OMCs was rigged by sugar mills/ISMA/EMAI/NFSCF in contravention of the provisions of Section 3 of the Act? - HELD THAT:- No plausible explanation could be offered by the bidders as to how the freight charges could match exactly despite substantial variance in distance between the distilleries of the bidders and the depots for which they participated in the bidding process. It is also found that the freight charges quoted by the bidders were neither based on the actual figures of past supplies nor the same were found to have any connection with the actual charges paid by them to the transporters after award of tender. On the contrary, as noted above, despite difference in the distance between the depot and factory, identical freight charges have been quoted by the bidders. Such conduct can only be an outcome of collusive behavior and not the result of free market forces.
The Commission also finds no merit in the plea that the DG has only picked few depots and players for the purpose of investigation to arrive at a finding of contravention against few bidders leaving the rest. The Commission notes that bidding was depot-wise and therefore the DG was justified in focussing investigation on the depots where the bidding pattern appeared to be collusive - the Commission is of the considered opinion that the bidders who participated in respect of the depots located in UP, in response to the joint tender floated by OMCs, have acted in a concerted and collusive manner in submitting their bids. This is evidenced from the prices quoted, quantities offered and the explanations given by the parties. Moreover, such collusion is also strengthened from bidders utilizing the platform of ISMA as also from the signals emitted by EMAI which influenced the bidding behavior of the parties.
ISMA was proactively facilitating coordinated action by ethanol manufacturers. As noted above, ISMA even invited Bajaj in the meetings as it was the largest ethanol manufacturers controlling more than 40% of the market share in UP. Needless to add, no coordination amongst ethanol manufacturers of UP could have been successful without Bajaj being a party to such concerted effort. Such actions coupled with evasive responses of ISMA representatives lead to inescapable conclusion that ISMA acted as fulcrum to the whole arrangement - considering the past history of ISMA in facilitating concerted bidding in respect of the tenders floated by OMCs, as recorded by the DG, the Commission has no hesitation in holding that ISMA was actively involved with the bidding parties during the relevant period of the tender of January 2013. The evidence adumbrated hereinabove establishes that ISMA has violated the provisions of Section 3(3)(a), 3(3)(b) read with Section 3(1) of the Act.
In the present case, the Commission is of the considered view that the bidders through their impugned conduct have contravened the provisions of Section 3(3)(d) read with Section 3(1) of the Act by acting in a collusive and concerted manner which has eliminated and lessened the competition besides manipulating the bidding process in respect of the impugned tender floated by OMCs - the Commission holds that the bidders who participated in respect of the depots located in UP/Gujarat/Andhra Pradesh in response to the joint tender floated by OMCs have colluded in submitting the bids by quoting collusive prices and sharing quantities using the platform of ISMA and signals provided by EMAI.
The sugar mills and ISMA/EMAI are directed to cease and desist from indulging in conduct that has been found to be in contravention of the provisions of the Act.
Monetary penalty - HELD THAT:- It may be noted that the twin objectives behind imposition of penalties are: (a) to reflect the seriousness of the infringement; and (b) to ensure that the threat of penalties will deter the infringing undertakings. Therefore, the quantum of penalties imposed must correspond with the gravity of the offence and the same must be determined after having due regard to the mitigating and aggravating circumstances of the case.
The Commission imposes monetary penalties upon the parties for contravention of the provisions of Section 3(1) read with Section 3(3) of the Act - Commission directs the parties to deposit the penalty amount within 60 days from the receipt of this order.
It is evident that Dhampur was granted sufficient opportunity which it did not avail and as such the plea that it was denied opportunity of cross-examination is not only fallacious but is reflective of its contumacious conduct in not complying with the directions given by the Commission.
The Secretary is directed to communicate to the parties, accordingly.
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2018 (9) TMI 2121
Anti-Competitive Arrangements - Resale Price Maintenance - Discount Control Mechanism - Contravention of provisions of Section 3(4)(e) read with Section 3(1) of the Act, 2002 through arrangements which resulted into Resale Price Maintenance - relevant geographic market - HELD THAT:- In the present case, the ‘DG’ as well as the Commission has failed to decide the relevant geographic market as also the relevant product market - As per the decision of the Hon’ble Supreme Court in Competition Commission of India v. Coordination Committee of Artistes and Technicians of West Bengal Film and Television and Ors [2017 (3) TMI 1692 - SUPREME COURT] for inquiring into an alleged contravention, the factors mentioned in sub-section (3) of Section 19 is required to be taken into consideration. The Commission has failed to inquire into the agreement in the light of sub-section (3) of Section 19. It has not taken into consideration whether the agreement creates any barrier to new entrants in the market; driving existing competitors out of the market or foreclosure of competition by hindering entry into the market. It has also failed to consider whether the said agreement accrual of benefits to consumers and improvements in production or distribution of goods or provision of services. The relevant geographic market and the relevant product market having not been taken into consideration, the inquiry is incomplete being violation of sub-section (6) of Section 19.
Section 26 of the Act, 2002 prescribes procedure for inquiry under Section 19 but in the present case no such inquiry has been made in terms of Section 19 - the Commission though directed the DG to cause an investigation but thereafter, the matter having not closed by the Commission, the Commission was required to make inquiry in terms of Section 27 to find out whether any agreement referred to in Section 3 or action of an enterprise, is in contravention of the provision.
The procedure for inquiry under Section 19 is not a mere formality rather the inquiry by the Commission into an agreement under Section 27 cannot be completed without appreciation of relevant evidence - The DG report is merely an investigation report, in terms of subsection (3) of Section 26 but DG’s report alone cannot be relied upon or cited for finding and the Commission which is required to make independent analysis based on evidence brought on record.
The finding that the Appellant has mandated its dealers to use recommended lubricants/ oils and penalised them for use of nonrecommended lubricants and oils is also not based on any evidence. Nothing brought on the record by the DG or the Commission to suggest that the Appellant penalised one or other dealer for not utilising the recommended lubricants and oils.
The Commission has failed to appreciate the evidence and the impugned order not based on any specific evidence and has been passed merely on the basis of opinion of DG. The DG as well as the Commission also failed to decide relevant geographic market or a relevant product market as required under Section 19 (6) & (7) of the Act, 2002 - the impugned order set aside - appeal allowed.
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