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Law of Competition - Case Laws
Showing 181 to 200 of 357 Records
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2019 (11) TMI 1814
Abuse of dominant position by an enterprise - HELD THAT:- Nothing has been placed on record to establish that in the relevant market i.e. the segment of passenger cars, BMW India enjoyed a dominant position. The material available in public domain which has been considered by the CCI unmistakably demonstrates that BMW India had insignificant presence in the relevant market and BMW passenger cars did not occupy a significant market share. Merely because, the act of refusal on the part of OP-1 to renew dealership of Informant beyond 31st December, 2017 may have caused pecuniary loss to the Informant does not raise any competition concern, even if, the consequence of such termination of dealership has proved advantageous to the dealers of OP-1 in neighbouring states of Gujarat to sell BMW cars to customers hailing from Gujarat. As regards, fiscal loss to the State of Gujarat in the form of Taxes leviable on sale of cars suffice it to say that apart from the Informant having no locus to raise such issue the revenue resources available to the State would depend on the profitability of business and it lies within the domain of the manufacturer, whether setting up of dealership in a particular State would promote its business and generate profit.
There are no ground to interfere with the well reasoned order impugned in this appeal, we take note of the fact that the Informant is said to have obtained financing facilities from OP-2 for running its business and default of debt advanced by OP-2 to the Informant is stated to be staggering amount exceeding Rs.54 Crores, in respect whereof OP-2 is stated to have filed application under Section 7 of the Insolvency and Bankruptcy Code, 2016 being C.P.(IB)No.161/2017 pending consideration before the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench.
There are no merit in this appeal. The appeal is accordingly dismissed.
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2019 (11) TMI 1199
Directions for investigation under Section 26(1) of the Competition Act, 2002 - To discontinue Abusive/Anti-competitive practices - price discrimination - fixation of commission rate for all partner hotels - elimination of Performance Linked Bonus (PLB) or other additional promotional incentives which indirectly add to fixed commission - prohibition of discrimination and offering of heavy discounting on hotel room tariffs over & above fixed commission - remittance of advance payments etc. - contravention of the provisions of Sections 3 and 4 of the Competition Act, 2002.
HELD THAT:- The Commission is of the view that there exists a prima facie case for investigation against MMT-Go and OYO for alleged violation of the provisions of Section 3(4) of the Act. Further, a prima facie case for investigation under Section 4 of the Act is made out against MMT-Go, as elucidated in the earlier parts of this order. The DG is, thus, directed to carry out a detailed investigation into the matter, in terms of Section 26(1) of the Act, and submit a report to the Commission, within 150 days.
During the course of investigation, if involvement of any other party/entity is found, the DG shall investigate the conduct of such other party/entity(s) who may have indulged in the said contravention. It is, however, made clear that nothing stated herein shall tantamount to an expression of final opinion on the merits of the case and the DG shall conduct the investigation without being influenced by any observations made herein.
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2019 (11) TMI 716
Constitutional spirit of judicial independence - appointments to the Debt Recovery Tribunals - constitutionality of the Finance Act, 2017 - satisfaction of test of a ‘money bill’ under Article 110 of the Constitution. - Competence of selection committee - validity of section 184 of the Finance Act, 2017
Held That:-
RANJAN GOGOI, CJI
(i) The issue and question of Money Bill, as defined under Article 110(1) of the Constitution, and certification accorded by the Speaker of the Lok Sabha in respect of Part-XIV of the Finance Act, 2017 is referred to a larger Bench.
(ii) Section 184 of the Finance Act, 2017 does not suffer from excessive delegation of legislative functions as there are adequate principles to guide framing of delegated legislation, which would include the binding dictums of this Court.
(iii) The Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 suffer from various infirmities as observed earlier. These Rules formulated by the Central Government under Section 184 of the Finance Act, 2017 being contrary to the parent enactment and the principles envisaged in the Constitution as interpreted by this Court, are hereby struck down in entirety.
(iv) The Central Government is accordingly directed to re-formulate the Rules strictly in conformity and in accordance with the principles delineated by this Court in R.K. Jain (supra), L. Chandra Kumar (supra), Madras Bar Association (supra) and Gujarat Urja Vikas Ltd. (supra) conjointly read with the observations made in the earlier part of this decision.
(v) The new set of Rules to be formulated by the Central Government shall ensure non-discriminatory and uniform conditions of service, including assured tenure, keeping in mind the fact that the Chairperson and Members appointed after retirement and those who are appointed from the Bar or from other specialised professions/services, constitute two separate and distinct homogeneous classes.
(vi) It would be open to the Central Government to provide in the new set of Rules that the Presiding Officers or Members of the Statutory Tribunals shall not hold ‘rank’ and ‘status’ equivalent to that of the Judges of the Supreme Court or High Courts, as the case may be, only on the basis of drawing equal salary or other perquisites.
(vii) There is a need-based requirement to conduct ‘Judicial Impact Assessment’ of all the Tribunals referable to the Finance Act, 2017 so as to analyse the ramifications of the changes in the framework of Tribunals as provided under the Finance Act, 2017. Thus, we find it appropriate to issue a writ of mandamus to the Ministry of Law and Justice to carry out such ‘Judicial Impact Assessment’ and submit the result of the findings before the competent legislative authority.
(viii) The Central Government in consultation with the Law Commission of India or any other expert body shall re-visit the provisions of the statutes referable to the Finance Act, 2017 or other Acts as listed in para 174 of this order and place appropriate proposals before the Parliament for consideration of the need to remove direct appeals to the Supreme Court from orders of Tribunals. A decision in this regard by the Union of India shall be taken within six months.
(ix) The Union Government shall carry out an appropriate exercise for amalgamation of existing Tribunals adopting the test of homogeneity of the subject matters to be dealt with and thereafter constitute adequate number of Benches commensurate with the existing and anticipated volume of work.
Dr Dhananjaya Y Chandrachud, J
Part XIV of the Finance Act 2017 could not have been enacted in the form of a Money Bill. The rules which have been framed pursuant of the rule making power under Section 184 are held to be unconstitutional. However, since during the pendency of these proceedings, certain steps were taken in pursuance of the interim orders and appointments have been made, we direct that those appointments shall not be affected by the declaration of unconstitutionality. The terms and conditions governing the personnel so appointed shall however abide by the parent enactments. Upon the declaration of unconstitutionality, the conditions specified in all corresponding aspects in the parent enactments shall continue to operate.
Though the present judgment analyses the ambit of the word ―only” in Article 110(1) and the interpretation of sub-clauses (a) to (g) of clause (1) of Article 110 and concludes that Part XIV of the Finance Act 2017 could not have been validly enacted as a Money Bill, I am in agreement with the reasons which have been set out by the learned Chief Justice of India to refer the aspect of money bill to a larger Bench and direct accordingly.
I am in agreement with the observations of brother Justice Deepak Gupta that the qualifications of members to tribunals constitute an essential legislative function and cannot be delegated. Tribunals have been conceptualized as specialized bodies with domain-specific knowledge expertise. Indispensable to this specialized adjudicatory function is the selection of members trained in their discipline. Keeping this in mind, the prescription of qualifications for members of tribunals is a legislative function in its most essential character.
Deepak Gupta, J.
I am in total agreement with the Chief Justice in as much as he has held that the decision of the Hon’ble Speaker of the House of People under Article 110 (3) of the Constitution is not beyond judicial review. I also agree with his views that keeping in view of the high office of the Speaker, the scope of judicial review in such matters is extremely restricted. If two views are possible then there can be no manner of doubt that the view of the Speaker must prevail. Keeping in view the lack of clarity as to what constitutes a Money Bill, I agree with the Hon’ble Chief Justice that the issue as to whether Part XIV of the Finance Act, 2017, is a Money Bill or not may be referred to a larger bench.
As far as Issue No.2 is concerned, I am unable to agree with the conclusion of Chief Justice. There can be no doubt that Parliament is not expected to deal with all matters and it can delegate certain “non-essential” matters to the executive. Every condition need not be laid down by the Legislature.
There being no guidelines, unfettered and unguided powers have been vested in the delegatee and, therefore, in my opinion, there is excessive delegation. As such, I would hold that Section 184 of the Finance Act, 2017 insofar as it delegates the powers to lay down the qualifications of Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member of the Tribunal, Appellate Tribunal or, as the case may be, other Authorities as specified in column (2) of the Eighth Schedule, suffers from the vice of excessive delegation and is accordingly struck down.
Regarding Issue Nos. 3 & 6 I agree with the Chief Justice and I do not want to add anything.
Regarding Issue Nos. 4, 5, 7 & 8 I agree with the Chief Justice both on the reasoning and conclusions on these issues
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2019 (10) TMI 1599
Contravention of the provisions of Section 4 of the Competition Act, 2002 - rejection of report submitted by the Director General, Competition of Commission of India - no opportunity was granted to the petitioner to contest the premise on which CCI rejected the DG’s report - violation of principles of natural justice.
Whether it was incumbent upon CCI to pass an order directing further inquiry under Section 26(8) of the Act in the event it did not agree with the report submitted by the DG? HELD THAT:- The contention that if the DG’s report recommends that there are contraventions of the Act, CCI cannot close the case straightway, is without any merit. There is no provision in the Act which mandates that CCI must accept the DG’s report recommending that there are contraventions of the provisions of the Act. The DG’s report is not binding on CCI and it can differ with the DG’s findings and reject the same. If on examination of the DG’s investigation report indicating contraventions of the Act and CCI finds that there are no such contraventions; it is required to close the case, as has been done in the present case - If the petitioner’s contention that it is mandatory for CCI to direct further investigation in the event it disagrees with the DG’s recommendation is accepted, it would imply that CCI can never disagree with the report submitted by the DG. This, clearly, is not the scheme of Sections 26 and 27 of the Act. The report submitted by the DG under Section 26(3) of the Act is merely recommendatory. CCI is required to examine the same and take a view after hearing the concerned parties.
In the present case, CCI has not accepted the DG’s report and after hearing the parties has decided to close the case. The contention that this is contrary to the scheme of Sections 26 and 27 of the Act, is bereft of any merit and is, accordingly, rejected -
Undisputedly, the impugned order passed by CCI is final and no appeal is provided under the Act against such an order. The contention that the impugned order is an order under Section 27 of the Act was rejected by COMPAT vide its order dated 15.05.2017. The petitioner has accepted the said order and the issue whether the impugned order is appealable or not, does not arise for any further consideration.
Whether the impugned order suffers from any infirmity, which warrants interference by this Court under Article 226 of the Constitution of India? - HELD THAT:- In the present case, CCI had noticed that the parties had exchanged drafts of the GSPA before finalising the same. More importantly, some of the clauses which the petitioner claimed were unfair and discriminatory, had not been objected to by SRMB during contractual negotiations. Clearly, in these circumstances, the decision of CCI to take into account that the GSPA was a negotiated contract, cannot be faulted.
This Court finds that the entire approach of the DG in expressing its subjective opinion on various clauses is flawed. The DG is required to submit an investigation report after investigating facts and making recommendations on the basis of a factual foundation. In the present case, the DG has considered various clauses of the GSPA and has expressed its subjective opinion regarding the same. This, clearly, is not the only scope of investigation as contemplated under Section 26(3) of the Act.
It was contended on behalf of the petitioner that CCI ought to have remanded the matter back to the DG for further inquiry instead of relying on the submissions made on behalf of SRMB. This contention is unmerited, as most of the recommendations made by the DG with regard to various specific clauses of GSPA were based on its subjective opinion and therefore, there was no necessity for remanding the matter back for further inquiry. CCI was well within its jurisdiction to examine the DG’s subjective opinion and take an informed view after considering the submissions made by the concerned parties.
This Court finds the present petition unmerited. This Court is also of the view that the proceedings instituting by the petitioner are an abuse of the process of law. The petitioner is an employee of SRMB and SRMB had issued no authority in favour of the petitioner to espouse its cause - Petition dismissed.
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2019 (10) TMI 1315
Directions for the convening, holding and conducting of the meeting of the Equity Shareholders, Secured Creditors and Unsecured Creditors of the Transferor Company and Transferee Company - sections 230 to 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the NCLT, Rules, 2016 - HELD THAT:- This Bench directs, in accordance to Section 230(5) of the Companies Act, 2013, to issue notices to the Regional director, Ministry of Corporate Affairs, ROC concerned, Income Tax Authorities, the Official Liquidator as far as the Transferor companies are concerned and such other sectoral regulators or authorities if applicable. The Official Liquidator is directed to appoint an auditor for the purposes of preparing the reports. In case the Scheme is exempted under the Competition Act, 2002, an affidavit to this effect is to be given. Otherwise, notice to CCI may also be issued. The Transferor Company and the Transferee Company are Private Limited Company. Hence. there is no need to issue notices to SEBI and the Stock Exchanges - The authorities are directed to make objection/representations, if any within 30 days from the date of receipt of the notice. In the event that no objections or representations are made within the stipulated timeframe, it shall be presumed that they do not have any objections.
Application disposed off.
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2019 (9) TMI 1467
Approval of Amalgamation Scheme - Section 230 to 232 of the Companies Act, 2013 - HELD THAT:- After hearing the Counsel for the Applicant Companies and considering the materials on record the Scheme appears to be fair, reasonable and is not detrimental against the Members or Creditors or contrary to public policy and the same can be approved.
The scheme is approved - application allowed.
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2019 (9) TMI 568
Prohibition on anti-competitive agreements - Anti-competitive restrictions - abuse of dominant position - HELD THAT:- Regulations 18 (1) and 20 (4) of the CCI Regulations, require the DG to investigate the matter i.e. the allegations “made in information or reference, as the case may be”, together with all evidence, documents, statements or analysis collected during investigation. The investigation has to be a comprehensive one. The DG may not, in fact, be able to anticipate what information may emerge during such investigation. Merely because the information that emerges does not pertain to the specific subject matter which the DG has been asked to investigate, would not constrain the DG from examining such information as well if it points to violation of some other provisions of the Act. Indeed, the directions given by the CCI to the DG under Section 26 (1) of the Act is only to ‘trigger’ investigation.
In the present case, the Court finds that while the information with the CCI did pertain to the alleged violation by GIL and others under Section 3(3) (a) and (b) of the Act, the direction given to the DG was to investigate ‘the matter’, and this enabled the DG to examine violations not only of under Section 3 of the Act, but any other violation that may have come to his notice while undertaking the investigation.
An order of the CCI under Section 26 (1) of the Act ‘triggers’ investigation by the DG, and that the powers of the DG are not necessarily circumscribed to examine only such matters that formed the subject matter of the original complaint. No doubt, the language of the order passed by the CCI issuing directions to the DG will also have a bearing on the scope of such investigation by the DG. In the present case, however, the language of the order passed by the CCI on 26th February, 2011, is broad enough to cover an investigation by the DG into what appeared to be prima facie violation of Section 4 of the Act by GIL.
The scope of the powers and functions of the CCI, when it is considering the report of the DG, is a quasi judicial function. It undertakes that exercise after furnishing to the party a copy of the report and then permits the party to make its submissions in relation thereto. This is followed by a full-fledged hearing. At that stage the CCI can in its discretion permit the affected party to lead evidence. Therefore, the scope and extent of participation of GIL in the present case would obviously be different at the stage of investigation before the DG and at the subsequent stage of consideration of the DG’s report by the CCI.
This Court sets aside the impugned judgment of the learned Single Judge and restores the order dated 30th May, 2013 passed by the CCI. The matter before the CCI will now proceed from the stage where it was when the above order was passed, in accordance with law - Appeal allowed.
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2019 (9) TMI 567
Demand of Interest on account of delay in payment of the penalty - violation of provisions of Section 3 of the Competition Act, 2002 - whether the petitioner is liable to pay interest to the CCI on account of delay in payment of penalty as levied upon it? - HELD THAT:- It is clear from the plain reading of Regulation 5 of the Recovery Regulations, that simple interest at the rate of one and one half per cent for every month, or part of the month, commencing from the date immediately after expiry of the period mentioned in the demand notice, is payable. The contention that since the order passed by CCI had been stayed, there was no delay in making the penalties, is unsustainable.
The said issue is no longer res integra - In the STATE OF RAJASTHAN & ANR. VERSUS J.K. SYNTHETICS LTD. & ANR. [2011 (7) TMI 1300 - SUPREME COURT], the Supreme Court had examined several other decisions and had authoritatively reiterated the position that wherever an interim order or stay is granted, the beneficiary of the interim order is bound to pay interest on the amount withheld or not paid by virtue of the interim order unless the final order indicates otherwise.
It is material to note that the CCI had found the petitioner to be falling foul of Section 3 of the Act. This finding was not disturbed by COMPAT. The COMPAT had merely reduced the penalty and had modified CCI’s order dated 10.07.2015 to that extent. Such modification would, obviously, relate back to CCI’s order, that is, the order dated 10.07.2015. The contention that the order of CCI had merged with the order passed by COMPAT is correct. However, the COMPAT order reaffirmed CCI’s decision to levy penalty and that decision, having been sustained, cannot be considered as inoperative or non-existent for the period during which it was suspended on account of the stay order.
The interest on such penalty being a statutory levy is required to be paid - the petitioner is required to pay interest on the delayed payment - Petition dismissed - decided against petitioner.
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2019 (9) TMI 520
Uber’s discount and incentive policy - Abuse of Dominant Position - Infringement of Section 4 of the Competition Act, 2002 - HELD THAT:- ‘Dominant position’ as defined in Explanation (a) refers to a position of strength, enjoyed by an enterprise, in the relevant market, which, in this case is the National Capital Region (NCR), which: (1) enables it to operate independently of the competitive forces prevailing; or (2) is something that would affect its competitors or the relevant market in its favour.
Given the allegation made, it is clear that if, in fact, a loss is made for trips made, Explanation (a)(ii) would prima facie be attracted inasmuch as this would certainly affect the appellant’s competitors in the appellant’s favour or the relevant market in its favour. Insofar as ‘abuse’ of dominant position is concerned, under Section 4(2)(a), so long as this dominant position, whether directly or indirectly, imposes an unfair price in purchase or sale including predatory price of services, abuse of dominant position also gets attracted. Explanation (b) which defines ‘predatory price’ means sale of services at a price which is below cost.
There is no case to interfere with the order made by the Appellate Tribunal - appeal dismissed.
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2019 (8) TMI 1778
Right to give necessary permissions and rights for organisation of volleyball leagues - Agreement executed between VFI and Baseline, is anti-competitive or not - penalty for entering into anti-competitive agreement - HELD THAT:- In the present case, the allegations concern restrictions placed on organisation of volleyball league by any enterprise other than Baseline in India or abroad and on volleyball players who are part of the Volleyball League to participate in any other league or other national/international events for the next 10 years. In DHANRAJ PILLAY AND OTHERS VERSUS HOCKEY INDIA [2013 (5) TMI 962 - COMPETITION COMMISSION OF INDIA], the Commission noted that the sports sector comprises multitude of relationships. For example, a sports federation may be a seller of various rights such as media rights, sponsorship rights, and franchise rights associated with sports event(s) under its purview and there would be a separate set of consumers for each such right. However, the ultimate viewers of sport events are the end consumers, who influence the popularity of the sport. Also, a sports federation requires services of players, officials, etc. for staging an event which makes sports federations themselves as consumers. In this multitude of relationships, defining the relevant consumer would enable defining the relevant market.
The Commission notes that as per the decisional practice of Commission, there is an inherent conflict of interest when an entity is acting as a regulator as well as an organiser. The restraints imposed by the regulator would be justified if the restraint on competition is a necessary requirement to serve the development of sport or preserve its integrity. Furthermore, the proportionality of the regulations can only be decided by considering the manner in which regulations are applied - it requires to be analysed whether VFI, which is a regulator of volleyball as well as the organiser of volleyball tournaments, was justified to enter into agreement with Baseline giving it exclusive rights for a period of 10 years to conduct and organise Volleyball League in India to the exclusion of other enterprises and consequently affecting the free movement of players, who are part of the Volleyball League, by not letting them participate in other tournaments.
The Commission at this stage is of the prima facie opinion that certain clauses of the agreement dated 21.02.2018 as it existed prior to amendment between VFI and Baseline had placed a prohibition on the players who are participating in Baseline's Volleyball League from participation in other similar tournaments for a period of ten years. The restrictions may be extended by more than ten years in case the said Agreement is renewed or extended. Furthermore, the players who would participate in Baseline's Volleyball League are/were not allowed to participate in any national or international event if its dates clashed with Baseline's Volleyball League. Such restrictions appear to be prejudicial to the players participating in Baseline's volleyball league as these players may have to forgo international events like, Olympics, Asian Games, etc. Such restrictions also appear to have the effect of restricting free movement of participating volleyball players and would have put them at a disadvantage - The Commission cannot be oblivious to the fact that VFI has entered into an arrangement with Baseline, thereby granting some exclusive rights to the said company to hold a Volleyball League and simultaneously placing restrictions on the players participating in the Volleyball League. This conduct of VFI, in the prima-facie opinion of the Commission, needs to be examined through an investigation by the DG, to determine whether the same resulted in violation of provisions of the Act including that of Section 4.
The Director General (the DG) is directed to investigate into the matter and submit its report within a period of 150 days from receipt of this order - Application disposed off.
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2019 (8) TMI 1540
Directions for the convening, holding and conducting of the meeting of the Equity/Preference Shareholders of all the Applicant Companies - dispensing with the convening, holding and conducting of the meeting of the Unsecured/Unsecured Trade Creditors of the said the Applicant Companies - sections 230 to 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the NCLT, Rules, 2016.
HELD THAT:- The Regisry is directed to issue notice to the concerned Regional Director, Ministry of Corporate Affairs, ROC concerned, Income Tax Authorities including the Assessing Officer of the I. T. Circle in relation to the Applicant Companies, SEBI, National Stock Exchange of India Ltd., BSE Limited, Central Depository Services Limited, Metropolitan Stock Exchange of India Ltd. and also notice to the Official Liquidator in relation to the 1 st and 2 nd Applicant Companies with the direction to appoint Chartered Accountants on his own for filing reports. In case, the scheme is exempted under the Competition Act, 2002, an affidavit to this effect is to be given. Otherwise, notice to CCI may also be issued.
The Applicant Companies are directed to place the notice on their website, if any, and also place the same on the notice board of the registered office of Companies. The Applicant Companies are also directed to send private notices to the authorities by way of speed post and file the proof of service along with the paper publication, by way of an affidavit before the next date of hearing.
Application disposed off.
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2019 (7) TMI 2006
Maintainability of appeal under Section 53B of the Competition Act, 2002 - Anti-Competition - abuse of dominant position - Proposal for combination - Jurisdiction to order such proposal - Appellant failed to establish locus standi as a person aggrieved by the 'Commission' to prefer the appeal under Section 53B - HELD THAT:- For forming prima facie opinion as to whether the combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India, the Commission is required only to go through the information given under sub-section (2) of Section 6 therein including the details of combination. For forming such opinion, the Commission is not required to follow the procedure as laid down under Section 29 or Section 30 of the Act.
The violation of Section 4 (i.e. Abuse of dominant position) is completely different than the violation of Section 6(1) (i.e. combination is likely to cause or has caused an appreciable adverse effect on competition), therefore, while passing order under sub-section (2) of Section 6, the Commission cannot hold abuse of dominant position, though it may hold that the combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India and thereby void in terms of Section 6(1) - In the present case, the Appellant alleges violation of Section 4 and not challenged the order dated 17th September, 2015 passed by the Commission under Section 31 of the Act. Further, as the question of abuse of dominant position will arise only after combination comes into effect in terms of sub-section (2) of Section 6 read with Section 31, the allegation of abuse of dominant position cannot be looked at the stage of approval of combination under Section 31.
The intimation given by the 'Commission' by letter dated 3rd November, 2015 to the Appellant is also not under challenge. The Appellant has also suppressed the aforesaid fact. It is the second time when such intimation given by letter dated 16th June, 2016, the present appeal has been preferred - The intimation given to the Appellant do not fall under any provisions as stipulated under clause (a) of Section 53A, therefore, the appeal under Section 53B preferred by the Appellant is not maintainable.
This Appellate Tribunal can hear and dispose of appeals against any direction issued or decision made or order passed by the 'Commission' under sub-sections (2) and (6) of Section 26, Sections 27, 28, 31, 32, 33, 38, 39, 43, 43A, 44, 45 or Section 46 of the Act - thus, no case has been made out by the Appellant to hold that the combination has appreciable adverse effect on competition in relevant market.
In absence of any merit, the appeal is dismissed.
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2019 (7) TMI 1119
Jurisdiction - petitioner contends that the impugned orders were passed without the presence of a judicial member - Section 19(l)(a) of the Competition Act, 2002 - HELD THAT:- As per the provisions, no Act or proceedings of CCI would be invalid by reason of any vacancy or any defect in its constitution. Thus, notwithstanding, that a judicial member is required to be appointed to CCI, the orders passed by the CCI pending such appointment cannot be called into question.
In the present case, the petitioner had participated in the proceedings before CCI and it has reserved orders after hearing submissions made on behalf of the parties. It is clearly not open for the petitioner to now seek a rehearing of the matter after appointment of a judicial member.
The petitioner’s contention that the functioning of CCI would not be paralysed if it is interdicted from passing final orders, is unmerited. Whilst, it is correct that CCI is also required to pass administrative orders as well, its principal function is to dispose of cases instituted either on an information or complaints. Plainly, interdicting CCI from passing final orders would effectively bring its functioning to a standstill.
Petition dismissed.
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2019 (7) TMI 522
Sanction of scheme of demerger - compromise or make arrangements with creditors and members - Section 230 and 232 of the Companies Act, 2013 r/w Rule 3 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
HELD THAT:- The Tribunal, while dealing with an application under Section 230 of the Act, on being satisfied that the compromise or arrangement has been proposed in connection with a scheme for the reconstruction of the company or companies involving merger/ amalgamation of two or more companies and under the scheme property or liabilities of the transferor company is required to be transferred to transferee company or divided among/ transferred to two or more companies is required to order meeting of the creditors or members, as the case may be, to be called. Sub-section (9) thereof empowers the Tribunal to dispense with calling of a meeting of creditors where such creditors, having at least 90% value agree to and confirm the scheme of compromise or arrangement - This is a sine quo non for proceeding further and any order of sanctioning or refusing to sanction such compromise or arrangement by the Tribunal would be without jurisdiction unless the Tribunal has dispensed with calling of such meeting of creditors/ members in terms of Sub-section (9). It is manifestly clear that at the stage of calling of meeting of creditors/members for consideration of the scheme of compromise or arrangement the Tribunal is not required to examine the merits of the scheme qua the proposed compromise/ arrangement. Any such indulgence on the part of Tribunal would fall foul of the provision engrafted in Section 230 (1) of the Act and would be without jurisdiction.
The mandate of law engrafted under Section 230(1) of the Act requiring the Tribunal to order calling of meeting of the creditors/ members of the concerned companies not being complied with and the mandatory provisions being observed in breach, the impugned order cannot be supported. The Tribunal, at the very threshold stage, was not required to venture into the merits of the proposed scheme of demerger which had to be examined only after obtaining the consent of creditors/members with requisite majority.
The Tribunal seriously erred in dismissing the application on merit when the stage of consideration of the proposed scheme of demerger was yet to arrive. The impugned order suffers from serious legal infirmity and the same is set aside - the matter is remanded back to the National Company Law Tribunal, Bengaluru Bench for proceeding further - appeal allowed by way of remand.
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2019 (6) TMI 1700
Anti-competition acts - Contravention of provisions of Section 3(4) read with Section 3(1) of Competition Act, 2002 - retailers of the Informants were not adhering to the terms of the Distributor Agreements - HELD THAT:- The Commission notes that allegations of the Informants against the OPs pertain to contravention of Section 3 (4) of the Act which provides that any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including (a) tie-in arrangement; (b) exclusive supply agreement;(c) exclusive distribution agreement;(d) refusal to deal; (e) resale price maintenance, shall be an agreement in contravention of provisions of the Act, if such agreement causes or is likely to cause an appreciable adverse effect on competition in India.
The Commission observes that in the instant case, no doubt, there was an agreement between OP-1 and the Informants, in the form of ‘secondary distribution agreement’. Further, the parties to the agreement are in a vertical chain of supply and distribution of Vivo smartphones. However, in order to assess whether such agreement/ any clause(s) of agreement is anti-competitive and causes or is likely to cause AAEC in markets in India, the relative market power of the OPs is to be looked into and thereafter the factors provided under Section 19(3) of the Act need to be examined.
The Commission observes that no evidence of any controlling influence of BBK Enterprise on the economic activities of OP-1 and OP-2, has been furnished by the Informants. The Commission notes that OP-1 has stated that the brands Vivo and Oppo have independent marketing teams and are competitors in the market for sale and distribution of smartphones in India and that BBK Enterprise does not have any director(s) on the board of directors either of OP-1, OP-2 or OP-3, thereby resulting in autonomy in decision making in Vivo. There is no material on record to refute these contentions of the OP. Therefore, the contention of the Informants that combined market share of Vivo, Oppo, OnePlus and Realme be taken to determine market power, is not tenable.
The Commission finds no competition concern in the entire matter. Consequently, the allegation of the Informant, as regards contravention of various provisions of Section 3(4) of the Act by the OPs is not made out - Commission notes that in addition to the aforesaid allegations, the Informants have also alleged that from admission of the OP-1 in its response dated 19.11.2018, it appears that the OPs are facilitating a cartel at the retailer level under the aegis of the All India Mobile Retailers Association, in violation of Section 3(3) of the Act. However, the Commission observes that the Informants have merely raised a general allegation during the proceedings without substantiating the same with any evidence whatsoever and the same has been controverted by the OPs stating that no retailers or AIMRA has been impleaded in the matter by the Informant.
The matter is ordered to be closed forthwith in terms of the provisions of Section 26(2) of the Act.
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2019 (4) TMI 2167
Maintainability of appeal - Anti-competitive practices - abuse of dominant position - bid-rigging - contravention of Section 3(3) r/w Section 3(1) of the Competition Act, 2002 - Whether the Commission was justified in overturning the finding of DG in regard to alleged contravention of Section 3 of the Act? - Price fixation.
Maintainability of appeal - HELD THAT:- Since the Commission found some deficiencies in investigation, it directed the DG to examine all relevant issues including the deficiencies pointed out by the Commission. Further investigation was carried out by DG culminating in filing of supplementary investigation report, wherein, DG reiterated its earlier conclusions and observed that KCDA had no role in appointing or terminating the dealers, which was the sole prerogative of cement manufacturers. It also found that KCDA had no role in regard to supply of cement by the cement manufacturers to dealers, which purely depended on market considerations. The supplementary investigation report thus further reinforced conclusions arrived at in the main investigation report - the Commission closed the matter largely agreeing with the recommendation of DG though disagreeing with its finding regarding contravention of Section 3 noticed hereinabove passing the order within the ambit of Section 26(6) of the Act which is appealable in terms of Section 53-B r/w Section 53-A clause (a) of the Act. Objection raised by the Commission in regard to maintainability of appeal being devoid of merit is accordingly overruled.
Whether the Commission was justified in overturning the finding of DG in regard to alleged contravention of Section 3 of the Act? - HELD THAT:- Clause 05 of Annexure A11 provides that any new appointment of stockists/dealers shall be as per understanding with KCDA. Normally, grant of dealership or appointment of stockists should rest exclusively with the cement manufacturing company. Merely because the cement manufacturer has an understanding with the Cement Dealers Association in regard to grant of dealership or appointment of stockists does not imply that a role is assigned to KCDA in appointment of stockists/dealers - The allegations emanating from the Appellants /Informants in regard to termination of dealership and stoppage of supplies to dealers have been inquired into by the Commission and on the basis of available evidence it has been found to be attributable to reasons peculiar to the dealer/ stockists. CCI appears to have considered these documents to arrive at a finding that there was no meeting of minds between KCDA and the cement manufacturers in regard to grant or termination of dealership. No fault can be found with the conclusions drawn by the Commission on consideration of the available material, moreso as the investigation found that there were several cement dealers in Kerala who were not members of KCDA - in arriving at the conclusion that no case of contravention of Section 3(3) r/w Section 3(1) of the Act was made out was largely influenced by the fact that the investigation reports consistently concluded that there was no material to attribute any role to KCDA in award or termination of dealership.
Price fixation - HELD THAT:- An isolated instance of merely two manufacturers out of a large number of manufacturers of a product withdrawing post sale discounts would not necessarily be a proof of an anti- competitive agreement, moreso, as the rationale behind the same as noticed above has been explained. While it is true that the aforestated exhortation on the part of KCDA jointly with the two odd cement manufacturers to dealers would impinge on the fair concept of competition, the same would not fall within the mischief of Section 3(3) r/w Section 3(1) of the Competition Act.
Conclusion - The anti-competitive agreements require clear evidence of a meeting of minds and that exhortations or suggestions without a direct impact on competition do not constitute a violation of Section 3.
The impugned order does not suffer from any legal infirmity and the conclusions drawn on evaluation of material are not erroneous - Appeal dismissed.
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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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