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Law of Competition - Case Laws
Showing 281 to 300 of 341 Records
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2014 (4) TMI 538
Contravention of the order of the Commission and the Tribunal - The applicant has stated that the "cease and desist" order passed by the Commission and confirmed by the Tribunal was binding on the opposite party - Held that:- The plea is thoroughy misconceived. It is no doubt true that after passing of final orders in terms of the provisions contained in section 27 of the Act, the inquiry conducted by the Commission comes to an end. However, the proceedings contemplated under section 42 of the Act, by very nature, will arise post passing of the orders by the Commission. The inquiry envisaged under section 42 of the Act may be initiated by the Commission either suo moto or on an application moved by any member of the public bringing to the notice of the Commission the alleged contravention by a party against whom an order was issued by the Commissions - The Commission has noticed the various orders passed by COMPAT in those proceedings. No stay on the cease and desist order passed by the Commission has been granted by COMPAT. In fact, when the applicant approached COMPAT with an application seeking stay on the impugned demands, COMPAT requested the Commission to dispose of the said application instead.
Opposite party No. 1 had contravened the order of the Commission dated 31.01.2012 by issuing the impugned demand letters dated 28.11.2012. The opposite party No. 1 has failed to show any cause, much less any reasonable cause, for non-compliance of the aforesaid order. It is made clear that order passed by the Commission need to be complied with by the parties and the same cannot be permitted to be opted out by the parties through negotiations. No stay on the cease and desist order passed by the Commission was operating when the non-compliance occurred. The said demand letter has not been withdrawn till date - opposite party No. 1 is directed to pay the fine accordingly - Decided in favour of appellant.
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2014 (3) TMI 445
Suo-moto enquiry u/s 19(1) of the Act - Determination of sale price - Anti-competitive practice - Whether the BCDA is engaged in anti-competitive practice of directly or indirectly determining the sale price of drugs and controlling the supply of drugs in a concerted manner in violation of Section 3(3)(a) and 3(3)(b) of the Competition Act, 2002 – Held that:- BCDA being an association of its constituent enterprises, is taking decisions relating to distribution and supply of pharma products on behalf of the members who are engaged in similar or identical trade of goods and that such practices carried on, or decisions taken, by BCDA as an association of enterprises are covered within the scope of Section 3(3) of the Act - It is evident from the various minutes that BCDA and its affiliated District and Zonal Committees have taken concerted action against the retailers, largely the chain stores, who have indulged in sale of medicine below MRP by offering discounts to the customers - They had launched organizational movement with effect from 1st April, 2012 against these entities and have tried to enforce their decision regarding sale of drugs on MRP by activating Vigilance and Zonal Committees in the various Districts and Zones of Kolkata - Thus, the contention raised by BCDA that it has not taken any measures against those members who offered medicines at discounts does not appear to hold any trace of truth in it and is bound to be rejected.
BCDA has not brought on record any evidence to suggest that the business of significant number of retailers was seriously affected by heavy discounts being offered by big retailers leading to closure of their business which compelled it to pass such resolutions - Even assuming without conceding that the argument put forth by BCDA is based on true facts/actual state of affairs, no such practice or decision which contravenes the law of the land in force can be allowed to continue - irrespective of the provision under which notice was issued, nonetheless an opportunity was given to Shri Tushar Chakraborty to meaningfully respond to the observations of the Commission – thus, there was no violation of principles of natural justice.
The Commission holds that the BCDA and its District and Zonal Committees were engaged in anti-competitive practices of directly or indirectly determining the sale prices of drugs and controlling or limiting the supply of drugs through concerted and restrictive practices, in violation of the provisions of Section 3(3)(a) and (b) read with Section 3(1) of the Act - The plea taken by the BCDA that since it has ceased from the practices of opposing sale of drug on discounts or selling them below MRP cannot be accepted – thus, the Commission directs the BCDA and its office bearers & executive committee members to seize and desist from indulging in anticompetitive practices found to be anticompetitive in terms of the provisions of Section 3 of the Act.
Penalty u/s 27 of the Act – Held that:- The anticompetitive acts and conducts require to be penalized to cause deterrence in future among the erring entities engaged in such actions - it is required that the degree of punishment is scaled to the severity of the violation - the position of BCDA to control the market of drugs and medicines in its area of operation is undoubted - the conduct of BCDA and its office bearers & executive committee members requires to be sternly dealt with - no mitigating factor is shown by the parties and none is borne out from the records – thus, the Commission decides to impose a penalty on the BCDA and its those office bearers who are directly responsible for running its affairs and play lead role in decision making @10% and on the executive committee members @7%, of their respective turnover/income/receipts based on the financial statements filed by them – Decided against the association.
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2014 (2) TMI 1398
Unfair and discriminatory conditions with respect to its Continuing Professional Education (CPE) scheme of OP - structured CPE credits and organization of the seminars/conferences/workshops for obtaining these credits - relevant product market - market for organizing recognised CPE Seminars/Workshops/Conferences - HELD THAT:- There seems to be force in the allegations of the informant that the restriction put in by OP in not allowing any other organization to conduct the CPE seminars for CPE credits, createdan entry barrier for the other players in the relevant market. Further, the choice of the consumer (members of OP) in this case was being limited. The members of OP had no option, but to attend the seminars organized by OP (whatever be the quality of seminars) to get the requisite CPE credits.The restriction put on by OP does not meet the objectives sought to be achieved by the policy. There are hundreds of seminars and conferences organized every month across India by reputed chambers of commerce like CCI, FICCI, ASSOCHAM, NASSCOM, etc. However, these seminars/conferences are not recognised by OP for CPE credits. Prima facie, it appears to be an unreasonable restraint and the members CA of OP are left with no option but to compulsorily attend seminars organized by OP and its organs.
Informant has pointed out in his information that the 64th Annual Report of OP for the Financial Year 2012-13 shows that the OP earned gross revenues of ₹ 45 crores from organizing seminars and conferences, which is around 8% of the OP’s total revenue. Informant also pointed out there were no similar restrictions imposed by other accounting bodies of the world, i.e. in US, UK, Singapore, Australia, etc.
The Commission directs the Director General (DG) to cause an investigation to be made into the matter and to complete the investigation within a period of 60 days from receipt of this order. If during the course of investigation, involvement of any other party is found, the DG shall investigate the conduct of such other parties including the conduct of group companies, if any, in terms of the proviso to section 27 of the Act - the DG is also directed to investigate the role (if any) of the persons who were in charge of, and were responsible to the companies for the conduct of the businesses of such companies, after giving due opportunity of hearing to such persons.
Application disposed off.
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2014 (1) TMI 1954
Jurisdiction of respondent No. 1-Competition Commission of India, to investigate the action of the petitioner inasmuch as the Patent Act itself provides adequate mechanism to balance the rights of patentee and other stakeholders - Section 3(5)(i) of the Competition Act, 2002 - HELD THAT:- This Court is prima facie of the view that a substantial question of jurisdiction of respondent No. 1 to entertain respondent No. 2’s petition arises in the present proceedings.
Upon a perusal of the impugned order dated 12th November, 2013, this Court is also prima facie of the view that the Commission has entered into an adjudicatory and determinative process by recording detailed and substantial reasoning at the Section 26(1) stage itself. In fact, by virtue of the impugned order, this Court is prima facie of the view that the petitioner’s remedy under Section 26(7) has been rendered illusory.
This Court is also prima facie of the view that by virtue of the impugned order an investigation has been ordered into consent terms which had been approved by this Court by order dated 19th March, 2013 in CS(OS) 442/2013 - Consequently, till the next date of hearing while the petitioner may give information as called upon by the Director General of Competition Commission of India, no final order/report shall be passed either by the Competition Commission of India or by its Director General.
List the matter before Joint Registrar on 26th May, 2014 for completion of pleadings.
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2014 (1) TMI 1462
Violation of the provisions of Section 3(3)(a)(b)(c) - Whether the Commission is required to give notice or hearing, to the person against whom an information is given or a reference is made, in terms of Section 19 of the Competition Act, 2002, before the Commission directs further investigation, in exercise of the powers conferred upon it by sub-section (7) of Section 26 of the Act - Held that:- investigation by the Director General, pursuant to the Commission forming an opinion that prima facie there exists a contravention of the provisions of the Act and directing investigation by the Director General, cannot be treated at par with the investigation by a police officer into a cognizable offence in exercise of the powers conferred upon him by the Code of Criminal Procedure, 1973. Section 156 of the Code of Criminal Procedure empowers any officer in charge of a police station to investigate any cognizable case, without the order of a Magistrate, wherever a cognizable offence is committed within the local area of jurisdiction. As regards non- cognizable offences, sub-section (2) of Section 155 of the Code of Criminal Procedure mandates that no police officer shall investigate a non-cognizable case, without the order of the Magistrate having power to try such case or commit the case for trial.
There is no provision in the Code of Criminal Procedure for an accused to apply to the investigating officer to permit him to examine his witnesses. Under the scheme of the Code, a police officer investigating a criminal case cannot allow cross-examination of witness, during the course of investigation conducted by him. On the other hand, clause (4) of the Regulation 41 expressly permits the Director General to record evidence and the power conferred upon him includes the power to record evidence of the enterprise against whom the information is being investigated by him. Unlike the provisions of the Code of Criminal Procedure, clause (5) of Regulation 41 empowers the Director General to allow cross-examination of a witness by the opposite party during the course of investigation conducted by him. Therefore, the scheme of investigation by a police officer, in terms of the provisions contained in the Code of Criminal Procedure and investigation by the Director General in terms of the Competition Act, are altogether different.
If a police officer, while carrying out investigation into a cognizable offence, receives information or evidence relating to Commission of yet another offence, whether that be cognizable or non-cognizable, he is competent to carry out investigation into the said offence as well, the reason being that investigation in a cognizable case can be carried out without the order of the Magistrate and as provided in sub-section (4) of Section 155, where the case relates to two or more offences, of which at least one is cognizable, the case shall be deemed to be a cognizable one, notwithstanding that the other offences are non- cognizable. The Director General, on the other hand, does not have any suo motu power of investigation and, therefore, cannot be treated at par with a police officer, investigating a cognizable case.
Under Section 147 of Income-tax Act is given by the same authority which undertakes the scrutiny and assessment, whereas under the scheme of the Act, the opinion is framed by one authority, whereas the investigation is conducted by another authority, in terms of the directions of the first authority - report of the Director General, to the extent he has reported contravention of the provisions of Section 4 of the Act by the petitioner by misuse of its dominant position as a VSF manufacturer, shall not be subjected to the procedure prescribed in sub-section (8) of Section 26 nor shall the Commission be entitled to pass order on the said report, in terms of the provisions of Section 27 of the Act. The Commission, however, shall be entitled to treat the aforesaid part of the report of the Director General as an information in terms of Section 19 of the Act and proceed accordingly in terms of the provisions of the Act, if the Commission on consideration of the aforesaid part of the report of the Director General, is of the opinion that there exists a prima facie case of contravention of the provisions of Section 4 of the Act by the petitioner - Decided in favour of Petitioner.
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2013 (12) TMI 1666
Issues Involved:
1. Collusive Agreement and Bid Rigging
2. Penalty under Section 27 of the Competition Act, 2002
Summary:
Collusive Agreement and Bid Rigging:
The judgment addresses the appeals of 44 companies found guilty of contravening Section 3(3)(d) of the Competition Act, 2002, for engaging in bid rigging. The CCI initiated suo-motu proceedings based on information from M/s. Pankaj Gas Cylinders Ltd. regarding unfair conditions in a tender floated by IOCL for LPG cylinders. The Director General (DG) found a pattern of identical or near-identical bids among the 50 qualified bidders, indicating collusion. The DG's investigation revealed that the LPG Cylinder Manufacturers had formed an association and held meetings just before the tender submission, where prices were likely fixed. The CCI considered various factors such as market conditions, small number of suppliers, repetitive bidding, and identical products, concluding that these factors suggested collusive bidding. The CCI's detailed analysis of bids across different states showed identical or near-identical pricing, reinforcing the finding of collusion. The CCI rejected arguments that price parallelism in an oligopolistic market was natural, emphasizing the presence of plus factors like the association and meetings. The judgment confirms the CCI's findings of bid rigging and collusion among the appellants.
Penalty under Section 27 of the Competition Act, 2002:
The CCI imposed a penalty of 7% of the average turnover of the last three years on the guilty companies. However, the judgment criticizes the CCI for not providing reasons for choosing the 7% penalty and for applying it uniformly without considering individual circumstances. The judgment highlights the need for the CCI to consider relevant turnover, mitigating factors, and the doctrine of proportionality. The matter is remanded to the CCI for reconsideration of the penalties, with the direction to hear the parties and decide within three months. The interim order of staying the penalties upon depositing 10% and furnishing security for the rest remains in effect until the CCI's final decision.
Separate Judgment by Shri Prasad:
Shri Prasad, in his minority order, found two companies, JBM Industries Ltd. and Punjab Cylinders Ltd., guilty of contravening Section 3(3)(d) and Section 3(3)(a) of the Act, disagreeing with their exoneration by the majority. He concurred with the majority on the guilt of the other appellants and the penalty under Section 27 of the Act.
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2013 (12) TMI 88
Maintainability of Petition – Remedy by way of appeal available or not – Held that:- The appropriate remedy for the petitioners would be to file an appeal in terms of the provisions of the Competition Act - the High Court in exercise of its extraordinary jurisdiction under Article 226/227 of the Constitution will not be justified in intervening in the matter, when an equally efficacious alternative remedy is available to the petitioners - The remedy of appeal is, in fact, more efficacious than the remedy by way of a writ petition under Articles 226/227 of the Constitution and there is no reason why the petitioners should not avail the said remedy.
The right to file an appeal, created by statute is a substantive right which remains unaffected by the subsequent changes in law, unless taken away expressly or by necessary application, though the mechanism for enforcement of such a right being procedural in nature can be changed even retrospectively - the legislature, while repealing an Act, is certainly competent to confer an additional right by providing for an appeal to an appropriate forum - A party to the lis is not in any manner prejudicially affected on such an additional right being granted to him while repealing an enactment.
Applicability of Provisions of Competition Act - Compensation under Monopolies and Restrictive Trade Practices Act, 1969 – Loss and Damage caused because of monopolistic, restrictive or unfair trade practice – Held that:- Relying upon Nathoo Lal Vs. Durga Prasad [1954 (4) TMI 47 - SUPREME COURT] – The orders came to be passed by the Competition Appellate Tribunal much after the MRTP Act had been repealed and the Competition Act had been notified - despite the fact that the original application was filed under the provisions of Section 12B of the MRTP Act and in view of the provisions contained in Section 66 of the Competition Act as also Section 6 of the General Clauses Act, the petitions had to be decided in terms of the provisions of the MRTP Act, an appeal against the order passed by the Competition Appellate Tribunal, after coming into force of the Competition Act would be maintainable - The appeal under Section 53T of the Competition Act is provided against any decision or order of the Competition Appellate Tribunal irrespective of whether such decision or order be interlocutory, intermediate or final though the orders in their petitions are final orders – Decided against Petitioner.
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2013 (11) TMI 993
Violation of principle of natural justice - Notice or hearing opportunity not given - Whether the Competition Commission of India is required to give notice or hearing to the person against whom an information is given or a reference is made, in terms of Section 19 of the Competition Act, 2002 before the Commission directs further investigation, in exercise of the powers conferred upon it by sub-section (7) of Section 26 of the Act - Held that:- Though, the principles of natural justice do necessitates hearing the affected party before a quasi-judicial or even an administrative decision which adversely affects his interest is taken, the order directing further investigation cannot be said to be an order prejudicially affecting the person against whom information is provided or a reference is made to the Commission. An order of this nature does not visit the person against whom information is provided or a reference is made to the Commission, with any civil consequences nor does it in any manner impair any legal right of such a person.
Procedure adopted by the Commission would not be rendered unfair or unreasonableness or arbitrary in case no notice or hearing to the affected party is given before directing further investigation under sub section (7) of section 26 of the Act. In fact, even an accused in a criminal case is not entitled to a hearing before a Magistrate passes an order for further investigation in exercise of the powers conferred upon him by sub section (8) of section 173 of Code of Criminal Procedure. The person against whom an information is given or a reference is made to the Commission in terms of section 19 of the Act cannot be placed on a footing higher than that of an accused in a criminal trial.
Regulation 41(5) of the Competition Commission of India (General) Regulation, 2009 confers upon the Commission or the Director General, to direct evidence by a party to be led by way of oral submissions and if deemed necessary or expedient grant an opportunity to other party or parties, as the case may be, to cross examine the person giving evidence. Thus, the opportunity to cross examine the witness is to be given to the opposite party when a party before the Commission or the Director General is allowed to lead evidence by way of oral submissions.
Commission has permitted the informant to cross examine only the witness of the petitioner and the cross examination has been restricted to the questions which are relevant and germane to the issue raised in the matter. Obviously, such cross examination can take place only if further investigation is directed by the Commission - Decided against Appellant.
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2013 (10) TMI 1504
Issues Involved:
1. Jurisdiction of CCI on pre-notification acts.
2. Evidence of collusive bidding and cartel formation.
3. Validity of considering tenders from other organizations.
4. Legality of investigating 2011 tender.
5. Penalty imposition and calculation.
Summary:
1. Jurisdiction of CCI on Pre-notification Acts:
The appellants argued that the act of submitting identical bids on 8.5.2009 could not be scrutinized by CCI as Section 3 was notified only on 20.5.2009. However, the Tribunal held that the process of bidding continued beyond 8.5.2009, including negotiations on 1.6.2009 and 17.6.2009, thus falling within the jurisdiction of CCI. The Tribunal emphasized that the term "manipulating the process for bidding" u/s 3(3) covers all stages from tender notice to contract award.
2. Evidence of Collusive Bidding and Cartel Formation:
The Tribunal found substantial evidence of collusive bidding, noting consistent identical pricing by the appellants in tenders from 2007 to 2011. The identical pricing pattern and the boycott of the 2011 tender indicated a pre-concerted agreement among the appellants. The Tribunal rejected the appellants' defense that identical pricing was coincidental and not indicative of cartel behavior.
3. Validity of Considering Tenders from Other Organizations:
The Tribunal upheld the DG's consideration of tenders from other organizations, stating that the consistent pattern of identical pricing across various tenders supported the finding of a cartel. The Tribunal dismissed the argument that the DG exceeded his brief by investigating tenders beyond the specific tender mentioned in the initial information.
4. Legality of Investigating 2011 Tender:
The Tribunal rejected the appellants' argument that the DG had no jurisdiction to investigate the 2011 tender, as the CCI's order u/s 26(1) was broad enough to cover ongoing anti-competitive behavior. The Tribunal found that the appellants' boycott of the 2011 tender was part of a continued anti-competitive agreement.
5. Penalty Imposition and Calculation:
The Tribunal criticized the CCI for not providing reasons for imposing a penalty of 9% of the average three years' turnover. It emphasized the need for proportionality and relevant turnover in penalty calculation, especially for multi-product companies like United Phosphorous Ltd. and Excel Crop Care Ltd. The Tribunal adjusted the penalties based on the relevant turnover of ALP tablets, reducing the penalty for Sandhya Organic Chemicals Pvt. Ltd. to Rs. 15.70 lakhs, while setting penalties for United Phosphorous Ltd. and Excel Crop Care Ltd. at Rs. 6.94 crores and Rs. 2.91 crores respectively.
Conclusion:
The Tribunal confirmed the finding of breach of the Competition Act by the appellants but modified the penalties based on relevant turnover considerations. The appeals were dismissed with adjusted penalties.
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2013 (8) TMI 1193
1. ISSUES PRESENTED and CONSIDERED The core legal issue in this judgment is whether the fixation of a benchmark for selection after the commencement of the recruitment process constitutes an impermissible change in the selection criteria. Specifically, the question is whether setting a benchmark of 70 marks for the General Category and 65 marks for the Reserved Category after the written test and interview amounts to changing the "rules of the game" midway through the selection process. 2. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents: The legal framework involves the principles governing recruitment processes, particularly the prohibition against altering selection criteria after the process has commenced. The appellants relied on the precedent set in Himani Malhotra vs. High Court of Delhi, where the Supreme Court held that introducing minimum qualifying marks for viva voce after the selection process had begun was impermissible. Court's Interpretation and Reasoning: The court distinguished the present case from Himani Malhotra by noting that in the current matter, the selection criteria of 80 marks for the written test and 20 marks for the interview were established from the outset. The court reasoned that the benchmark was not a change in criteria but rather a permissible shortlisting tool to ensure the selection of the most meritorious candidates. Key Evidence and Findings: The appellants participated in the written test and interview, securing more than the minimum required marks in the written test. However, they were not selected due to not meeting the newly fixed benchmark of 65 marks for the Reserved Category. The court found that the respondents had not disclosed this benchmark at the time of the advertisement or the commencement of the recruitment process. Application of Law to Facts: The court applied the principle that while rules governing selection cannot be changed mid-process, the fixation of a benchmark post-interview did not constitute such a change. It was deemed a legitimate exercise of the employer's discretion to ensure high standards of competence. Treatment of Competing Arguments: The appellants argued that the fixation of the benchmark was arbitrary and contrary to the established legal principles. The respondents contended that the benchmark was necessary due to the high number of applicants and was within their prerogative. The court sided with the respondents, finding their actions justified and not in violation of legal norms. Conclusions: The court concluded that the fixation of the benchmark was a permissible exercise of discretion aimed at shortlisting the most qualified candidates and did not amount to an impermissible change in the selection criteria. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: "In the absence of any rule on this aspect in the first instance, this does not amount to changing the 'rules of the game'. The High Court has rightly held that it is not a situation where securing of minimum marks was introduced which was not stipulated in the advertisement, standard was fixed for the purpose of selection." Core Principles Established: The court established that setting a benchmark for final selection, even if not initially disclosed, is permissible if it serves the purpose of ensuring the selection of meritorious candidates and does not alter the fundamental selection criteria established at the outset. Final Determinations on Each Issue: The appeals were dismissed, with the court affirming that the fixation of a benchmark was a legitimate exercise of discretion by the employer and did not constitute a change in the selection criteria. The court emphasized the importance of maintaining high standards in recruitment processes, particularly for specialized roles.
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2013 (5) TMI 1067
Issues involved: Appeal against orders of Monopolies and Restrictive Trade Practices Commission and Competition Appellate Tribunal lacking reasons for conclusions.
Summary:
The Supreme Court, in a judgment delivered by Justices Surinder Singh Nijjar and Pinaki Chandra Ghose, considered an appeal where the appellants challenged the orders of the Monopolies and Restrictive Trade Practices Commission and the Competition Appellate Tribunal for lacking reasons to support their conclusions. The Court noted that the appellants had raised substantial questions of law before the Commission, but the orders merely treated the matter as a contractual issue between the parties. The Competition Commission and Appellate Tribunal were criticized for not providing reasons for their decisions, which are essential given the significant consequences of their orders. The Court held that the impugned orders could not be sustained due to the lack of reasoning.
The appellants had filed a review application under the Monopolies and Restrictive Trade Practices Act, which was later required to be heard by the Competition Appellate Tribunal following the enforcement of the Competition Act. The Tribunal dismissed the review petition, essentially reiterating the earlier decision of the Commission. The Court emphasized the importance of reasons in quasi-judicial functions and found the lack of reasons in the impugned orders unacceptable.
The respondent argued that the appellants had willingly entered into a contractual relationship with the respondent-Bank, justifying the decisions of the Commission and the Appellate Tribunal. Additionally, it was contended that the petition was not maintainable under Section 4(2) of the MRTP Act and that the claims were barred by limitation. However, the Court did not delve into the merits of these issues, setting aside the orders solely on the basis of inadequate reasoning. Consequently, the appeals were allowed, and the matters were remanded back to the Competition Appellate Tribunal for a reconsideration of the entire issue on merits, including the preliminary objections raised by the appellants.
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2013 (5) TMI 993
Issues Involved:
1. Legality of the CCI's order and procedural defects.
2. Standard of proof required for quasi-criminal proceedings.
3. Selective investigation of cement manufacturers.
4. Denial of natural justice and cross-examination.
5. Role and function of the Competition Commission of India (CCI).
Summary:
1. Legality of the CCI's Order and Procedural Defects:
The appellants argued that the CCI's order was non-est as it was signed by the Chairman who had not attended the meetings during which oral arguments were made. This breached the principle of "he who hears decides," amounting to denial of natural justice. The CCI countered that the business was transacted in meetings as per Section 22, and the Chairman's participation in the final meeting where written submissions were considered validated his signature.
2. Standard of Proof Required for Quasi-Criminal Proceedings:
The appellants contended that since the CCI was inflicting penalties, it was acting as a quasi-criminal court and thus, the standard of proof required was "beyond reasonable doubt." However, the CCI adopted the civil standard of "preponderance of probability," which the appellants argued was incorrect.
3. Selective Investigation of Cement Manufacturers:
Several appellants argued that the CCI selectively investigated only a few cement manufacturers out of more than 40 in the country, without any justifiable reason. They claimed this selective approach was flawed and questioned the methodology used by the CCI.
4. Denial of Natural Justice and Cross-Examination:
The appellants claimed they were denied the opportunity to cross-examine witnesses and access necessary documents, which they argued resulted in grave injustice. The CCI responded that the refusal to allow cross-examination might at most amount to an irregularity in procedure, which did not affect the merits of the case.
5. Role and Function of the Competition Commission of India (CCI):
A significant issue raised was the exact role of the CCI post-amendment. The appellants argued that the CCI should adhere to judicial norms as it performs adjudicatory functions. The CCI, however, maintained that it transacts business in meetings and its decisions are based on a majority vote, per the amended Section 22.
Conclusion:
The Tribunal found a prima-facie case for granting a stay on the penalties, which were substantial, amounting to around Rs. 6000 crores. The appellants were ordered to deposit 10% of the penalties within one month, failing which the appeals would be dismissed. The order of 'cease' and 'desist' was not stayed. All stay applications were disposed of accordingly, and the matter was posted for further hearing.
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2013 (5) TMI 962
Issues Involved:
1. Jurisdiction of the Competition Commission of India (CCI) over Hockey India (HI) and the International Hockey Federation (FIH).
2. Definition of the relevant market.
3. Assessment of dominance in the relevant market.
4. Allegations of abuse of dominance by HI and FIH.
5. Allegations of anti-competitive agreements under Section 3 of the Competition Act.
Summary:
1. Jurisdiction of the Competition Commission of India (CCI) over HI and FIH:
The CCI determined that both HI and FIH qualify as "enterprises" u/s 2(h) of the Competition Act, 2002, despite their non-profit status. The economic activities carried out by HI and FIH, such as granting franchisee rights, media rights, and sponsorship rights, involve revenue generation and thus fall within the scope of the Act. The CCI also asserted its extra-territorial jurisdiction u/s 32 over FIH, which is based outside India, as its activities have an appreciable adverse effect on competition in India.
2. Definition of the Relevant Market:
The CCI defined two relevant markets:
- The market for the organization of private professional hockey leagues in India.
- The market for services of hockey players.
The CCI disagreed with the informants' and DG's definitions, emphasizing that governing activities cannot be part of market definition but can be a source of dominance.
3. Assessment of Dominance in the Relevant Market:
The CCI concluded that HI is dominant in both relevant markets due to its regulatory powers, monopoly position in team selection, and control over players through the Code of Conduct (CoC) Agreement. HI's dominance is also supported by the pyramid structure of sports governance, which creates entry barriers for other leagues and organizers.
4. Allegations of Abuse of Dominance by HI and FIH:
The CCI examined allegations of abuse of dominance, including:
- Foreclosure of market to rival leagues through regulations on sanctioned and unsanctioned events.
- Restrictive conditions in the CoC Agreement, such as requiring players to obtain NOCs and prohibiting participation in unsanctioned events.
The CCI found that the regulations and CoC Agreement are inherent and proportionate to the objectives of sports governance and do not constitute abuse of dominance per se. However, the manner of application of these regulations raised concerns about potential anti-competitive practices.
5. Allegations of Anti-Competitive Agreements under Section 3 of the Competition Act:
The CCI found that the CoC Agreement between HI and players is a vertical agreement but does not cause an appreciable adverse effect on competition. The CCI also concluded that the decision of FIH and HI regarding sanctioned and unsanctioned events does not violate Section 3(3)(b) of the Act, as it does not constitute a horizontal agreement.
Order:
The CCI did not find any contravention of Sections 3(3)(b), 3(4), 4(2)(a), 4(2)(c), and 4(2)(e) of the Act. However, it highlighted the potential conflict of interest between HI's regulatory and commercial roles and recommended that HI put in place an effective internal control system to ensure fair and transparent issuance of NOCs and avoid using regulatory powers for commercial gain.
Separate Judgment by R. Prasad (Dissenting):
R. Prasad dissented, finding that HI and FIH had indeed abused their dominant position and violated Sections 4(2)(a)(i), 4(2)(c), and 4(2)(e) of the Act. He recommended modifications to the CoC Agreement and FIH's byelaws to remove restrictions on players participating in unsanctioned events and imposed a penalty on HI and FIH.
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2013 (5) TMI 681
Abuse of Dominant position - (Apple/Airtel/Vodafone) - distribution/ sales arrangement between Apple and Airtel/Vodafone - violation of Section 4 r.w.s. 3 of the Competition Act, 2002 - Price bundling strategy - secret exclusive contracts/agreements for sale of iPhone in India, even prior to its launch as a result of which an exclusive selling rights has been gained for undisclosed number of years - Informant has categorically claimed that the information is in regard to a particular variant of iPhone - 3G/3GS, manufactured by OP1, an American multinational corporation that designs and markets consumer electronics, computer software and personal computers - Held that:- As it is found that a consumer interested in buying an iPhone is tied to one of the two mobile networks i.e. Airtel or Vodafone. It is worth noting that at the time of launch of iPhone in India, Apple did not have an outlet to sell its iPhone, a high-end smartphone. Instead of investing money on creating sales and service outlet and incurring advertisement expenditure, Apple's strategy was to have tactical agreement with network operators, possibly the best partners for selling mobile handsets. This arrangement also helped Apple in gauging the public perception for iPhone before actually selling iPhone through its own retail stores. The mobile network companies who spent money on creating distribution channel and incurring advertisement expenditure wanted the iPhone to be locked-in for some period so that they would be able to recoup their investment over a period of time.
To assess the alleged anti-competitive effect of the tie-in arrangement between Apple and Airtel/Vodafone in line with Section 19(3), the Commission relying on the market share statistics of smartphones in India provided by the DG observed that Apple had a share of less than 6% in the market of smart phones during the period 2008-11. Furthermore, share of GSM subscribers using Apple iPhone to total GSM subscribers in India is miniscule (less than 0.1%). Similarly,data provided on mobile service provider, no operator has more than 35% market share in an otherwise competitive mobile network service market. As none of the impugned operators (OP3 / OP4) have market-share exceeding 30%, that smartphone market in India is less than a tenth of the entire handset market and that Apple iPhone has less than 3% share in the smartphone market in India, it is highly improbable that there would be an AAEC in the Indian market.
A consumer having a mobile handset (smartphone or otherwise) is free to exercise his choice for availing network services without any restrictions. Furthermore, the network operators do not require any particular handset to be purchased by the customer in order to avail its network services. Moreover, the lock-in arrangement of iPhone to a particular network was for only for a specific period and not perpetual, a fact known to prospective customer. It is difficult to construe consumer harm from the 'tie-in' arrangement between the opposite parties. The Commission observes that there is no restriction on consumers to use the network services of OP3 and OP4 to the extent that the network services can be availed on any mobile handset, even an unlocked iPhone purchased from abroad. Also, a consumer who has purchased a locked iPhone in India and paid the unlocking fees is free to choose the network operator of his choice.
Thus none of the OPs have a position of strength to affect the market outcome in terms of market foreclosure or deterring entry, creating entry barriers or driving any existing competitor out of the market and within the theoretical framework of tying arrangement, the anti-competitive concerns in terms of section 3(4) violations does not hold. On the other hand, Commission has reasons to believe that the distribution arrangement between the impugned parties helped create a market for iPhone in India wherein domestic consumers got an opportunity to purchase a contemporary handset which was otherwise available through the grey market.
Thus no evidence to show that entry-barriers have been created for new entrants in the markets i.e. smartphone market and mobile services market by any of the impugned parties. Similarly, nothing has been brought to the notice of the Commission to reveal that existing competitors have been driven out from the market or that the market itself has been foreclosed.
Under these circumstances Commission opines that there is no anti-competitive effect of the tie-in arrangement as alleged by the Informant or dominant position in their respective relevant market to establish violation of Section 4(2), (a), (b), (c), (d) and (e). No appreciable adverse effect on competition in the market of smart-phones and/or mobile service has been established, there is no contravention of Section 3 (4) of the Act. Accordingly, the case is ordered to be closed.
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2013 (5) TMI 296
Abuse of dominance – Determination of relevant market - Contravention of provisions of sections 3 and 4 of the Act - The informant pleaded the following three types of agreements were in contravention of the provisions of the Act: (a) Voluntary non-exclusive agreements entered into by the OP directly with Indian Pharmaceutical companies since 2006 for production and distribution of TDF and FTC medicines and their combinations. (b) Licence agreement of the OP with MPP which allowed MPP to have sub-licences with Indian pharmaceutical companies. (c) The sub-license tripartite agreement among the OP, MPP and the Indian pharmaceutical companies. (all three agreements collectively referred to as 'license agreements'.
Held that:- OP first entered into the voluntary license agreement LA-2006 with the Indian pharmaceutical companies and allowed them to manufacture and sell the drugs as per terms and conditions of the agreement. However, it was not clear whether LA-2006 was still effective or continued to have any continuing effect post 20.05.2009 as the substantive provisions of the Act came into force on this date, whereas LA-2006 was signed prior in time. Therefore, the agreement between the OP and the Indian pharmaceutical companies could not be examined for the agreement was entered into much prior to the enforcement of the provisions of the Act. The second agreement was between the OP and MPP i.e. LA-2011 which allowed MPP to sub-license the manufacture and sale of the drugs to Indian pharmaceutical companies. This agreement will not fall within the ambit of section 3(4) of the Act since MPP is nowhere in the production chain. The last agreement i.e. the tripartite agreement falls within the contours of section 3(4) of the Act vis-à-vis the OP and the Indian pharmaceutical companies who are placed in different stages of the production chain and therefore, appreciable adverse effect on competition needs to be examined keeping in view the factors in section 19(3) of the Act.
The explanation to section 4 of the Act defines dominant position to mean a position of strength enjoyed by an enterprise in the relevant market in India which enables it to operate independent of competitive forces prevailing in the relevant market or affect its competitors or consumers or the relevant market in its favour. On examining the dominant position of the OP, it was seen that the OP had no legal existence in India and did not engage in any business in India. Accordingly, the OP was not a dominant player in the relevant market in India and therefore, no abuse as envisaged under section 4 of the Act could exist. In the light of aforesaid discussion, the Commission finds that no prima facie case was made out against the opposite party u/s 3 or 4 of the Act for referring the matter to DG for investigation. It was a fit case for closure under section 26(2) of the Act.
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2013 (5) TMI 215
Application u/s 19(1)(b) of the Competition Act, 2002 – Manipulation of tender – Bid rigging - Formation of cartel - Tender notice of rail lines was floated by South Eastern Railway for procurement of Anti-Theft Elastic Rail Clips with Circlips from RDSO approved firms, 29 firms submitted offer. The rate quoted by most of the firms was @ 66.50 (all inclusive). The quantity quoted by each of the firms was far less than 50% of the total tender quantity. It is also alleged that the quoted rate was about 10% higher than the neighboring Railways' last purchase rate. Suspecting cartelization by the bidders in fixing the price and distributing the tender quantity of the materials amongst themselves, the instant reference has been filed by Principal Chief Engineer, South Eastern Railway.
Held that:- It may be noted that in the Instruction to Tenderer and General Conditions of Tender, it was provided that wherever all or most of the approved firms quote equal rates and cartel formation is suspected, Railways reserve the right to place order on one or more firms to the exclusion of the rest without assigning any reasons thereof. Further, it was provided therein that firms were expected to quote for a quantity not less than 50% of tendered quantity. Offers for less than 50% quantity were to be considered unresponsive and liable to be rejected in case cartel formation was suspected. In the result, the Commission is of the view that conduct of the opposite parties amounts to bid rigging within the meaning of the said expression as given in explanation to section 3(3) of the Act as the impugned agreement being an agreement between enterprises or persons engaged in identical or similar production or trading of goods or provision of services, had the effect of eliminating or reducing competition for bids/ adversely affecting or manipulating the process for bidding.
As regards penalty u/s 27 of the Act, the Commission notes that there are circumstances in this case which require the issue of penalty to be looked into somewhat differently. The facts as projected in the present reference reveal a complete lack of awareness by the opposite parties which are small and micro enterprises. Thus, right in the beginning the offers made by these parties were not in accordance with the requirement of the tender and hence they could not have got supplies as per the tender conditions. Moreover, the bid given by these parties was not the lowest and so they could not have been awarded the contract.
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2013 (5) TMI 169
Complaint made 19(1)(a) of the Competition Act, 2002 against Board for Control of Cricket in India (hereinafter "BCCI") - (i) Irregularities in the grant of franchise rights for team ownership. (ii) Irregularities in the grant of media rights for coverage of the league. (iii) Irregularities in the award of sponsorship rights and other local contracts related to organization of IPL. In addition to the issues as pointed out above, the Commission examined the dual role of BCCI for anti-competitive practices.
Held that - In line with the provisions of the Act, international jurisprudence, it is concluded that BCCI is an enterprise for the purpose of the Act, and therefore, within the jurisdiction of the Commission. The Commission finds BCCI guilty of contravention of Section 4(2)(c) of the Act. In view of the above and in exercise of powers under Section 27 of the Act, the Commission directs BCCI (i) to cease and desist from any practice in future denying market access to potential competitors, including inclusion of similar clauses in any agreement in future. (ii) to cease and desist from using its regulatory powers in any way in the process of considering and deciding on any matters relating to its commercial activities. To ensure this, BCCI will set up an effective internal control system to its own satisfaction, in good faith and after due diligence. (iii) To delete the violative clause 9.1(c)(i) in the Media Rights Agreement.
The Commission considers that the abuse by BCCI was of a grave nature and the quantum of penalty that needs to be levied should be commensurate with the gravity of the violation. The Commission has to keep in mind the nature of barriers created and whether such barriers can be surmounted by the competitors and the type of hindrances by the dominant enterprise against entry of competitors into the market. The Commission has also to keep in mind the economic power of enterprise, which is normally leveraged to create such barriers and the impact of these barriers on the consumers and on the other persons affected by such barriers. The Commission decides accordingly. The directions of the Commission must be complied within 90 days of receipt of this Order. The amount of penalty determined of Rs. 52.24 crore must also be deposited within a period of 90 days from the date of receipt of this Order.
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2013 (5) TMI 168
Anti-Competitive Agreement - The informant had produced a feature film by the title 'Vishwaroopam'. The informant as an innovative and pioneering step and to take advantage of exhibition of film via (DTH) platform, wanted to premiere the movie through DTH service providers. It is stated in the information that out of total number of theatres (1134) in Tamil Nadu, 698 theatres were members of the opposite party association. Resolution was passed by the opposite party not to lend co-operation for screening of any film that is released even before it comes to the theatre, through DTH or any other technology.'
Held that - The impugned resolution was an anti-competitive agreement amongst the theatre owners in Tamil Nadu since the resolution limited and controlled the market of exhibition of films and use of technical development in exhibition of feature films and in contravention of the provisions of section 3(1) read with section 3(3)(b) of the Act. The Commission, therefore, directs the DG under section 26(1) of the Act to cause an investigation to be made into the matter and submit the report to the Commission within 60 days.
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2013 (5) TMI 67
Complaint was filed by appellant under Sections 36-A, 36B, 36D and 37 of the MRTP Act. – compensation application - Appellant availed the services of respondent bank - said service was of sub-standard quality and that the respondents have adopted unfair and deceptive practices while rendering the same and had also coercively recovered Export Outstanding Charges ('XOS charges' in short) and it had neglected and failed to return original title deeds of the properties entrusted to the respondent bank as a collateral security in spite of having been fully paid all the debts given to the complainant.
It is to be seen that the complainant used to export garments through the Apparel Export Promotion Council and several export bills were sent to the foreign buyers through the bank for "collection only". In respect of these "collections only" export bills, the bank used to levy xos charge per outstanding bill per quarter. These charges were levied since these were required to be reported by the bank to RBI every quarter by way of 'XOS statements' get incentives/benefits on the export proceeds. In fact, it was only in August 1992 that the complainant had shifted its banking operation to Vysya Bank. However, packing credit limit was paid on 05.08.1993, but the outstanding in the account of the complainant on that date was ₹ 1,40,77,644/-. According to the complainant though the loan credit of the respondent bank was liquefied in 1993 and though the bank guarantee also expired on 30.10.1994, but the collaterals were not returned.
Held that - We have deliberately stated the facts above along with the dates of the correspondence which went on between the parties stretching maximum in favour of the complainant. We do not find any justification as to how the non-return of collaterals could be complained of only in 2007 when admittedly the collateral securities were refused for the first time in somewhere in the year 1993 and when the bank ultimately returned the collaterals in March 2001. As regards the non-refund of XOS charges, we have already found that the complainant has not shown any rule under which he was entitled to the refund, thus there is a complete justification on the part of the respondent bank not to return collaterals. There is no question of limitation as any action in that behalf could not be possible. In the result, we come to the conclusion that the complaint as well as Compensation Application under Section 12-B are not maintainable. They are dismissed.
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2013 (5) TMI 8
Unfair trade practice - Application is filed u/s 19(1)(a) of the Competition Act, 2002 – Franchisee agreement – territorial exclusivity to the informant for a period of 3 years. - As per information a dispute arose between the informant and the OP when the informant came to know that the OP had initiated process of setting up its own Company-Run and Company-Operated (COCO) Saloon in breach of the territorial exclusivity given under the agreement. The informant initiated arbitration proceedings against the OP. During pendency of the arbitration proceedings the OP terminated the franchisee agreement. The informant has alleged that the action of OP to set up COCO Saloon in contravention to the terms of the agreement was an unfair trade practice and an abuse of its dominant position under the Franchisee Agreement. Thus, as per the informant the acts and conduct of the OP were in contravention of the provisions of sections 3 and 4 of the Act.
Held that – It is necessary to consider as to what will be the relevant market in this case and in this case would be the market of beauty and wellness services exclusive for women through saloon in the territory of Gurgaon as well as Delhi. The next issue to be considered is about dominance of OP in the relevant market. There are very few corporations in this market and these corporations cater to the need of only small category of customers and their presence is only by way of few saloons. One can find beauty saloons/parlours almost in every street/mohalla of Delhi. Some examples of such saloons and parlours running in Delhi and Gurgoan are Trends Beauty Point, Cure & Curve, Radiance, Shreyas Shanhnaz Husian Signature Salon etc. Many of these beauty saloons are one person show and many have employed several women beauticians to cater to the needs of their clients. Thus the question of abuse of dominance by Lakme would not arise. In view of the above discussion, there does not exist a prima facie case for investigation by the Commission. It is a fit case for closure under section 26(2) and is hereby closed.
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