2017 (9) TMI 196 - AT - Companies Law

Dominant position - abuse of power - case of contravention - allegation of unfair and anti-competitive activities - Held that - Once the Commission came to a definite conclusion that the person holding dominant position has not abused its power and/or activities and its activities are not unfair and anti-competitive, in absence of any specific evidence and finding, the Commission has no jurisdiction to issue any direction. for the alleged prima facie case of contravention. If the Flexi Rate Scheme and classification of routes and monopoly and non- monopoly destination point has not been held to be operative, the Commission has no authority to express its view as to what the State Government is required to do in the larger public interest. In absence of such power vested with the Commission, we have no other option but to set aside the last part of the order and observation as made in paragraph 20, as quoted above. Thereby, the direction, as given in paragraph 20 of the impugned order is set aside, rest part of the order dated 27th February, 2017 is affirmed. The order passed by the Commission stand modified to the extent above.

Issues:
1. Appeal against order passed by Competition Commission of India under the Competition Act, 2002.
2. Allegation of abuse of dominant position by Karnataka State Road Transport Corporation.
3. Allegation of unfair practices related to route monopolies and fare schemes.
4. Commission's findings on dominant position and anti-competitive activities.
5. Commission's direction for the Government of Karnataka to review certain schemes.
6. Appellant's challenge to Commission's jurisdiction to issue directions.

Analysis:

1. The appeal was filed by Karnataka State Road Transport Corporation against the Competition Commission of India's order under the Competition Act, 2002. The Commission found the appellant to be in a dominant position but did not find any abuse of that position, issuing certain orders and directions.

2. The case involved allegations by Sree Gajanana Motor Transport Company Limited against the Karnataka State Road Transport Corporation and North West Karnataka Road Transport Corporation. The informant claimed that the appellants were abusing their dominant position by restricting private bus operators on certain monopoly routes, along with implementing a 'Flexi Rate' Scheme to undercut competition.

3. The Competition Commission analyzed the situation and concluded that the Karnataka State Road Transport Corporation was dominant in the relevant market, while the North West State Road Transport Corporation was not. The Commission found no violation of Section 4 of the Act regarding fare charges and monopoly routes, stating that the allegations lacked a sound business rationale.

4. The Commission dismissed the allegations of unfair practices related to route monopolies and fare schemes, stating that the conduct of the Karnataka State Road Transport Corporation in restricting private bus operators on certain routes was not anti-competitive. The Commission issued a direction for the Government of Karnataka to review the schemes in the larger public interest.

5. Upon review, the appellate tribunal agreed with the Commission's findings on the dominant position and absence of unfair activities by the appellant. However, the tribunal held that the Commission exceeded its jurisdiction by issuing directions without specific evidence of contravention. The tribunal set aside the direction for the Government of Karnataka to review the schemes but affirmed the rest of the Commission's order.

6. The appeal was disposed of with modifications, where the direction for the Government of Karnataka was set aside, and the rest of the Commission's order was upheld. The tribunal found no reason to award costs in the circumstances of the case.

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