2018 (8) TMI 180 - AT - Indian Laws

Contravention of Competition Act - direction to Opposite Parties to cease and desist from indulging in such activity - contravention of Section 3(3)(a) & (b) of the Competition Act, 2002 - alleged price increase - Held that - The Commission not only looked into Sate-wise Market but also Region-wise Market and range of percentage change in prices between 2007-2011. The Commission has noticed the Range of Percentage change of different years for the months of October over September (2007-2011) for Central, Northern and Eastern States . The Commission also highlighting the unprecedented trend for the percentage increase in the prices in all the five regions namely- Central Region, Northern Region, Eastern Region, Western Region and Southern Region - It is clear that the Commission while dealing with the market dealt with the relevant market i.e. all regional markets of Cement, which are the relevant geographical market i.e. relevant product market of Cement. Penalty - Held that - The Commission has imposed mere minimum penalty, no interference is called for against the same. Appeal dismissed - decided against appellant.

Issues Involved:
1. Allegation of anti-competitive agreement and cartelization by Cement Manufacturers.
2. Examination of evidence and data to establish the existence of an agreement.
3. Analysis of price parallelism and production trends.
4. Role and activities of Cement Manufacturers Association (CMA).
5. Determination of relevant market.
6. Imposition of penalties and cease and desist orders.

Analysis:

Allegation of Anti-Competitive Agreement and Cartelization:
The Builders Association of India filed information under Section 19(1)(a) of the Competition Act, 2002, alleging anti-competitive agreement against the Cement Manufacturers Association (CMA) and 11 Cement Manufacturing Companies. The Competition Commission of India (CCI) initially found the parties in contravention of Section 3(3)(a) & (b) of the Act, imposed penalties, and directed them to cease and desist from such activities.

Examination of Evidence and Data:
The appellants argued that the CCI failed to establish an "agreement" to cartelize among the cement companies as required under Section 3 of the Competition Act, 2002. They contended that there was no direct or indirect evidence of an agreement to cartelize and that the CCI did not produce sufficient evidence to exclude the possibility that parties acted under normal market conditions.

Analysis of Price Parallelism and Production Trends:
The appellants contended that the CCI's analysis of price parallelism was flawed due to inconsistent data and failure to account for market transparency, seasonality, and other factors. They argued that price parallelism alone cannot determine a cartel and that the CCI did not carry out any analysis to dispel the existence of any alternate plausible explanation but for cartelization.

Role and Activities of CMA:
The CMA was accused of providing a platform for the cement companies to share sensitive information and coordinate their activities. The appellants argued that CMA's collection of data was at the behest of the Ministry of Commerce and Industry and that such collection was not anti-competitive unless shared with or disseminated to the cement companies.

Determination of Relevant Market:
The appellants argued that the CCI failed to define the relevant market, which is necessary to determine the anti-competitive effects of the alleged conduct. The CCI, however, considered the relevant geographic and product markets while analyzing the competitive constraints faced by the undertakings involved.

Imposition of Penalties and Cease and Desist Orders:
The CCI imposed penalties and directed the parties to cease and desist from indulging in any activity relating to agreement, understanding, or arrangement on prices, production, and supply of cement. The penalties were challenged on the ground that only certain deficiencies were detected for specific periods.

Conclusion:
The National Company Law Appellate Tribunal (NCLAT) upheld the CCI's findings and dismissed the appeals. The Tribunal concluded that there was sufficient evidence to establish an agreement among the cement companies to fix prices and control production and supply, in violation of Section 3(3)(a) and (b) of the Competition Act, 2002. The Tribunal also found that the CCI had considered the relevant market and imposed minimum penalties, which were appropriate given the circumstances.

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