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2020 (3) TMI 1483 - AT - Law of Competition


1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the National Company Law Appellate Tribunal (NCLAT) in this judgment include:

  • Whether the proposed combination between Walmart and Flipkart would result in an appreciable adverse effect on competition (AAEC) within the relevant market in India.
  • Whether the appellant, Confederation of All India Traders, has the locus standi to challenge the Competition Commission of India's (CCI) order approving the combination.
  • Whether the procedural requirements under Sections 29 and 30 of the Competition Act, 2002, were necessary for the CCI to follow in this case.
  • Whether the alleged practices of Flipkart, such as preferential treatment of certain sellers, constitute anti-competitive conduct.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Potential Anti-Competitive Effects of the Combination

  • Relevant Legal Framework and Precedents: The combination is governed by Section 6 of the Competition Act, 2002, which prohibits combinations that cause or are likely to cause an AAEC within the relevant market in India.
  • Court's Interpretation and Reasoning: The Tribunal noted that the CCI's role is to assess whether a proposed combination would adversely affect competition, distinct from prohibiting anti-competitive agreements or abuse of dominance.
  • Key Evidence and Findings: The CCI found that Walmart and Flipkart's combined market share in the B2B segment was less than 5%, indicating no significant overlap or competition concerns.
  • Application of Law to Facts: The Tribunal agreed with the CCI's assessment that the combination would not eliminate any major player in the relevant market and would enhance the financial strength of Flipkart's platform.
  • Treatment of Competing Arguments: The appellant's concerns about market foreclosure and preferential treatment were addressed, but the Tribunal found no evidence of AAEC.
  • Conclusions: The Tribunal concluded that the proposed combination does not result in AAEC and upheld the CCI's approval.

Issue 2: Locus Standi of the Appellant

  • Relevant Legal Framework and Precedents: The right to appeal under the Competition Act is available to parties aggrieved by a CCI order.
  • Court's Interpretation and Reasoning: The Tribunal noted that the appellant failed to demonstrate how it was aggrieved by the CCI's order.
  • Key Evidence and Findings: The appellant's argument centered on the lack of an oral hearing, which the Tribunal found unnecessary for third parties in merger reviews.
  • Application of Law to Facts: The Tribunal determined that the appellant had no locus standi as it was not directly affected by the CCI's decision.
  • Treatment of Competing Arguments: The Tribunal dismissed the appellant's procedural fairness arguments, noting that written submissions to the CCI were sufficient.
  • Conclusions: The Tribunal held that the appellant lacked the standing to challenge the CCI's order.

Issue 3: Procedural Requirements under Sections 29 and 30

  • Relevant Legal Framework and Precedents: Sections 29 and 30 outline procedures for investigating combinations that may cause AAEC.
  • Court's Interpretation and Reasoning: The Tribunal referenced its decision in the Piyush Joshi case, where it held that these procedures are unnecessary if no prima facie case of AAEC is found.
  • Key Evidence and Findings: The CCI did not find a prima facie case of AAEC, thus bypassing the need for Sections 29 and 30 procedures.
  • Application of Law to Facts: The Tribunal found no procedural error in the CCI's handling of the notice and approval process.
  • Treatment of Competing Arguments: The appellant's procedural objections were dismissed as the CCI followed the correct legal framework.
  • Conclusions: The Tribunal upheld the CCI's process as compliant with the Act.

Issue 4: Alleged Anti-Competitive Practices by Flipkart

  • Relevant Legal Framework and Precedents: Allegations of anti-competitive conduct are distinct from merger review and require separate investigation.
  • Court's Interpretation and Reasoning: The Tribunal noted that the appeal did not include Flipkart as a party, limiting its ability to address these allegations.
  • Key Evidence and Findings: The Tribunal found no direct evidence linking the combination to anti-competitive practices by Flipkart.
  • Application of Law to Facts: The Tribunal emphasized the need for separate proceedings to address conduct-related issues.
  • Treatment of Competing Arguments: The Tribunal acknowledged the appellant's concerns but found them irrelevant to the combination's approval.
  • Conclusions: The Tribunal dismissed the appeal, noting the lack of evidence and procedural shortcomings.

3. SIGNIFICANT HOLDINGS

  • Preserve verbatim quotes of crucial legal reasoning: "In absence of any prime facie opinion framed, that the combination is likely to cause or has caused appreciable adverse effect on the competition within the relevant market in India, the Commission is not required to follow the procedure under Section 29 and Section 30 of the Act."
  • Core principles established: The distinction between merger review and conduct-related investigations; the need for prima facie evidence of AAEC to trigger detailed procedural requirements.
  • Final determinations on each issue: The Tribunal upheld the CCI's approval of the combination, dismissed the appellant's challenge due to lack of standing and evidence, and emphasized the separate nature of conduct-related allegations.

 

 

 

 

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