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TMI Blog2018 (11) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... arket therefor and has also limited the technical/ scientific development relating to Servers in the market in violation of Section 4 (2) (b) of the Act. The DG is directed to cause an investigation into the matter to ascertain whether the OP has abused its dominant position in contravention of the provisions of Section 4 of the Act by denying to the Informant access to its reference design files for Server-Boards and/ or simulation files for the same, in a discriminatory manner, not at par with the ODMs/ OEMs, without any reasonable justification for the same. - Case No. 16 of 2018 - - - Dated:- 9-11-2018 - Mr. Sudhir Mital, Chairperson, Mr. Augustine Peter, Member And Mr. U. C. Nahta, Member For The Velankani Electronics Private Limited : Ms. Smita Singh, Advocate alongwith Ms. Anju Prakash, Company Secretary, Mr. Zayed Sayed and Mr. Vinymol, Senior Design Engineers, and Mr. H. Nagraj, Financial Controller For The For Intel Corporation : Mr. Rajshekhar Rao, Ms. Kalyani Singh and Mr. Sarthak Pande, Advocates alongwith Ms. Evangelina Alhiratearena, Vice-President (Law and Policy), Ms. Puja Malhotra, Senior Counsel (Law and Policy) and Mr. Baskar Dhandapani, Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. Purchasing the Server-Board from competitors would unduly inflate the cost of the Informant s final product Server and deprive its product of any market access. Hence, in such a scenario, for the Informant to access the Server market, it is imperative that the Informant designs and manufactures its own Server-Boards. 4. The other important sub-assembly of the Server is stated by the Informant to be the Processor . Processor for Server is stated to be a distinct product in itself which cannot be inter-changed or substituted by any other product. The Informant has stated that it cannot manufacture the Processor itself because it is not easily reproducible at a reasonable cost in the short-term. As a result, it has to purchase the Processor for its Server from the market only. 5. As per the Informant, the OP is a dominant player in the relevant market of Processors for Servers in India as well as globally. For manufacturing a Server, the Processors of the OP are essential standard. Relying upon reports like Intel s Annual Report 2017, information available on Intel s website and reports compiled by the International Data Corporation ( IDC ) , the Informant has alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provide the relevant reference design files to the Informant. The reason given for such refusal was that the Informant did not have sufficient technical and sales scope and expertise . However, no reason for arriving at such a conclusion was given by the OP. The OP rather stated that the choice with whom to do business is a legitimate business decision and the OP has the discretion to decide upon the same. As per the Informant, during the intervening 10 months, at no point of time the OP demanded the Informant to meet any threshold as to resources, etc. or fulfil any relevant criteria as to technical expertise, etc. The OP never disclosed the terms on which it proposed to provide the reference designs to the Informant. The Informant has also stated that the OP has been sharing/ furnishing the complete reference design files with the Informant s competitors in the Server market such as Dell, HPE, etc. ( Original Design Manufacturers/ Original Equipment Manufacturers or ODMs/ OEMs ) thus, enabling them to manufacture their own Server-Boards, but not with the Informant. This, as per the Informant, has placed it in a disadvantageous position in the Server market. 8. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essfully prevented and precluded the Informant from designing/ manufacturing its own Server-Boards. Such conduct of the OP amounts to violation of Section 4 (2) (c) of the Act. The OP is also guilty of limiting and restricting the production of Servers and the market therefor and also limiting the technical/ scientific development relating to Servers in violation of Section 4 (2) (b) of the Act. It is also alleged that the OP is abusing its dominant position in the market for Processor for Servers to protect its market of Servers in violation of Section 4 (2) (e) of the Act. 12. In reply to the above information, the OP filed its preliminary response on 11.07.2018. Thereafter, a preliminary conference was held with the parties on 12.07.2018 wherein detailed arguments from both sides were made. The Informant also filed a brief synopsis of its case. The OP, through a prototype of the Server-Board and the Micro-Processor displayed before the Commission as a demo, explained in detail the concept of designing of a Server- Board. Subsequently, the Informant also filed written submissions alongwith certain additional documents and a compilation of citations on 25.07.2018. Both the Info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts to abuse of dominant position by the OP. Being a dominant player, the OP was duty bound to provide such files to the Informant in a nondiscriminatory manner. The Informant also stresses upon the fact that the option to get reference design files from other Micro-Processor manufacturers like IBM or ARM to design Server-Boards is not available to it as even if the Informant designs its Server-Boards compatible with such other Micro-Processors, not many people will buy the final product (Server) of the Informant as most consumers prefer Servers with Intel Processors only. 17. Per contra, the OP has argued that the market for Processors for Server cannot be the relevant market in the instant case as the allegations contained in the information are not visa- vis Micro-Processors but in the context of Server-Boards. The two are completely distinct products and the Informant has alleged that it has been denied access by the OP to the reference designs for Server-Boards. The OP contended that the market for Micro- Processors for Servers is wholly irrelevant in the instant case and that the relevant product market should be the market for Server-Boards or in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmant. Relevant market in this case is the market in which the conduct actually took place and not the market in which the eventual effect may be caused. Thus, the relevant product market in the instant case would be market for Processors for Servers . Further, as per the Explanation to Section 4 of the Act, dominant position means a position of strength, enjoyed by an enterprise, in the relevant market, in India . Therefore, as per the scheme of the Act, the dominant position of an enterprise and abuse thereof, is required to be assessed in India and not globally. Therefore, the relevant geographic market in the instant case would be India . 22. In the relevant market of Processors for Servers in India , admittedly, the OP is in a dominant position. The Commission also takes note of the fact that in the previous decision of the Commission in ESYS Information Technologies Private Limited (supra) relied upon by the Informant, the Commission has concluded that the OP was dominant in the market of Micro-Processors for Servers in India. 23. Once the OP is prima facie found to be dominant in the relevant market of Processors for Servers in India delineated by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... design files, the Informant has alleged that though the OP has uploaded certain reference design files of Buchanan Pass , and Wolf Pass on its Purley Platform, the OP has not furnished any reference design files pertaining to Silver Pass and Sawtooth Pass to the Informant. 26. On the other hand, the OP has stated that upon demand of the Informant, the OP, in order to provide the Informant access to its reference designs and other collateral, has provided the Informant access to its Intel Business Link ( IBL ) online portal. Annexure 9 of the information which lists the files to which the Informant is seeking access are for products named Buchanan Pass , Wolf Pass , Silver Pass and Sawtooth Pass . These products operate on a Purley Platform which is a Server Platform. A Server Platform is a family of Micro-Processors as well as related chip sets and interfaces (buses). Purley Platform of the OP is one such Platform, released in July 2017. Through IBL, the Informant has available to it a wide variety of collateral, including reference designs for Server-Boards. Collateral for Purley Platform are hence, accessible to the Informant which is the same access provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnical capabilities of the customers, such reference designs provided are sufficient to design Server-Boards for the Purley Platform. 29. The Commission is of the view that though the Informant avers that access to the whole set of reference design files for Buchanan Pass , Wolf Pass , Silver Pass and Sawtooth Pass has not been provided to it by the OP as is given to the other ODMs/ OEMs, the OP has consistently maintained that access to all the reference design files for these products has been given to the Informant like it is given to all the other ODMs/ OEMs of Servers. From the categorical submission of the OP on oath in its undertaking that the reference designs for Buchanan Pass and Wolf Pass have already been provided to the Informant as are provided to the other customers of the OP and that no reference designs for Silver Pass and Sawtooth Pass exist, the Commission is of the view that there is no denial of reference design files as being sought by the Informant on part of the OP. 30. With respect to simulation files, the Informant has argued that even in respect of the files made available of Buchanan Pass and Wolf Pass , the same do not include the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass reference design files, etc . The Informant even placed on record opinions from industry experts like Wurth Electronics and Mentor Graphics stating that IBIS files are critical and SPICE files made available are not capable of performing the desired simulation function. Though the Informant has requested the OP multiple times to provide the IBIS files, the OP has not provided the same. Rather in its e-mail dated 22.02.2018, the OP has communicated to the Informant that IBIS files are made available to tier one customers only. As per the Informant, such refusal on the part of the OP hence amounts to abuse of dominant position by it. 32. Further, as per the Informant, though the OP has argued during the preliminary conference that SPICE files are the later/ advanced versions which include the function of IBIS files, however, the same is not true. IBIS files/ models were introduced much later in 1993 and are much more advanced than SPICE which was introduced in 1973. IBIS files contain more specific information and are based on advanced standards. Further, the same are admittedly provided by the OP to its tier one customers. It is not the case of the OP that providing access t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months after the SPICE model files, the Informant has been unable to prove that SPICE files do not perform the simulation function fully and accurately. The date of launch does not matter. Rather, the emails dated 16.07.2018 and 18.01.2018 placed on record by the Informant between the Informant and third parties clearly show the lack of resources and expertise on part of the services provider. Repeated requests for IBIS files have only been made by the Informant because it is unable to use the SPICE files provided by the OP. The e-mails themselves show that IBIS files are only an alternate to the SPICE files provided by the OP. Hence, it is the Informant who lacks the necessary ability and expertise to be able to use the resources made available by the OP through IBL. 35. Regarding the contention of the Informant that certain files though are visible on IBL, cannot be accessed by the Informant, the OP has stated that such files may be those which are customised or bespoke Server-Board reference files developed by the OP on the special request of any customer to be used only with that customer s own design. Such customised files cannot be provided to the Informant nor can the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion is not restricted to the facts stated in the information. The proceedings before the Commission are not in personam in the nature of a private lis between two parties but are rather proceedings in rem affecting an entire market. Hence, the Commission may even take notice of further facts not stated in the first information while forming a prima facie opinion. 39. Next, the Commission notes that the OP has not disputed the claim of the Informant of not being provided with the IBIS files as such but rather only repeatedly stated that the Informant does not need IBIS files for simulation as it has been provided with SPICE files, which can be used as an alternative. However, clearly, access to IBIS simulation files has been given by the OP to at least one ODM/ OEM which is evident from the e-mail dated 22.02.2018 written by the OP to the Informant. Further, it is seen from the record that IBIS files/ models have been introduced much later in 1993 and are much more advanced than SPICE which were introduced in 1973. As per the Informant, IBIS files contain more specific information and are based on advanced standards. Even the OP concedes to the fact that interfaces mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... least files. It has never been the case of the Informant that there has been complete denial of files by the OP to it; rather what the Informant complains is that access to all the files (the complete set) has not been given to it. Thus, the OP has clearly not given access to the Informant to at least important files. Hence, prima facie , it cannot be said that access to all necessary files/ documents/ information has been provided by the OP to the Informant, without any discrimination and at par with the other ODMs/ OEMs, which would enable the Informant to design/ develop and manufacture its own Server-Boards which are compatible with the Micro-Processors designed and manufactured by the OP, at this stage. In the absence of any cogent explanation from the OP as to why IBIS files cannot be provided to the Informant or any clarity on whether all SPICE files have been provided by the OP to the Informant, the Commission is of the view that such facts can only be determined by the Commission after a comprehensive investigation into the matter by the Director General ( DG ) of the Commission. 42. The OP has made a submission that it is not the only source of reference designs avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ODMs/ OEMs have with it for getting access to all the requisite files. However, the only reason given by the OP for not treating the Informant at par with the ODMs/ OEMs is the alleged lack of financial and human resources and technical expertise with the Informant. From the e-mail communications annexed with the information by the Informant, the Commission notes that only in one e-mail dated 05.03.2018, the OP has communicated to the Informant that it will be able to share the design files only after execution of an SLA. However, no further details on what kind of SLA needs to be executed or how can the same be executed have been provided to the Informant. 45. Further, after almost 10 months of to and fro e-mails, only vide one letter dated 04.05.2018, the OP refused to provide the relevant reference designs to the Informant stating lack of sufficient technical and sales scope and expertise . The Informant has stated that at no point of time prior to such letter, any such capacity/ capability requirement was told to the Informant for designing a Server-Board. The Informant has employed more than 30 people who are well qualified designers and the Informant has no dear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f dominant position on part of the OP. Even till date, the OP has not informed to it the threshold or the conditions required to be met in terms of financial resources, human resources or expertise, for getting access to all requisite files necessary for designing a Server-Board. 48. The Commission notes from the case record that the OP did not specify any threshold set by it or the industry which the Informant was required to meet either in monetary terms or the number of personnel, etc. The OP only generally stated that there is a huge difference between the capacities of the Informant and the ODMs/ OEMs who design their own Server- Boards. Such designing is a time taking process and in its opinion, the Informant wanting to enter into the same is a fishing expedition on part of the Informant. The Commission is of the opinion that unless the OP has to undertake some special efforts or incur any costs or risks to provide the requisite files for designing to the Informant, it cannot decline to provide the same only because it does not think that the Informant is capable enough to do such designing work. 49. The only thing in which the OP may have to incur costs is provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Sawtooth Pass ) also, anyhow, all necessary reference designs have been provided by the OP to the Informant through Purley Platform. It is the Informant who is unable to understand the same. The OP has discharged its existing legal relationship under the existing contract with the Informant to the fullest and even more than that, but if the Informant wants such support from the OP, it should have entered into a design agreement with the OP. The OP has not denied to the Informant anything that was required to be given by the OP under law. 51. On the other hand, as per the Informant, there is nothing wrong for a young company to want to enter into designing. Nowhere has the Informant asked the OP to provide to it any support in the form of Intel engineers; the only support the Informant seeks is access to requisite files like is provided to the other ODMs/ OEMs and necessary clarifications upon the same. The OP s belief that the Informant is not only seeking access to the reference design files but also seeking Intel s support services involving considerable costs is grossly incorrect. In none of the communications made by the Informant to the OP, it has sought the OP s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, in reply thereto, rather than providing such clarifications, the Informant reiterated its earlier demands made in the letter dated 20.03.2018, which was a complete reversal from what it had stated in the MEITY meeting. Even the Ministry has not found any fault with the OP s conduct. From the consequent e-mail trail post the MEITY meeting, the Commission notes that such contention of the OP is not acceptable as though the Informant requested at least twice for the No-Objection, the OP failed to provide the same but rather only deferred the matter. 55. Another contention raised by the OP is that under the Manufacturing Enablement Agreement, the Informant is already making Servers and selling in the market which is evident from the Informant s website which lists out five Intel based Servers under its brand name Prysm , and hence, it is already present in the market for Servers. In such circumstances, there can be no question of any denial to it to the Server market on part of the OP. The Commission is of the opinion that assembling Servers under the brand name of Intel is not the same as designing and manufacturing own Servers under own name. 56. The OP has also argued ..... X X X X Extracts X X X X X X X X Extracts X X X X
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