Competition Law Alert
July 2012
ORDERS By COMPETITION COMMISSION OF INDIA
A.
Anti-Competitive Agreements
Synopsis
of the legal provisions
Section 3 of the Competition Act, 2002 (“Act”) prohibits an enterprise or
association of enterprises or persons to enter into agreements in respect of
production, supply, distribution, storage, acquisition or control of goods or
provision of services, which causes or is likely to cause appreciable adverse
effect on competition in India.
Following kinds of
agreements between enterprises, persons or association of persons or
enterprises, or practices or decisions taken by association of persons or
enterprises, including cartels, engaged in similar or identical trade
of goods or provision of services is presumed to have appreciable adverse
effect on competition:
a) Agreements or decisions that directly or indirectly
determine purchase or sale price.
b) Agreements that limit or control production, supply,
market, technical development, investment or provision of services.
c) Agreements to share market or source of production
or provision of services by way of allocation of geographical area of market or
type of goods or services, or number of customers in the market or any other
similar way.
d) Agreements that, directly or indirectly, result in
bid-rigging or collusive bidding.
However, agreements
entered into by way of joint ventures are excluded from above restriction if
such agreements increase the efficiency in production, supply, distribution,
acquisition, or control of goods or provision of services.
Under the Act, ‘cartel includes an association of producers,
sellers, distributors, traders, or service providers who, by agreement amongst
themselves, limit control or attempt to control the production, distribution,
sale or price of, or trade in goods, or provision of services’.
Further, under section
19(3) of the Act, following factors are to be considered by Competition Commission of India (“CCI”) in determining whether an agreement
has appreciable adverse effect on competition:
a) Creation of barriers to new entrants in the market.
b) Driving existing competitors out of the market.
c) Foreclosure of competition by hindering entry into
the market.
d) Accrual of benefits to consumers.
e) Improvement in production or distribution of goods
or provision of services.
f)
Promotion of
technical, scientific and economic development by means of production or
distribution of goods or provision of services.
B.
Abuse of Dominant Position
Synopsis of legal provisions
Section 4 of
the Act prohibits any enterprise or group to abuse its dominant position. ‘Dominant
position’ has been defined to mean ‘a
position of strength enjoyed by an enterprise, in the relevant market, in
India, which enables it to –
(i)
operate independently of competitive forces
prevailing in the relevant market; or
(ii)
affect its competitors or consumers or the relevant
market in its favor’.
In light of the above
provisions, we produce the summary of CCI’s orders passed in the month of July,
2012:
1.
Automobiles
Dealers Association v. Global Automobiles Limited &
others, decided on July 3, 2012
Background Facts and
Allegations
·
The case was
initiated upon information received from Automobile Dealers Association (“Informant
Association”) under section 19 (1)(a) of the Act against Global Automobiles
Limited (“GAL”) and Pooja Expo India Private Limited (“PEIPL”)
for alleged contravention of section 3 and section 4 of the Act. GAL is engaged
in the business of manufacturing, marketing and sale of two wheelers. PEIPL is
carrying and forwarding agent of GAL for the state of Haryana and Uttar
Pradesh.
·
GAL floated
an advertisement in the open market to appoint dealers for marketing and
selling of the two wheelers manufactured by it. Following the advertisement,
members of the Informant Association were appointed as dealers of GAL for
marketing and selling of two wheelers. Subsequently a Letter of Intent (“LOI”)
was signed between GAL and each of the dealers across the country.
·
It was
alleged by the Informant Association that the conditions of LOI were one sided
and heavily loaded in favor of the GAL. LOI included anti-competitive clauses
and did not result in accrual of benefits to the dealers. Members of the
Informant Association were not allowed to accept any other two wheeler agency
or dealership of any other automobile company without written approval of GAL.
The Informant Association alleged that given to these features, the LOI was in
the nature of exclusive supply agreement, which was in violation of section 3
of the Act. Further, it was alleged that GAL who enjoys dominant position was
not allowing members of the Informant Association to carry on business in a
suitable manner and therefore were affecting competition in the market.
·
After LOI was
signed between members of Informant Association and GAL, GAL on its own and
without informing Informant Association introduced PEIPL and few other
companies, as the carrying and forwarding agent of GAL. Members of the
Informant Association were informed to take stock, pay for it and deal directly
with such carrying and forwarding companies. But, when the dealers approached
their respective carrying and forwarding company, they were told that GAL had
not given such instructions to them.
Rulings
Appreciable
Adverse Effect on Competition
·
CCI declined
to agree that the agreement between GAL and its dealers causes or is likely to
cause appreciable adverse effect on competition in the market of two wheelers
in India.
·
CCI analyzed
all the factors mentioned under section 19(3) of the Act to determine
appreciable adverse effect on competition and observed that normally the
competition in the different level of production supply chain may possibly be
adversely effected when both entities to the agreement possess some market
power in their respective spheres of market. In the present case, both the
parties to the agreement had insignificant presence in the market where they
are operating and are fringe players. GAL had merely 50 dealers across the
country and less than 1% shares in terms of volume of sale, so GAL can hardly
be held to be in a position to create any entry barrier or foreclose the
competition in the market.
Abuse
of Dominant Position
·
CCI did not find
GAL to be in a dominant position, CCI held that the question of abuse of its
dominance did not arise.
·
Accordingly, CCI
came to the conclusion that there was no violation of the provisions of either
section 3 or section 4 of the Act.
2.
In re:
Alleged Cartelization by Cement Companies, decided on July 30, 2012
Background Facts
and Allegations
·
The case was received on transfer from
the office of the DG (IR), Monopolies and Restrictive Trade Practices
Commission (“MRTP Commission”) under section 66(6) of the Act. The MRTP
Commission had taken suo moto cognizance and initiated investigation on
the basis of press reports published in the business daily, the Economic Times
on May 09, 2006 and June 29, 2006 regarding increase in cement prices.
Subsequently, a letter dated September 16, 2006 of the Builders’ Association of
India (“BAI”) was also received by MRTP Commission through Ministry of
Company Affairs on September 26, 2006.
·
It was alleged that the cement prices
were stable at the rate of Rs. 125 to Rs. 145 per bag between 2003 and 2005,
but the prices started upward movement in December 2005 and were floating
around Rs. 210 to Rs. 230 per bag from January 2006 onward without any
corresponding increase in the input cost or demand-supply mismatch warranting
such abnormal increase. It was also alleged that the cement manufacturing
companies had resorted to unfair trade practices by under producing and choking
up supply in the market, thereby raising the sale price.
·
Separate information was also filed by
BAI bearing Case No. 29 of 2010 under section 19(1) of the Act against 11
cement companies and Cement Manufacturers Association (“CMA”) with
similar allegations. CCI had already passed an order dated June 20, 2012 under
section 27 of the Act (“June Order”) holding that the cement companies
named in that case are parties to a cartel in violation of section 3 of the
Act. By this order, CCI disposed of the present matter received on transfer
from the MRTP Commission against various cement companies including M/s Shree
Cement Limited (“Shree Cement”).
Rulings
Jurisdiction
·
Negating the contention of Shree Cement
that CCI does not have the jurisdiction to entertain cases filed under MRTP
Act, 1969, CCI noted that in cases where the alleged anti-competitive conduct
was started before coming into force of section 3 and 4 but continued even
after the enforcement of section 3 and 4 of the Act, CCI has the jurisdiction
to look into such conduct.
·
It was also contended by Shree Cement that
as the allegations in the present matter pertained to year 2005 and 2006, the
case ought to have been examined under the MRTP Act and the Act cannot be
applied retrospectively. Further, as the matter was being investigated by DG
(IR), MRTP Commission before being transferred to CCI, the rights, liabilities
and obligations accrued to the parties under repealed MRTP Act, 1969 were
preserved and protected by virtue of section 66(1A) of the Act. Rejecting the
foregoing contention, CCI observed that the DG (IR), MRTP Commission undertook
the preliminary investigation which was still pending when the MRTP Act, 1969
was repealed vide ordinance dated October 14, 2009. As the investigation
had not culminated into a case, the matter was rightly transferred to CCI by DG
(IR) invoking the provisions of section 66(6) of the Act as the allegations
involved were related to restrictive trade practices. Referring to section
66(6) of the Act, CCI observed that even plain reading of section 66(6) of the
Act will clearly demonstrate that on receiving the matter where investigation
was pending, CCI may order for conduct of the investigation in the manner as it
deems fit. CCI is empowered under section 26 of the Act to treat the complaint
as information under the Act. MRTP Commission was still at the stage of
preliminary investigation and no right, liability, privilege or obligation can
be said to have been accrued to any party. CCI further noted that it has not
been conferred with any power to adjudicate any matter invoking the provisions
of the repealed MRTP Act, 1969.
Common
Investigation report of DG, CCI
·
Shree Cement contended that it was not
made a party by BAI in Case No. 29 of 2010. Hence, a common investigation
report in both the cases is inappropriate and deserves to be rejected. CCI
noted that Director General (“DG”) submitted separate reports in both
the cases. As in both the cases, the parties were common and issues involved
were also similar in nature, the reports in both the cases were bound to be
similar. CCI held that as the proceedings before CCI is inquisitorial in nature,
the DG or CCI were not required to confine the scope of investigation or
inquiry, only to the parties whose name figures in the allegations.
Abuse
of Dominant Position
·
CCI noted that as per the report of DG,
ACC Limited, Ambuja Cement Limited, Ultratech Cement Limited, Jaypee Cement Limited,
India Cements Limited, Shree Cements Limited, Madras Cements Limited, Century
Cement Limited, J.K. Cements, JK Lakshmi Cement Limited, Binani Cement Limited
and Lafarge India Private Limited control about 75% market share of cement in
India. CCI observed that even if Shree Cement is not considered, the above
details as regards market share of cement manufacturing companies demonstrate
that no single firm can be said to be dominant in India. Accordingly, CCI held
that no single firm or a group is in position to operate independent of competitive
forces or affect its competitors or consumers in its favor to make it dominant
within the meaning of explanation (a) to section 4 of the Act.
Anti-Competitive
Agreements
·
CCI under June Order held that there are
evidences which indicate existence of agreement, arrangement and understanding
among the named cement companies using the platform of CMA for sharing of
information, communication, as regards pricing and production among the
competing cement companies. CCI held that these evidences provide strong
evidence of coordinated behavior and existence of anticompetitive agreement
among the cement companies.
·
CCI noted that Shree Cement is a member
of CMA and also attended the meetings organized by CMA. Further, Shree Cement
collected retail cement prices for Delhi center on behalf of the CMA. In this backdrop,
CCI held that the aforesaid finding recorded under the June Order would also be
applicable with reference to the conduct of Shree Cement in this case.
Price
parallelism
·
The DG found that prices of the cement
of all the companies moved in a particular direction in a given period of time
in different zones. The range of price movement was also found to be the same for
all the companies and in all zones of the country. The DG found that whenever
the prices of cement in case of one company went up, it was followed by other
companies simultaneously in the different zones across the country.
·
From the above behavior, DG concluded
that this price parallelism indicated the possibility of prior consultation on
price movement and its range amongst the cement manufacturing companies.
According to DG, the cost of production, particularly, transportation charge
varies from company to company, which may affect the prices of particular brand
of cement. Given to these factors CCI noted that the price movement of all the
companies in the same range and direction in the above manner is not possible,
unless there is pre-discussion on the price movement.
Low
capacity utilization
·
On a detailed analysis of the data
relating to installed capacity and production of cement, CCI observed that it
was undisputed that there was reduced capacity utilization during the years
2009-10 and 2010-11 as compared to previous years. Based on the analysis of
data relating to installed capacity and production of cement, it was held that
the cement companies indulged in limiting and controlling the production and
supplies in the market in violation of provisions of section 3(3)(b) of the Act,
which prohibit any agreement or arrangement among the enterprises which limits
or controls the production or supplies in the market.
Production
Parallelism
·
Under the June Order, CCI observed from
the data collected by DG in respect of the plant wise monthly production that
there is a positive correlation in change in production output among the cement
manufacturers operating in a particular region/state. CCI held that the data
collated by DG in respect of trends in production shows that during November
2010, all the companies had reduced the production drastically as compared to
October 2010, although this was not the case for the corresponding months in
2009.
Dispatch
Parallelism
·
On the basis of the analysis of dispatch
data for the period of two years from January, 2009 to December, 2010 by the
DG, CCI observed that changes in dispatch of cement by the top companies
including Shree Cement were almost identical.
Price
increase
·
Under June Order, CCI observed that the
act of limiting and controlling supplies on the part of the cement companies
over the years had been aimed at first creating shortages leading to build up
demand and thereafter raising prices in wake of high demand of the product in
the market. Since in some seasons, the demand was more, the cement companies
restricted the supplies just before the peak demand and thereafter sold cement
at a higher price. The cement companies reduced production and dispatch of
cement even when demand was positive during November and December 2010 and
thereafter raised prices in the month of January and February 2011 in times of
high demand. CCI further observed that the price parallelism among the cement
manufacturers supported and corroborated by factors such as limiting and
controlling supply by underutilizing capacity, maintaining similar and parallel
behavior in production and dispatch of cements with a view to
maintain high prices in the market established that the cement companies
including Shree Cement have acted in concert under an agreement.
Relief
Granted
·
A penalty of Rs. 397.51 which is 0.5 times of net
profit for 2009-10 (from 20.05.2009) and 2010-2011 has been imposed on Shree
Cement.
·
Shree Cement
has been ordered to ‘cease
and desist’ from indulging in any activity relating to agreement, understanding or arrangement on
price, production and supply of cement in the market.
3.
Owners
and Occupants Welfare Association v. DLF Commercial Developers Ltd. And Ors., decided on July 4, 2012
Background Facts and Allegations
·
The case was initiated by the complaint
filed by Owners and Occupants Welfare Association (“Informant Association”)
against DLF Commercial Developers
Limited (“DLF”), Delhi Development
Authority and DLF Services Limited.
·
The Informant Association alleged that the terms and conditions of
the retail/commercial space buyers’ agreement (“Agreement”) by the DLF are harsh, onerous and burdensome on the
allottees. The Informant Association alleged that DLF contravened section 4 of
the Act by abusing its dominant position. Few clauses as cited by the Informant
Association in their information are inter alia as following:
§
The Agreement did not contain appropriate
liability clause to impose proportionate penalty on DLF for the breach in
discharge of its obligation.
§
Under clause 13.3 of the Agreement, DLF
has unilaterally reserved the right to terminate the Agreement in the event the
allottees fail to execute the conveyance deed and/ or the deed of apartment
within a period of sixty (60) days from the date of intimation of receipt of
certificate of use and occupation of the building.
§
Clause 1.5 of the Agreement stipulates
that due to change in the layout building plan, if any amount was to be
refunded to the allottees, DLF would not refund the said amount, but would
retain and adjust this amount in the last installment payable by the allottees.
§
As per clause 13.3 of the Agreement, DLF
has unilaterally reserved the right to cancel the Agreement in the event
intending allottees fails to execute the conveyance deed and or deed of
apartment within a period of sixty (60) days from the date of intimation of
receipt of certificate of use and occupation of the building.
Ruling and Relief
Granted
·
The CCI observed that the relevant
product market in the case is the “the provision of services for development
and sale of commercial space”. In the relevant product market, there are a
large number of developers and builders in Delhi, who are engaged in developing
commercial space. Within Jasola District Centre itself, there are about 11
other developers.
·
CCI further observed that as far as the
relevant geographical market is concerned, it cannot be merely confined to
Jasola Distict or South West Delhi and thus the Informant Association’s contention
of geographic market being South West Delhi and more particularly Jasola
District Centre was not justified and was found to have no basis.
·
The CCI held that as the dominance of
the DLF in the relevant market could not get established, no prima facie case was made out for the
Director General (DG) to conduct investigation into the matter under section 26
(1) of the Act. Therefore, the matter was closed in accordance with the
provisions of section 26(2) of the Act.
4.
Prints
India v. Springer India Private Limited and Others, decided on July 3, 2012
Background Facts and Allegations
·
The information was filed by M/s Prints
India (“Prints India”) under section 19(1)(a) of the Act against
Springer India Private Limited (“Springer India”) and eight other Indian
institutes for the violation of section 3 and 4 of the Act.
·
Prints India is in the business of
distribution and exports of Indian journals for domestic and foreign clients.
Springer India is a part of Springer Science and Business Media. Springer
Science is a leading global academic and scientific publisher, having around 60
publishing in about 20 countries in Europe, Asia and USA.
·
Springer India entered into several
co-publishing agreements (“Agreements”) with 33 institutes and societies
of Science, Technology and Medicine (“STM”) segment. Thereafter, Springer
India started controlling the sale, distribution and licensing for publication
of journals. Print India alleged that Springer India imposed inter alia
following terms and conditions on Print India:
§
Print India to make payment according to
the USD list price after converting it in INR as per ongoing forex market
rates.
§
Discount reduced to 5% on the list price
which was earlier 10-25%.
§
Print India to make 100% advance payment
for order placed.
§
Print India to provide information of
end-user client details to Springer India.
·
Print India alleged that it lost some of
its clients whose details were provided by it to Springer India. On this
pretext Print India declined to provide any further client details. As a
result, Springer India refused the supply of journals to Print India.
·
As per the additional information filed
by Print India Springer acquired the co-publishing and distributing rights of most
popular 47 journals. Further, Print India alleged that subsequent to entering
into the Agreement, Springer India raised the prices of the journals, which
reduced the distributors’ margin.
Rulings
Analysis of Relevant Market
·
CCI noted that while determining
relevant product market under section 2(t) of the Act, interchangeability or
substitutability of the products, their prices and intended use have to be
analyzed.
·
In the present case, CCI distinguished
the journals from the books and other types of the periodicals. It said that
the academic publishing involves publishing journals, which are aimed at
researches and academics, whereas professional publishing entails publishing of
the periodicals, which are intended for professional use and/or provide
information to practitioners. The content of the academic publishing involves
new ideas/ theories and the content of professional publishing emphasizes on
the practical applications of these ideas. Both the publications were held not
to be interchangeable or substitutable. Further, the existence of International
Association of Scientific, Technical, and Medical Publishers, makes STM a
distinct segment. Thus CCI held that for the present case the relevant product
market would be the publishing of STM academic journals in English
language.
Abuse of Dominant Position
·
For the ascertainment of the dominant
position, CCI noted that the journals with the ‘must have’ content are
considered indispensable by the customers due to their reputation or specific
focus on the items contained therein and are the ones which are most read by
researchers active in certain field. According to DG report Springer India
journals in the STM segment constitute ‘must have’ by virtue of their
portfolio achieved and by way of their co-branding agreements with major
scientific institutes in India. DG’s report shows that Springer has 31% market
share in ‘must have’ journals.
·
However, CCI rejected DG’s submission of
dominant position on the basis of ‘must have, content by highlighting that
there were several limitations in the data on ‘must have’ that was
submitted. CCI further noted that the data could not been authenticated and an
exhaustive list of ‘must have’ journals could not been collated. Therefore,
CCI held that market power cannot be determined on the basis of ‘must have’
journals. CCI also noted that while ascertaining the market share of Springer,
DG overlooked the data on market share pertaining to online journals.
·
Further, DG did not carry any
investigation on the overall size of the market, number of competitors, their
revenues etc. It assumed that Springer India does not face any competition in India.
On the basis of the above reasons, CCI concluded that Springer India cannot be
said to be the dominant player of the market.
Vertical Integration
·
CCI rejected the finding of the DG that
the exclusive co-publishing rights of Springer India coupled with its presence
in the distribution network of ‘STM journals published in English in India’
makes it a vertically integrated enterprise and gives immense power to dominate
the relevant market. CCI held that when it comes to distribution, services of
third party like subscription agents or online aggregators may be required. CCI
did not consider it a matter of concern, if the changing business model does not
require intermediaries. CCI observed that the competition is not about
protecting a business practice that may be not relevant anymore but rather it’s
about bringing efficiency.
Anti-competitive agreement
·
Print India alleged that by entering
into Agreement, Springer India violated provisions of section 3 of the Act by
directly determining sale price, controlling the supply of the journals by
imposing unfair conditions of furnishing commercially sensitive information
violating and sharing the market by way of allocation of types of goods, i.e.
print version and e-journal.
·
CCI noted that when institutes published
their journal themselves, the total distribution rights (India as well as
world-wide) were vested with Prints India. However, pursuant to the
Agreement, the distribution rights were demarcated as domestic and world-wide. The institutes were able to benefit from the online expertise of Springer India, which helped in improving the impact factor, thus getting better recognition and reputation for their journals. Indian authors got international exposure, which encouraged them for better quality of research. Hence, it concluded that there was no breach of section 3 of the Act.
Agreement, the distribution rights were demarcated as domestic and world-wide. The institutes were able to benefit from the online expertise of Springer India, which helped in improving the impact factor, thus getting better recognition and reputation for their journals. Indian authors got international exposure, which encouraged them for better quality of research. Hence, it concluded that there was no breach of section 3 of the Act.
5.
Kansan News Private Limited. v. Fast Way
Transmission Private Limited and others, decided on July 3, 2012
Background Facts and Allegations
·
The information was filed by M/s Kansan News Private Limited (“Kansan”) against Fast Way Transmission
Private Limited and others (“Operators”)
for the violation of section 3 and 4 of the Act.
·
Kansan was a broadcaster of news and
current affairs TV channel, ‘Day and Night News’ (“Channel”). Kansas
entered into an agreement with the Operators for the transmission of its Channel
through their networks. After some time the Operators started disrupting the
transmission of Channel and on several occasions they distorted and
disconnected Channel. Kansan served a legal notice to the Operators. Subsequently,
the Operators terminated the Channel placement agreement with Kansan.
·
Kansas alleged that the Operators
controlled the market of services of transmission of TV signal from
broadcasters in the State of Punjab and Union Territory of Chandigarh and by
virtue of such monopoly denied the access to Kansan to telecast Channel.
Rulings
Relevant Market
·
CCI held that while dealing with the
issues involved in the present matter it is necessary to determine relevant
product market and relevant geographical market. CCI observed that due to
different product characteristics, the cable TV systems are different from the
DTH or other platforms like IPTV etc. Thus the relevant product market should
be Cable TV service. CCI further held that due to the factors such as local
specification requirements, consumer preferences communication language,
distributing network, the territory of Punjab and Chandigarh is the relevant
geographic market.
Group
·
CCI noted that Mr. Gurdeep Singh holds
more than 50% shares in Fast Way Transmission Private Limited and Hatheay
Sukhamrit Cable and Datacom Private Limited. Mr. Gurdeep Singh also holds 99%
shares in Creative Cable Networks Private Limited. Mr. Gurdeep Singh is
managing director in Fast Way Transmission Private Limited and director in
Hatheay Sukhamrit Cable and Datacom Private Limited and Creative Cable Networks
Private Limited. Accordingly, CCI treated all the above Operators (named as
opposite parties in the matter) as a ‘group’ under clause (b) of
explanation to section 5 of the Act.
Abuse
of Dominant Position
·
While analyzing the factors under
section 19(4) of the Act for the purpose of determining the dominant position
of the Operators, CCI noted that:
§
the Operators had around 85% of the
total relevant market;
§
the Operators had their cable network
and head ends in all the districts of Punjab, whereas other competitors were
operating only in one or two districts;
§
the total turnover of the Operators from
cable TV operation during financial year 2010-11 was more than Rs.200 crore;
and
§
the consumers of the cable TV in Punjab
& Chandigarh were also hugely dependent on Operators, as they did not have
any effective substitute to switch over.
·
On the basis of aforesaid findings, CCI
observed that Operators were dominant player in the relevant market on account
of their market share market power and ability to operate independent of
competitive forces as well as to affect the competitors, consumers and the
relevant market in its favor.
·
On the issue of denial of market access,
CCI observed even after payment of placement and carriage charges, transmission
of the channel was disrupted and later terminated. Negating the argument of
Operators that the reason form termination was low TRP of the Channel, CCI noted
that the TRP ratings of the Channel as mentioned by DG in its report were in
the range of 3-7, which was almost equal to some other channels.
·
CCI
observed that the subscriber base of the Operators was more than 40 lakhs, so
the Operators were in a position to affect the market in their favor and used
this position to deny the opportunity for transmission to the Channel.
·
On the date of judgment the Channel had
access to only 56,000 household on the cable TV in state of Punjab &
Chandigarh, where about more than 45 lakhs households were connected on cable
networks. Thus, CCI noted that Kansan had been effectively wiped out from the
entire relevant market by the conduct of the Operators and held that Kansan had
been denied the market access and opportunity to compete, which is in violation
of section 4 (2) (c) of the Act.
Cartel
·
On the issue of forming of cartels, CCI
observed that as the Operators were of the same group, so there cannot be a
case of cartelization of the nature mentioned in section 3(3) of the Act. Accordingly,
CCI denied Kansas’s allegation that Operators have formed a cartel.
Relief
Granted
·
CCI imposed the penalty of Rs.
8,04,01,141/- (Eight crores four lakhs one thousand one forty one only) on the
entities of Operators group and also directed that the contravening Operators to
‘cease and desist’ from indulging in anti-competitive practices, which
have the effect of denial of market access.
6.
Raj Rani Chandok v.
Senior Builders, decided
on July 20, 2012
Background Facts and Allegations
·
The information was filed by Raj Rani
Chandok and Poneet Chandok (“Informants”)
against Senior Builders limited (“Senior
Builders”), Pacific Greens Infracon Private Limited (“Pacific Greens”) and Amar Singh for violation of section 3 and 4 of
the Act.
·
Informants had purchased a shop in Senior
Destination Mall, Gurgaon being jointly developed and promoted by Senior
Builders, Pacific Greens and Amar Singh (together as “Developers”).
·
As per the buyer’s agreement, between
Informants and Developers, the Informants were to be paid rent amount from the
date of the 100% payment by Informants. A separate confirmation letter in form
of memorandum of understanding was signed on the behalf of the Informants, which
stated that the entire mall was being given to M/s India Bulls.
·
Further it was assured by the Pacific
Greens to the Informants that on the payment of the entire outstanding, the
Developers will start paying the rent to the Informants till the possession is
handed over to M/s India Bulls (“Proposed
Lessee”).
·
The rent was paid to Informants for only
three month and after that there was no payment even after numbers of representations
were made to the Developers.
·
The Informants had earlier moved to District
Court, Gurgaon for permanent and mandatory injunction against Developers. Under
a settlement arrived in the above case, Senior Builders agreed to give the
possession of the shop as well as the rent but both these terms were not
complied. The Informants alleged that the Developers have violated section 4 of
the Act by using their position in a wrong way and by denying them the monthly
rent and possession.
Rulings
·
CCI stated that Informants did not make
any allegations regarding any clause of the agreement being anti-competitive.
The informants did not assert as to how Senior Builders and Pacific Greens were
the dominant players of the relevant market. CCI noted that there are numerous
builders that are constructing malls, shopping complexes and office blocks in
Gurgaon. The informants had the option to purchase commercial space in any of
those projects. Further, Informants and Developers had already reached a compromise
in the suit filed by them in District Court, Gurgaon. CCI observed that the Informants
were unable to establish that the case attracts provisions of the Act and
therefore no prima facie case was made against them.
7.
India Glycols Limited v
Indian Oil Corporation Limited and others, decided on 26th July
2012
Background Facts and Allegations
·
The information was filed by India Glycols Limited (“Glycols”) against Indian Oil Corporation and Others (“Opposite Parties”) for violation of
section 3 and 4 of the Act. Glycols is engaged in the business of manufacturing
and marketing of ethanol based chemicals and is dependent on Opposite Parties
for the supply of ethanol[1].
·
Glycols contended that the decision to
blend 5% of ethanol with the motor spirit (or gasoline) was taken in 2003 and
the first phase of implementation began in 2006. Single or joint tenders were
invited by government owned Oil Marketing Companies (“OMCs”) from
manufacturers of ethanol in the year 2003 and 2006.
·
For fixing the price of ethanol, the
matter was referred to the Cabinet Committee of Economic Affairs (“CCEA”).
CCEA approved an ad-hoc uniform ex-factory price throughout the country
at Rs. 27 per litre for ethanol procured by OMCs, till the time price was fixed
by the expert Committee. The figure of Rs. 27per litre was also discussed and
decided by the members of Indian Sugar Mills Association (“ISMA”).
·
Glycols contended that through the
minutes of the meeting of ISMA, it was apparent that ‘price of ethanol’ was
discussed and it was decided to put pressure upon government to fix price of ethanol.
Glycols further contended that the president of ISMA also expressly suggested
enforcing the cartelized agreement by threatening to stop supply of ethanol in
case the price suggested by ISMA did not get approval of the government.
·
Glycols alleged that joint tendering by
four OMC’s was an agreement between horizontal players to procure ethanol from
various suppliers such as sugar mill owners, who too were the players in
horizontal relationship. Therefore, price fixation by players in the same
business breached the provisions of sections 3 (3) (a), (b) & (c) of the
Act.
·
Another allegation made by Glycols was
that the sugar industry was collectively fixing price of ethanol and was
exercising unfair and discriminatory conditions of price. Further ISMA using
its position of dominance in the relevant product market of ethanol has been
entering another relevant product market, i.e. petroleum market and protecting
later market, which was an act of abuse of dominant position in terms of
section 4(2)(a) and (e) of the Act.
Ruling
·
Rejecting the contentions of the
Glycols, CCI rendered following observations:
“Ethanol
blending program has been started by Union of India in order to reduce the
import of petroleum. The consumption of petroleum has been increasing in India
day by day. World over, efforts are being made to depend more on renewable
energy as a day will come when petroleum resources will dry up. The compulsory
blending policy of the Govt. is also therewith a view to reduce pollution as
Ethanol blended petrol pollutes less. …………..……….In order to encourage
production of Ethanol and to improve the operations of market, The Government
has to fix a price so that the farmers are encouraged to produce more
sugarcane. Fixing of support price of Rs. 27/- per litre by CCEA for
procurement of Ethanol, therefore, cannot be considered as anti-competitive in
nature either on the part of OMC’s or on the part of government or sugar mills.
This is the administered price as decided by CCEA.”
·
CCI further held that
the ethanol production is dependent on the availability of molasses and the
availability of molasses is directly proportional to the production of sugar. In
order to encourage more production of sugar so as to further increase the
production of molasses, CCEA had decided on fixing the price of Ethanol at Rs.
27 per litre. Accordingly CCI held that there does not appear to exist any
agreement between ISMA and CCEA and thus, no prima facie case of
violation of any of the provisions of either section 3 or section 4 of the Act
was found.
C.
Combination
Registration
1.
Combination
Registration No: C-2012/06/59 decided
on July 04, 2012
Background
Facts
·
On June 05, 2012, CCI received a
notice under section 6(2) of the Act of the proposed combination between
Welspun India Limited (“WIL”), Welspun Global Brands Limited (“WGBL”)
and Welspun Retail Limited (“WRL”). The notice was given pursuant to the
approval of the composite scheme of arrangement under section 391 to 394 of the
Companies Act, 1956 (“Companies Act”) by the board of directors of WIL,
WGBL and WRL.
·
The
said scheme provides inter alia for the following actions, in the same
order:
§ Amalgamation of WGBL as a going
concern with WIL.
§ Hiving off the marketing business
undertaking of WIL as going concern into WRL.
§ Transfer of investment of WIL by
way of shares of Welspun USA Inc., Welspun Holding Private Limited and Welspun
Mauritius Enterprises Limited to WRL.
§ Change of name of WRL to WGBL.
·
WIL
is a listed company engaged in the business of manufacturing home textile
products. WGBL and WRL are the marketing and distribution arms of WIL in the
international and domestic markets respectively.
Order
·
CCI
noted that as per the information supplied by parties to the combination, the
persons constituting promoter group of both WRL and WGBL are predominantly
common and WRL is subsidiary of WGBL. Going by the details provided in the
notice and other material on record, CCI observed that the control over the
parties to the combination, before and after the proposed combination, remains
with the same promoter group. Therefore, the proposed combination is not likely
to give rise to any adverse competition concern. The CCI accordingly approved
the proposed combination under section 31(1) of the Act.
2.
Combination
Registration No. C-2012/05/58 decided on July 4th,
2012
Background
Facts
· Schroder
Investment Management (Singapore) Limited (“SIMSL”), Schroder
Singapore Holdings Private Limited (“SSHPL”), Axis Asset
Management Company Limited (“Axis AMC”), Axis Mutual Fund Trustee
Limited (“Axis MF Trustee”) and Axis Bank Limited (“Axis
Bank”) filed a notice on May
28, 2012 under section 6(2) of the Act notifying the combination of SIML,
SSHPL, Axis AMC, Axis MF Trustee and Axis Bank.
· The proposed combination related to the acquisition by SIMSL, through
its wholly owned subsidiary SSHPL, of the current issued, paid up and
subscribed share capital constituting 25 % plus one share in each of Axis AMC
and Axis MF Trustee from its existing shareholder Axis Bank. As per the notice
filed, Axis Bank currently holds the entire share capital of Axis AMC and Axis
MF Trustee.
· SIMSL is a company incorporated under the laws of
Singapore and is an indirect wholly owned subsidiary of Schroders plc. Further,
SIMSL is also present in India through its non-trading subsidiary Schroders
India Private Limited. SSHPL is a company incorporated under the laws of
Singapore and is a wholly owned subsidiary of SIMSL. SSHPL is incorporated for
acquiring Axis AMC and Axis MF Trustee. Axis AMC is a public limited company
incorporated under the provisions of the Companies Act and is a wholly owned
subsidiary of Axis Bank.
· Axis AMC provides asset management services to Axis Mutual Fund which is
registered with SEBI, under the SEBI (Mutual Funds) Regulations, 1996. Further Axis
AMC is registered under SEBI (Portfolio Managers) Regulations, 1993 to provide
portfolio management services. Axis MF Trustee, a company incorporated under
the Companies Act is a wholly owned subsidiary of Axis Bank and is stated to be
the sole trustee to Axis Mutual Fund.
Order
· CCI observed that SIMSL along with its affiliates
are present globally in the market for asset management services, portfolio
management and related advisory services. However, SIMSL has no presence in India in the asset management services and portfolio
management services. Thus, the customers would have many options to choose from
and invest in a desired scheme of the mutual funds. It was also observed that
with the presence of various other large players of the Indian mutual funds
market, the market share of Axis Mutual Fund is insignificant.
· Therefore, CCI held that the proposed combination was
not likely to have any appreciable adverse effect on competition in India. The CCI accordingly approved the
proposed combination.
3.
Combination Registration No.
C-2012/06/60 decided on July 12, 2012
Background Facts
·
Fairbridge
Capital (Mauritius) Limited (“FCML”)
and Thomas Cook (India) Limited (“TCIL”)
on May 21, 2012 filed a notice under section 6(2) of the Act for a proposed
combination of FCML and TCIL.
·
The combination was pursuant to a Share Purchase
Agreement dated May 21, 2012 (“SPA”)
executed between Thomas Cook UK Limited (“TCUK”),
TCIM Limited (“TCIM”), Thomas Group
Plc (“TCG”), FCML and Fairfax
Financial Holding (“FFHL”) for
acquisition of 76.81 % of the issued and paid up equity capital of TCIL by FCML
from TCUK and TCIM.
·
TCIL is a listed company under the
provisions of the Companies Act 1956. TCIL is a part of Thomas Cook Group, an
international leisure travel group. TCIL is subsidiary of TCG. TCUK and TCIM
are the sole beneficial owners of 21.31% and 55.50 % respectively, of the share
capital of TCIL.
·
TCIL is engaged in the business of providing travel services that
include leisure travel (inbound and outbound) and foreign exchange services
like currency exchange, money transfer, remittances etc. Thomas Cook Insurance
Services (India) Limited, a subsidiary to TCIL, provides insurance services as
a corporate agent of Bajaj Allianz General Insurance.
·
FCML is
private limited company incorporated under the Companies Act, 2001 of Republic
of Mauritius, which holds category I global business license from the Financial
Services Commission of Mauritius. FCML is an indirect owned subsidiary of FFHL,
a company incorporated under the laws of Canada, primarily engaged in property
and casualty insurance. FFHL, through one of its subsidiaries, has 26 % stake
in ICICI Lombard General Insurance Company Limited.
Order
·
After observing the information CCI
opined that currently neither FCML nor FFHL or any of their subsidiaries are engaged in the
business of providing similar or identical or substitutable services in India
in which TCIL is engaged, i.e. providing travel related services, foreign exchange
services or acting as an insurance agent in India. Accordingly, CCI held that the
proposed combination is not likely to give rise to any adverse effect on
competition in India. Therefore, the
CCI approved the proposed combination.
4.
Combination
Registration No. C-2012/07/68 decided
on July 24, 2012
Background Facts
· Maruti
Suzuki India Limited (“MSIL”)
and Suzuki Powertrain India Limited (“SPIL”) filed a notice on July 12, 2012 under
section 6(2) of the Act notifying the amalgamation of SPIL into MSIL pursuant
to a resolution passed under section 391 to 394 of the Companies Act. MSIL is a
listed public company and is also subsidiary of Suzuki Motor
Corporation, Japan (“Suzuki Corporation”).
· SPIL is an unlisted public limited company and
Suzuki Corporation holds 70 % of its share capital and the balance is held by
MSIL.
Order
· CCI after considering the facts on record and the
details provided in the notice held that since MSIL and SPIL are subsidiaries
of Suzuki Corporation and MSIL together currently holds the entire share
capital of SPIL, and the control over the activities carried on by MSIL and
SPIL before and after the proposed combination will remain with Suzuki
Corporation. Therefore, it held that the proposed combination is not likely to
give rise to any adverse competition in India. Therefore, the CCI approved the proposed
combination.
5.
Combination
Registration No. C-2012/04/53 decided
on July
26, 2012
Background
Facts
·
Nirma Limited (“NL”) and Saurashtra
Chemicals Limited (“SCL”) filed a notice on April 27, 2012
under section 6(2) of the Act notifying proposed amalgamation of SCL into NL.
·
It was stated in the notice that SCL is
a sick company in terms of the provisions of the sick Industries Companies (Special
Provisions) Act, 1985 and the proposed amalgamation is subject to the approval
of the Board for Industrial and Financial Reconstruction.
·
As per the information provided to CCI, Nirma Chemical Works Private Limited (“NCWPL”) and Nirma Credit and Capital Private Limited (“NCCPL”), Nirma Industries Private Limited (“NIPL”) and Nirma Management
Services Private Limited (“NMSPL”) together hold 92% of the equity
share capital of SCL. Further, as on March 31, 2012 Dr. K.K. Patel and family,
directly and indirectly, held approximately 99% of the equity share capital in
each of NCWPL, NCCPL, NIPL and NMSPL and approximately 92% of the equity share
capital of NL.
Order
·
CCI held that the parties to the
combination are engaged in the business of manufacturing and marketing of soda
ash in India, however SCL is not an independent competitor to NL, as the
ultimate control over the business activities of both NL and SCL lies, directly
or indirectly, with Dr. K.K. Patel and Family. Thus, it held that the proposed
combination is not likely to have adverse competition concern in India. Therefore
the CCI accordingly
approved the proposed combination.
*************************************************************************
[1]
Ethanol
is a value added product produced from molasses, which is a product of the sugar
industry.
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