Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): CCI has dismissed allegations of abuse of dominant position against Nissan Motor India Pvt. Ltd. in terms of after-sales service while observing that the issue raised in the information pertained to alleged deficiency in services and no case of contravention of the provisions of Section 4 of the Competition Act was made out against Nissan Motor India Pvt. Ltd. The information before the Commission was filed against Sterling Vehicle Sales Pvt. Ltd. (an authorised dealer of Nissan Motor) and Nissan Motor India Pvt. Ltd. alleging contravention of the provisions of Section 4 of the Act. Earlier, the services and maintenance of the Nissan car of the informant were done from the service centre (Sterling Vehicle Sales Pvt. Ltd.), but many defects like unusual sound, faulty engine etc. emerged after the servicing. The Informant alleged that either the car has manufacturing defect or was damaged by service centre’s carelessness and negligent handling. Before CIC, informant prayed the Commission to issue a cease and desist order against the Opposite Parties restraining them from indulging in the alleged unfair and erroneous trade practices and direct them to exchange the defective car with a brand new car of the same model. The Informant also prayed that the Opposite Parties be directed to pay compensation to the tune of Rs. 2 lakhs towards the mental harassment and inconvenience caused. After hearing the parties, CIC observed that for making out a case for contravention of the provisions of Section 4 of the Act, the dominant enterprise has to be shown to have abused such position in the relevant market but the informant has not indicated any relevant market where any of the Opposite Parties is shown to be dominant. While observing that, “the grievances made by the Informant essentially pertain to alleged deficiency in services and none of the abusive instances as alleged in the information comes within the purview of Section 4(2) of the Act,” CIC closed the matter. [Jolly Diclause v. Sterling Vehicle Sales Pvt. Ltd., [2016] CCI 25, decided on June 7, 2016]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Business strategy by Bajaj Corporation for its product ‘Almond Drop Hair Oil’ was scanned by the competition regulator on information received by one of the distributors of Bajaj. CCI found that Bajaj had allocated area of business to every dealer and there was a vertical restraint imposed on the distributors to supply the products in the area limited by the company and the arrangement was monitored and enforced by Bajaj Corp. Such the practice of allocation of geographical area to its distributors amounts to exclusive distribution agreement (EDA) under section 3(4)(c) of the Competition Act. Bajaj had also indulged in resale price maintenance (RPM) by prescribing rate at which its products were to be re-sold by the dealers to the retailers. It was alleged by the informant that in order to ensure that there was no intra-brand competition or price competition of its products, Bajaj imposed RPM type vertical restrictions upon its dealers.

CCI observed that there are many players in the FMCG market in India providing consumer products and services in the areas of Health and Beauty, which indicates that the market of hair oil is wide and consumers have various brands as options to choose from. Bajaj does not have position of strength in this sector in comparison with other brands in market structure of FMCG products and particularly the hair oil segment in India. CCI opined that in the presence of several companies and considering the dynamic nature of the sector, conducts of Bajaj are unlikely to affect the inter-brand competition in the market. After considering effect of the impugned conducts of Bajaj on the touchstone of factors elucidated under section 19(3) of the Act, CCI opined that vertical restraints imposed by Bajaj upon its distributors have not been shown to have caused appreciable adverse effect on competition (AAEC) nor is there any appreciable effect on the benefits accruing to the ultimate consumers. On RPM the Commission noted the price suggestion was merely recommendatory in nature and that a bulk purchaser was free to sell the product at lower price. [In Re: Ghanshyam Dass Vij and Bajaj Corp. Ltd., [2015] CCI 155 decided on 21.10.2015]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India: CCI in its closure order in a case against TN Cable TV Corporation for alleged abuse of dominance noted that there are different mechanisms for transmitting/ re-transmitting signals of TV channels e.g. Terrestrial, Cable TV (analog and digital), Direct To Home (DTH), Head-end In The Sky (HITS), Internet Protocol TV (IPTV) and Mobile TV etc. These platforms cannot be treated similar and can be divided in different market based on economic affordability and their reach to the masses. In the present case the informant, a broadcaster disseminating TV signals through cable TV and DTH, alleged that Tamil Nadu Arasu Cable TV Corporation (“OP”), a state owned Multi System Operator (MSO), is charging unfair and discriminatory prices and has blacked out the channel of the informant. OP has deliberately chosen not to sell/ fix price for the prime band which is the most precious band in the analog cable TV network. It alleged that OP has limited and restricted the choice of the consumers and thereby caused adverse effect to competition to favour the channels of a particular political class.
The Commission held that the relevant product market in the present case would be “Re-transmission of channels through Cable TV Networks”. The OP is found to be in dominant position in this relevant product market in the state of Tamil Nadu except city of Chennai. (Chennai was separated from relevant geographic market because the city is covered under Digital Addressable System of the Government of India). However, the Commission observed that determination of price charged by the OP was done through tender process in terms of the policy of Government of Tamil Nadu, therefore it cannot be termed to be unfair and discriminatory. The closed the matter noting that no prima facie case is made out to order investigation. It is also noteworthy that a writ petition filed by the informant against the conducts of the OP is sub judice before the Madras High Court. [Makkal Tholai Thodarpu Kuzhumam v. Tamil Nadu Arasu Cable TV Corporation, [2015] CCI 145, decided on 29.09.2015]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI):  CCI maintaining distance from the jurisdiction of electricity sector regulators State Electricity Regulatory Commissions (SERCs) denied to examine fixation of electricity tariffs under the provisions of S. 4 of the Competition Act, 2002. The informant association alleged abuse of dominance position by Tata Power Delhi, BSES Rajasthani Power, BSES Yamuna Power, Punjab State Power Corp, Haryana Bijali Vitaran Nigam and HP State Electricity Board by imposing unfair and discriminatory conditions and by influencing and making unreasonable suggestions to respective SERCs for increasing various charges for “Open Access” and the tariff for power. Informant alleged that by continuously increasing cross subsidy, Open Access charges the consumers have been constantly prevented from utilizing the feature of Open Access, and thereby cheaper power and it have resulted in denial of market access to the members of the Informant, creation of entry barriers and foreclosure of competition.

CCI opined on the jurisdiction issue that that there is no overlap in the jurisdictions exercisable by it and the SERCs. It said that sectoral regulators (here SERCs) focus on the dynamics of specific sectors, whereas the it has a holistic approach and focuses on functioning of the markets by way of increasing efficiency through competition. The roles played by the CCI and the sectoral regulators are complementary and supplementary to each other as they share the common objective of obtaining maximum benefit for the consumers.

CCI, to further examine the matter, made references to SERCs of Punjab, Haryana, Delhi and Himachal Pradesh on the central issue agitated by the Informant i.e. increase in Open Access charges. After considering replies of the SERCs and the provisions of Electricity Act, 2003, CCI observed that scheme of the Electricity Act and the regulatory architecture provided thereunder, makes is abundantly clear that the charges for Open Access are to be decided by the respective SERCs. The concerned State Electricity Regulator and the Appellate Authority in terms of the statutory architecture governing the regulation of open access and determination of the relevant tariffs thereto would deal any issue in this regard. It also noted that matters pertaining to this issue are already pending before the Appellate Tribunal for Electricity (APTEL) and the Supreme Court.

CCI ordered for closing the case observing that the issue highlighted by the Informant in the present case is essentially related to the regulatory functions discharged by the State Regulatory Commissions in respect of fixation of tariffs. No competition issue is involved in the factual matrix disclosed in the information. [In re: Open Access Users Association and Tata Power Delhi Distribution,  [2015] CCI 146decided on 29.09.2015]

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India: The CCI while closing case against Ansal Properties & Infrastructure Ltd ruled that consumer related issues do not come under the ambit of the Competition Act, 2002 (the Act).

The informant was aggrieved by the conduct of Ansal Properties for non-compliance of an order passed by the Delhi Consumer Dispute Resolution Forum in two cases filed by the Informant and his wife.  It was alleged that Ansal was not paying the amount as directed by the Consumer Forum. 

The CCI found that allegation of the informant for non-compliance of Consumer Forum order does not fall within the jurisdiction of the CCI under the Act because the issue raised does not involve any issue which contravenes the provisions of the Act, In Re:Mr. Preetam Chhabra v. Ansal Properties & Infrastructure Ltd , Case No. 37 of 201, decided on 25.06.2015

 

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): While rejecting the allegations of unfair trade practices against Bank of Baroda in the market of commercial/corporate loan in India, CCI closed an information filed by Uttarakhand-based firm Dhanvir Food Product in the matter. Said information was filed by Dhanvir Food Product, which had availed of a term loan of Rs 7.25 crore from the bank for construction of factory building and also to purchase plant and machinery, alleging that the penalty imposed by the Bank upon the Firm to foreclose the loan account was in violation of the guidelines issued by the Reserve Bank of India (RBI) and hence, arbitrary, unreasonable and anti-competitive. It was alleged in the information that the Bank had imposed a penalty of Rs.18,86,711/- to foreclose the loan account of the Informant for the residual period of 65 months in terms of clause 25 of the sanction letter. After perusal of relevant documents and hearing both the parties, CIC observed, “the Informant has not provided any material to show that Opposite Party-2 (Bank of Baroda) have been imposing pre-payment penalty or foreclosure charges in pursuance of some agreement entered into by them with any other enterprise engaged in similar trade or business. Thus, prima facie, no case of contravention of Section 3 can be made out against the Opposite Part-2 in the instant case.” The Commission also turned down the contention of the Informant regarding abuse of dominant position by the Bank on the ground that as Bank of Baroda was not in dominant position in the relevant market, it cannot be held guilty of abuse of dominant position, Dhanvir Food Product v. Bank of Baroda, 2015 CCI 10, decided on 02.06.2015

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): CCI imposed a total fine of about Rs 64 crore on GlaxoSmithKline Pharmaceuticals Ltd. and Sanofi Pasteur India for collusive bidding in supply of a meningitis vaccine to the government for Hajj pilgrims and subsequently plotting to charge higher prices in the government tender for the said vaccine. The order of Commission came upon an information filed by Bio-Med Pvt. Ltd., a pharma company, which also makes polysaccharide Quadrivalent Meningococcal Meningitis (QMMV) vaccines. The information was filed against GlaxoSmithKline Pharmaceuticals Ltd., Sanofi Pasteur India and Health and Family Welfare Ministry was also made party in the matter. It was alleged in the information that Government introduced and modified the turnover conditions for eligibility of the participating bidders to supply the particular vaccine without any reasonable rationale and explanation. It was further alleged that GlaxoSmithKline Pharmaceuticals Ltd. and Sanofi Pasteur India, also cartelized through bid rotations and geographical allocations. CCI in its investigation found that both companies were acting pursuant to an anti-competitive agreement and formed a cartel to get government tenders to supply meningitis vaccine which was required to be administered upon the pilgrims who wish to go on annual pilgrimage of Hajj. After perusal of material on record and hearing both the parties, CCI found GlaxoSmithKline Pharmaceuticals Ltd. and Sanofi Pasteur India liable for violation of the provisions of the Competition Act, 2002 and levied penalty to the extent of three per cent of the turnover both on GlaxoSmithKline Pharmaceuticals Ltd. and Sanofi Pasteur India (aggregating to Rs 60.49 crore and Rs 3.04 crore, respectively) and gave both companies sixty days to deposit the amount. Apart from imposing penalties, the Commission has directed GlaxoSmithKline and Sanofi to “cease and desist” from anti-competitive practices, In re: Bio-Med Pvt. Ltd. v. Union of India, 2015 CCI 11, decided on 04.06.2015

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): In the series of its orders against trade unions/associations for anti-competitive agreements, the CCI yesterday found the arrangement relating to distribution of films for releasing between the Opposite Parties (Ops) namely, Kerala Film Exhibitors Federation (OP1), Kerala Film Distributors Association (OP2), and Kerala Film Producers Association (OP3) in violation of section 3(3)(b) of the Competition Act, 2002.

The Commission held that OP-1, OP-2 and OP-3 have transgressed their legal contours and indulged in collective decision making to limit and control the exhibition of films in the theatres other than the ones owned by the members of OP-1. The Commission did not see any rational justification for prescribing such criteria which is exclusionary in nature.

It declared that the Competition Act condemns such decisions taken by the associations which limits/ restricts the supply of goods/ services and affects competition in the market. The Commission viewed that the collusion between the OPs without any logical basis was nothing but the manifestation of their anti-competitive conduct to benefit the members of OP-1 at the expense of other theatre owners and movie goers i.e., consumers.

It is found that the OP1 was the main culprit behind the cartel conduct and the members of OP2 succumbed to the restriction imposed by the OP1.  The Commission cleared that OP-2 is guilty of not distributing movies to the theatres of the members of the Informant and thus violating section 3(3)(b) read with section 3(1); of the act. However, OP3 was not found guilty because of its non-compliance with the arrangement between the Ops for limiting and restricting distribution, and boycotting release of films. 

The Commission ruled that the office bearers of the OP1 and OP2 are liable to penalty under section 48. During the period of contravention, they were actively involved in the affairs of their respective associations and as such they are responsible for the anti-competitive decision making by their respective associations, Kerala Cine Exhibitors Association  v. Kerala Film Exhibitors Federation, 2015 CCI 15,decided on 23rd June, 2015

 

Ed. Note: In this order the Commission did not find the OP3 guilty of cartelization even though OP3 was signatory party to the agreement, because OP3 did not comply with the decision taken in the agreement and its conducts did not show that it (OP3) was against the wide release of the movies. This brings a new development in the competition law that section 3 will not attract if a party to an anti-competitive agreement is not acting upon it.

 

 

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India: The Competition Commission of India (CCI) in its suo moto cognizance found thirteen suppliers/manufacturers (opposite parties) of containers with disc required for 81 mm bomb have engaged in the practices of determination of purchase price of “CN Container” (the Product) and collusive bidding in contravention of the provisions of sections 3(3)(a) and 3(3)(d) read with section 3(1); of the Competition Act, 2002.

The CCI considering the remote possibilities of direct evidence in the case of cartel reiterate its earlier decisions that the existence of an anti-competitive practice or agreement can be inferred from the circumstantial evidence i.e. conduct of the colluding parties.  Such conduct may include a number of coincidences and indicia which, taken together and in absence of any plausible explanation, points towards the existence of a collusive agreement.

The Commission noted that quotation of identical price without any satisfactory justification on production cost gives apparent evidence to price collusion adopted by the opposite parties. The Commission was of the opinion that common ownership of a large number of opposite parties, through related directors, coupled with the fact that a number of opposite parties quoted same rates indicates to a conclusion that the opposite parties acted pursuant to an anti-competitive agreement/understanding to manipulate the bidding process in the present case. Price parallelism coupled with peculiar market conditions like few enterprises with same owners, stringently standardized product, predictable demand, etc., unequivocally establishes that the conduct of the Opposite Parties of quoting identical/ similar price bids was only due to collusive tactics adopted by them in violation of section 3(1); read with sections 3(3)(a) and section 3(3)(d) of the Act.

The Commission noted that, in the absence of any such an anti-competitive agreement, the bidders would have not only competed against each other (on price) but may have also undercut each other to secure the contract which would have resulted in lower prices for the consumers. Therefore, the consumers, i.e., the three ordinance factories, have also been deprived of the benefits that could have accrued to them on account of the competitive bidding process. The Commission in its order directed the opposite parties to cease and desist from the anti-competitive practices and imposed a penalty at the rate of 3% of the average turnover of the relevant financial years, In re: Sheth & Co.,2015 CCI 12, decided on 10/06/2015

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): CCI has dismissed a complaint filed against Kent RO Systems, alleging unfair business practices with respect to sale of spare parts and services/maintenance of Kent RO water purifier systems. The Informant alleged that Kent RO Systems being a dominant player had through contracts limited the access of independent repairers and other multi-brand service providers to genuine spare parts required to effectively compete with the authorised dealers of the company. It was also alleged that by charging exorbitant price for its spare parts and after sales service, Kent RO Systems has charged a price which is unrelated to the “economic value” of the product, which in absence of the dominance that it currently enjoys in the relevant market could not have been otherwise charged. After perusal of documents, CCI observed that no case of contravention of the provisions of the Competition Act has been made out against Kent RO Systems in the matter. CCI observed that the allegations of the informant regarding non-availability of the spare parts of Kent RO water purifier systems in the market are proved false as the spare parts can be purchased online by the customers. While noting that the informant failed to adduce a single document or any pricing data to support the assertion that the prices charged by Kent RO Systems are “exorbitant” and “unusually high”, CCI dismissed the information. (Amitabh v. Kent RO Systems, 2015 CCI 4, decided on February 26, 2015)

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): CCI has rejected an information filed by Muthoot Mercantile Ltd. alleging that 12 commercial banks including State Bank of India had entered into an anti-competitive arrangement to determine the price and control the gold loan business and formed a cartel for offering and marketing gold loan products. Other banks which were included are IDBI, Canara Bank, Indian Overseas Bank, Federal Bank, South Indian Bank, Central Bank of India, Syndicate Bank, Vijaya Bank, Dhanlaxmi Bank, State Bank of Travancore and Catholic Syrian Bank. Muthoot Mercantile Ltd., in its information had contended that all the 12 Banks were forming a cartel and launching a new gold loan product viz. agri-gold loan at the rate of four percent (4%) thereby causing adverse/detrimental effect on the informant and other similarly situated NBFCs dealing in gold loan. Informant also alleged that offering loans at the rate of 4% under the guise of agricultural loan against the pledge of gold, is abuse of Interest Subvention Scheme of the Government of India as even RBI had clarified that the benefit of Interest Subvention Scheme was not meant for agri-gold loans or gold loan. After perusing the record, CCI observed that there was no material on record which is indicative of any collusion or concerted practice on the part of the Banks which can be said to be in contravention of the provisions of Section 3 of the Act or can be termed as anti-competitive. While rejecting the contention of the informant, CCI observed that prima facie, no case of contravention of the provisions of either Section 3 or Section 4 of the Competition Act, 2002 has been made out against the banks and dismissed the information. (Muthoot Mercantile Ltd. v. State Bank of India, 2014 CCI 77, decided on December 30, 2014)

Tribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): CCI has rejected a complaint filed by Kalpataru Enterprises, a franchisee of Reebok India Co. alleging that Adidas AG, Reebok International Ltd and Reebok India Company, as a group, abused its dominant position in the relevant market of sale of premium sports goods in Noida. It was alleged in the complaint that the terms and conditions of the Franchisee Agreement signed between Kalpataru Enterprises and Adidas AG Group are not only unfair but also discriminatory vis-à-vis other franchisees as other Franchisee owners are receiving a higher rate of commission and assurance of a minimum guaranteed payment for operating the retail outlet was also given to other franchisees. It was averred that such discriminating practice of the Adidas AG Group had put some franchisees/retailers at a competitive disadvantage position vis-à-vis the others thus, causing an appreciable adverse effect on competition in the downstream market. It was further stated that the said acts of the Adidas AG Group amounted to imposition of discriminatory conditions which is in infringement of the provisions of Section 4(2) (a) (ii) of the Competition Act, 2002. After hearing the parties, CCI observed that though Adidas AG Group appears to be a dominant group in the relevant market, allegations of complainant seem to be baseless and not amounting to an abuse of dominant by the Adidas AG Group within the meaning of Section 4 of the Act. CCI said, “the Commission finds two fundamental flaws in the allegations made by the Informant. Firstly, the Agreement which was termed as unfair and arbitrary was entered into in 2003 when the alleged dominant group had not even come into existence. Secondly, even if the submission of the Informant regarding dominance of the Adidas AG Group is accepted post the formation of group in 2005, the conduct of the Adidas AG Group vis-à-vis the Informant remained same (as the Agreement  was said to be continued on same terms and conditions). Further, as per Informants own submissions, the agreement with M/s Neelkanth Traders was more favourable than the one with it which fact goes against the allegation of abuse by the Adidas AG Group.” “A manufacturer is not being obligated to follow a single template agreement throughout its existence. With passage of time and operations, the commercial arrangements may undergo a change,” CCI added. (Om Datt Sharma v. Adidas AG, Case No. 10 of 2014, decided on May 13, 2014)


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