Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi, Members found no cartelization in respect to the skyrocketing prices by the airlines during the Jat Agitation.

Informant had alleged that Jet Airways, Spice Jet and Indigo had contravened the provisions of Section 3 of the Competition Act.

Informant’s Submissions

During the month of February 2016 when Jat Agitation was going on, domestic airlines had skyrocketed their rates particularly between the Delhi-Chandigarh and Delhi-Amritsar routes.

From the above instance, it was noted that the aviation industry had been exploiting the passengers during such conditions as the same was observed during the Chennai Floods and Nepal Earthquake.

Preliminary Conference

Commission on noting the allegations and submission by the Informant held a preliminary conference and made a reference to the Director-General of Civil Aviation in terms of Section 21 A of the Act, later the Commission sought certain information from 5 airlines.

What did the Commission note?

Commission noted that with the use of algorithms, there exists a high possibility of collusion with or without the need of human intervention or coordination between competitors.

Therefore, Commission opined that there was a need for investigation of the algorithms used by airlines, so as to determine whether the fares set by the airlines during the alleged period were an outcome of collusion or not?

 Hence, on 9-11-2018 an order was passed to cause an investigation to be made.

 DG in its investigation report concluded that no contravention of Section 3(3) read with Section 3(1) of the Act was found against the conduct of Spice Jet, Air India, Go Air and Indigo during the period of ‘Jat’ Agitation, but in regard to Jet Airways, DG excluded the same from its purview of investigation since the airline was grounded in April 2019 and due to grounding of Jet Airways and un-availability of any employee/personnel, the Resolution Professional could not provide any price data, booking dates, capacity of flight, number of passengers flown and the number of price buckets used by Jet Airways during the period of ‘Jat’ Agitation.

After the objections and suggestions were filed, parties were directed to appear for a final hearing on the investigation report on 23-02-2021.

On the fixed date of hearing, Commission noted that neither the informant nor its counsel appeared before the Commission.

Further, Commission considered the matter in its ordinary meeting and decided to pass an appropriate order.

What did the investigation try to ascertain?

It was ascertained whether the increase in air-ticket prices during the period of Jat Agitation was the result of an agreement between the OPs?

Whether the price data suggested any uniformity in prices indicative of price parallelism?

DG found no contravention of Section 3(3) read with Section 3(1) of the Act against the conduct of Spice Jet, Air India, Go Air and Indigo during the period of Jat Agitation.

Analysis and Decision

Commission noted that the existence of an ‘agreement’ is sine qua non before ascertaining whether the same is anti-competitive or not in terms of the scheme of Section 3 of the Act.

Definition of ‘agreement’ as given in Section 2(b) of the Act requires inter alia any arrangement or understanding or action in concert whether or not formal or in writing or intended to be enforceable by legal proceedings.

The establishment of ‘agreement’ would require some explicit or tacit arrangement amongst the parties wherefrom a concert between them can be deciphered. This may include, amongst others, exchange of information in the form of communications/ e-mails or in any other form of communication amongst the competitors, whether – explicit or tacit, oral or in writing, formal or informal including through parallel conduct which cannot be otherwise explained etc.

 In the instant matter, no such emails were found which could show any exchange of information among the airlines establishing any form of collusion during or after the period of Jat Agitation.

The investigation did not reveal any price parallelism or identical pricing of tickets by the airlines.

Further, elaborating more, Commission noted that widespread usage of algorithms in price determination by individual firms could pose possible anti-competitive effects by making it easier for firms to achieve and sustain collusion without any formal agreement or human interaction.

Based on DG’s investigation, Commission noted that airlines were using different software’s for the pricing of tickets in different fare bucket.

No evidence on record was found to establish a cartel amongst the airlines during the period of Jat Agitation.

Hence, no case of contravention of the provisions of Section 3(1) of the Competition Act was made out against the airlines. [Shikha Roy v. Jet Airways (India) Ltd., 2021 SCC OnLine CCI 31, decided on 3-06-2021]


Advocates before the Court:

For SpiceJet Limited: Mr. Abhishek Sharma, Advocate along with Mr. Shashi Shekhar, Executive (Legal) of OP-2

For InterGlobe Aviation Limited: Mr. Raj Shekhar Rao, Senior Advocate with Mr. Sagardeep Rathi, Mr. Pranjal Prateek and Mr. Ebaad Nawaaj Khan, Advocates

For Go Airlines (India) Limited: Mr. Vihang Virkar and Mr. Karun Jhangiani, Advocates along with Mr. Prashant Shinde, Senior General Manager (Legal) of OP-4

For Air India Limited: Mr. Pratik Majumdar, DGM of OP-5

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): The coram comprising of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) while addressing a very interesting matter with respect to WhatsApp’s updated policy, expressed that:

“…in a data driven ecosystem, the competition law needs to examine whether the excessive data collection and the extent to which such collected data is subsequently put to use or otherwise shared, have anti-competitive implications, which require anti-trust scrutiny.”

As per several media reports, WhatsApp updated its privacy policy and terms of service for WhatsApp users.

It was reported that the new policy made it mandatory for the users to accept the terms and conditions in order to retain their WhatsApp account information and provides as to how it will share personalized user information with Facebook and its subsidiaries.

In the present matter, both Facebook and WhatsApp will together be referred to as ‘Opposite Parties’.

Commission on noting the impact of policy and terms for WhatsApp users decided to take suo motu cognizance of the matter.

WhatsApp submitted that its current Terms and Service and Privacy Policy, as well as the proposed update in the same fall within the purview of the information and technology law framework and these issues, are currently sub judice before various courts and other fora in India.

Further, it was added that the examination of the 2021 Update by Courts and the Government of India is not merely limited to data protection/ privacy laws but extends to assessing more broadly whether the 2021 Update is in conformity with principles of fairness, public policy and national security considerations.

WhatsApp relied on the Supreme Court decision in Competition Commission of India v. Bharti Airtel Limited, (2019) 2 SCC 521, and stated that the said decision emphasized the need to maintain comity between decisions of different authorities on the same issues and held that the Commission should only exercise jurisdiction after the proceedings before the sectoral regulator had concluded and attained finality.

Bench noted that WhatsApp failed to point out any proceedings on the subject matter which a sectoral regulator is seized of.

“…Commission is examining the policy update from the perspective of competition lens in ascertaining as to whether such policy updates have any competition concerns which are in violation of the provisions of Section 4 of the Act.”

 Further, the Commission added that, it is obligated to ‘prevent’ practices having adverse effect on competition.

Whether the Ops have violated provisions of Section 4 of the Act?

 On what points has the Commission sought clarification?

  • The primary aim of the 2021 Update is twofold: (i) to provide users with further transparency about how WhatsApp collects, uses and shares data; and (ii) to inform users about how optional business messaging features work when certain business messaging features become available to them.
  • 2016 Update allowed existing users the option to opt-out of sharing their WhatsApp account information with Facebook Companies for ads and product experiences purposes. WhatsApp is continuing to honour the 2016 opt-out for anyone who had chosen it, and the most recent updates do not change that. If anyone who has previously opted out agrees to the 2021 Update, WhatsApp will acknowledge their agreement to the 2021 Update and also continue to honour the 2016 opt-out.
  • Privacy of personal messaging is integral to the growth and vision of WhatsApp. This commitment to keeping WhatsApp a safe and protected place where people can connect privately has not changed. WhatsApp cannot see users’ personal conversations with friends and family because they are protected by end-to-end encryption.
  • 2021 Update does not expand WhatsApp’s ability to share data with Facebook and does not impact the privacy of personal messages of WhatsApp users with their friends and family.
  • The 2021 Update provides more specifics on how WhatsApp works with businesses that use Facebook or third parties to manage their communications with users on WhatsApp. Even for users who choose to interact with a business on WhatsApp, the implications of such data sharing are minimal.

WhatsApp submitted that the 2021 Update raised no concerns from a competition perspective and the said Update aimed to provide greater transparency, hence no investigation shall be initiated.

Commission took note of the recent developments wherein the competing apps, i.e. Signal and Telecom witnessed a surge in downloads after the policy announcement by WhatsApp. However, apparently, it did not result in any significant loss of users for WhatsApp.

Comparison with Previous Policy| No opt-out option?

As per the previous policy, existing users were provided with an option to choose not to have their WhatsApp account information shared with Facebook. However, it was evident from the latest policy statement on the WhatsApp website and the media reports that the said choice as was available under the previous policy is not available now.

“…consent to sharing and integration of user data with other Facebook Companies for a range of purposes including marketing and advertising, has been made a precondition for availing WhatsApp service.”

Moving ahead, Bench noted that the data collected by WhatsApp would be shared with Facebook Companies for various usages envisaged in the policy. The Commission also took note of the submission of WhatsApp that it would continue to honour the ‘opt-out’ option exercised by users during the 2016 Update; however, the 2021 Update do not create any carveout for such users who opted for not sharing their information with Facebook.

On considering the overarching terms and conditions of the new policy, the Commission prima facie opined that the ‘take-it-or-leave-it nature of privacy policy and terms of service of WhatsApp and the information sharing stipulations mentioned therein merit a detailed investigation in view of the market position and market power enjoyed by WhatsApp.

The conduct of WhatsApp/ Facebook under consideration merits detailed scrutiny.

Bench opined that the users are entitled to be informed about the extent, scope and precise purpose of sharing of such data by WhatsApp with other Facebook Companies.

“… opacity, vagueness, open-endedness and incomplete disclosures hide the actual data cost that a user incurs for availing WhatsApp services. “

Commission also observed that it is also not clear from the policy whether the historical data of users would also be shared with Facebook Companies and whether data would be shared in respect of those WhatsApp users also who are not present on other apps of Facebook i.e., Facebook, Instagram, etc.

There appeared to be no justifiable reason as to why users should not have any control or say over such cross-product processing of their data by way of voluntary consent, and not as a precondition for availing WhatsApp’s services.

No Voluntary Agreement

Users are required to accept the unilaterally dictated ‘take-it-or-leave-it’ terms by a dominant messaging platform in their entirety, including the data sharing provisions therein, if they wish to avail their service. Such “consent” cannot signify voluntary agreement to all the specific processing or use of personalised data, as provided in the present policy.

Unfair

On a careful and thoughtful consideration of the matter, the conduct of WhatsApp in sharing of users’ personalised data with other Facebook Companies, in a manner that is neither fully transparent nor based on voluntary and specific user consent, appears prima facie unfair to users.

Data Sharing with Facebook

The impugned conduct of data-sharing by WhatsApp with Facebook apparently amounts to degradation of non-price parameters of competition

The impugned data-sharing provision may have exclusionary effects also in the display advertising market which has the potential to undermine the competitive process and creates further barriers to market entry besides leveraging, in violation of the provisions of Section 4(2)(c) and (e) of the Act.

While stating that a thorough and detailed investigation is required in the matter, and DG to complete the same within a period of 60 days, held that WhatsApp has prima facie contravened the provisions of Section 4 of the Act through its exploitative and exclusionary conduct, as detailed in this order, in the garb of policy update.[Updated Terms of Service and Privacy Policy for WhatsApp Users, In Re., 2021 SCC OnLine CCI 19, decided on 24-03-2021]

Case BriefsSupreme Court

Supreme Court: In a plea seeking inquiry into the alleged anti-competitive practices of Ola and Uber of entering into price-fixing agreement, the 3-judge bench of RF Nariman*, KM Joseph, Krishna Murari, JJ has refused to interfere with the concurrent finding of CCI and NCLAT that Ola and Uber do not facilitate cartelization or anti-competitive practices between drivers, who are independent individuals, who act independently of each other, so as to attract the application of section 3 of the Competition Act, 2002.

Why was an inquiry sought?

An informant sought that the Competition Commission of India initiate an inquiry, under section 26(2) of the Competition Act, 2002, into the alleged anti-competitive conduct of ANI Technologies Pvt. Ltd. [Ola], and Uber India Systems Pvt. Ltd., Uber B.V. and Uber Technologies Inc. [Uber], alleging that they entered into price-fixing agreements in contravention of section 3(1) read with section 3(3)(a) of the Act, and engaged in resale price maintenance in contravention of section 3(1) 1 read with section 3(4)(e) of the Act. According to the Informant, Uber and Ola provide radio taxi services and essentially operate as platforms through mobile applications which allow riders and drivers, that is, two sides of the platform, to interact. Due to algorithmic pricing, neither are riders able to negotiate fares with individual drivers for rides that are booked through the apps, nor are the drivers able to offer any discounts. Thus, the pricing algorithm takes away the freedom of riders and drivers to choose the best price on the basis of competition, as both have to accept the price set by the pricing algorithm.

Further, despite the fact that the drivers are independent entities who are not employees or agents of Ola or Uber, the driver is bound to accept the trip fare reflected in the app at the end of the trip, without having any discretion insofar as the same is concerned. The drivers receive their share of the fare only after the deduction of a commission by Ola and Uber for the services offered to the rider.

What did the counsels say?

Senior Advocate Abhishek Manu Singhvi, appearing on behalf of Uber, walked the Court through the concurrent findings of fact of the CCI and the NCLAT and said that every driver of a taxi cab, who uses the Ola or Uber app, can have several such apps including both Ola, Uber and the apps of some of their competitors, and can take private rides de hors these apps as well.

Advocate Rajshekhar Rao, appearing for Ola, agreed with Dr. Singhvi’s submissions on merit but questioned the locus standi of the informant, an “independent practitioner of law”. He, thus, prayed before the Supreme Court that “in such cases heavy costs should be imposed to deter such persons from approaching the CCI with frivolous and/or mala fide information, filed at the behest of competitors.”

Additional Solicitor General Balbir Singh, appearing on behalf of the CCI, however, stated that though he would support the CCI’s Order closing the case, he would also support the right of the Appellant to approach the CCI with information.

What did the Supreme Court say?

Informant’s locus standi

A reading of the provisions of Competition Act, 2002 and the Competition Commission of India (General) Regulations, 2009 shows that “any person” may provide information to the CCI, which may then act upon it in accordance with the provisions of the Act. The definition of “person” in section 2(l) of the Act is an inclusive one and is extremely wide, including individuals of all kinds and every artificial juridical person.

Section 19(1) of the Act originally provided for the “receipt of a complaint” from any person, consumer or their association, or trade association. This expression was then substituted with the expression “receipt of any information in such manner and” by the 2007 Amendment. This substitution is not without significance.

A complaint could be filed only from a person who was aggrieved by a particular action, information may be received from any person, obviously whether such person is or is not personally affected. This is for the reason that the proceedings under the Act are proceedings in rem which affect the public interest. That the CCI may inquire into any alleged contravention of the provisions of the Act on its own motion, is also laid down in section 19(1) of the Act.

“Even while exercising suo motu powers, the CCI may receive information from any person and not merely from a person who is aggrieved by the conduct that is alleged to have occurred. This also follows from a reading of section 35 of the Act, in which the earlier expression “complainant or defendant” has been substituted by the expression, “person or an enterprise,” setting out that the informant may appear either in person, or through one or more agents, before the CCI to present the information that he has gathered.”

However, Section 45 of the Act is a deterrent against persons who provide information to the CCI, mala fide or recklessly, inasmuch as false statements and omissions of material facts are punishable with a penalty which may extend to the hefty amount of rupees one crore, with the CCI being empowered to pass other such orders as it deems fit.

“This, and the judicious use of heavy costs being imposed when the information supplied is either frivolous or mala fide, can keep in check what is described as the growing tendency of persons being “set up” by rivals in the trade.”

The 2009 Regulations also do not require the informant to state how he is personally aggrieved by the contravention of the Act, but only requires a statement of facts and details of the alleged contravention to be set out in the information filed. Also, regulation 25 shows that public interest must be foremost in the consideration of the CCI when an application is made to it in writing that a person or enterprise has substantial interest in the outcome of the proceedings, and such person may therefore be allowed to take part in the proceedings. Further,

“CCI must maintain confidentiality of the identity of an informant on a request made to it in writing, so that such informant be free from harassment by persons involved in contravening the Act.”

“Person aggrieved”

Since the CCI and the NCLAT deal with practices which have an adverse effect on competition in derogation of the interest of consumers, the Act vests powers in the CCI and enables it to act in rem, in public interest. Hence, a “person aggrieved” must, in the context of the Act, be understood widely and not be constructed narrowly.

Further, it is not without significance that the expressions used in sections 53B and 53T of the Act are “any person”, thereby signifying that all persons who bring to the CCI information of practices that are contrary to the provisions of the Act, could be said to be aggrieved by an adverse order of the CCI in case it refuses to act upon the information supplied. By way of contrast, section 53N(3) speaks of making payment to an applicant as compensation for the loss or damage caused to the applicant as a result of any contravention of the provisions of Chapter II of the Act, having been committed by an enterprise. By this sub-section, clearly, therefore, “any person” who makes an application for compensation, under sub-section (1) of section 53N of the Act, would refer only to persons who have suffered loss or damage, thereby, qualifying the expression “any person” as being a person who has suffered loss or damage.

It was, hence, noticed,

“when the CCI performs inquisitorial, as opposed to adjudicatory functions, the doors of approaching the CCI and the appellate authority, i.e., the NCLAT, must be kept wide open in public interest, so as to subserve the high public purpose of the Act.”

[Samir Agrawal v. Competition Commission on India, 2020 SCC OnLine SC 1024, decided on 15.12.2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): The Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) while addressing the complaint in regard to unfair business by WhatsApp, dismissed the same on finding no competition concern.

Informant has filed the present information under Section 19(1)(a) of the Competition Act, against Whatsapp and Facebook alleging a contravention of provisions of Sections 4 of the Act and both Facebook and Whatsapp are collectively known as “OPs”.

Users of WhatsApp automatically get the payment app owned by WhatsApp i.e. ‘WhatsApp Pay’ installed on their smartphones. This, as per the Informant leads to the contravention of Section 4(2)(a)(i) of the Act as automatic installation of WhatsApp Pay on existing WhatsApp Messenger user’s device amounts to the imposition of an unfair condition on the users/consumers.

COERCION

A user who does not wish to install the Payments App but only the Messenger App does not have the option to do so.

Contravention: Section 4(2)(e)

Automatic installation also amounts to a contravention of Section 4(2)(e) of the Act as the dominance of WhatsApp in the Internet-based instant messaging App market favours and protects it in the UPI enabled Digital Payments Applications Market.

Informant further alleges that the acquisition of WhatsApp, Instagram and Oculus by Facebook causes an adverse effect on the competition as these companies to have huge data sets of users that they can use for their commercial advantage.

Decision and Analysis

Coram observes that the preamble to the Act unequivocally voices the ethos with which the Act was enacted, keeping in view the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.

The mere fact that a case has been filed by an aggrieved party under the Competition Act, does not take away its character of being a case in rem involving a larger question of fair and competitive markets.

Further, it was observed that the Informant need to necessarily be an aggrieved party to file a case before the Commission.

Forum Shopping

Informant has indulged in forum shopping being closely associated with a petitioner who has approached the Supreme Court against WhatsApp and Facebook and this apparent non-disclosure reveals the mala fide intent and unclean hands with which the Informant has approached the Commission.

The Commission observes that WhatsApp and Facebook are third-party apps broadly providing internet-based consumer communications services. Consumer communications services can be sub-segmented based on different parameters.

Commission agrees with the Informant that the second relevant market for assessing the allegations of the Informant would be ‘market for UPI enabled Digital Payments Apps in India’.

At the outset, the Commission observes that Facebook and WhatsApp are group entities and though they may operate in separate relevant markets, their strengths can be attributed to each-others’ positioning in the respective markets in which they operate.

Commission added that in the absence of concrete data/information available in the Indian context other than the subjective information on the popularity of WhatsApp, the Commission is of the view that these trends and results can be used as a proxy, the said trends point towards Whatsapp’s dominance.

Barriers to Entry

The barriers to entry, may arise indirectly as a result of the networks effects enjoyed by the dominant player in the market, i.e. WhatsApp, in the present case. Since network effects lead to increased switching costs, new players may be disincentivized from entering the market.

Hence, Commission prima facie finds WhatsApp to be dominant in the first relevant market — market for OTT messaging apps through smartphones in India.

As regards Section 4(2)(a)(i), the Commission does not find much merit in the allegation of the Informant as mere existence of an App on the smartphone does not necessarily convert into transaction/usage.

Incorporating the payment option in the messaging app does not seem to influence a consumer’s choice when it comes to exercising their preference in terms of app usage, particularly since there seems to be a strong likelihood of a status quo bias operating in favour of the incumbents, at present.

With regard to the allegation under Section 4(2)(d) of the Act, the Commission observes that though the Informant has used the word ‘bundling’, the nature of such allegation is more akin to ‘tying’ as understood in the antitrust context generally.

While ‘tying’ refers to a practice whereby the seller of a product or service requires the buyers to also purchase another separate product or service, which essentially is the allegation of the Informant.

Installation of the WhatsApp messenger does not appear to explicitly mandate/coerce the user to use WhatsApp Pay exclusively or to influence the consumer choice implicitly in any other manner, at present.

UPI Market

UPI market is quite established with renowned players competing vigorously. Given the fact that WhatsApp ecosystem does not involve paid services as such for normal users, it seems unlikely that the consumer traffic will be diverted by WhatsApp using its strength in the messenger market. 

Facebook and WhatsApp undeniably deal with customer sensitive data which is amenable to misuse and may raise potential antitrust concerns among other data protection issues.

In the present case, the Informant has only alleged that WhatsApp/Facebook have access to data which they are using for doing targeted advertising, hence there is no concrete allegation.

Informant has also claimed that WhatsApp is in serious non-compliance with critical and mandatory procedural norms.

In view of the above allegation, Commission, do not seem to raise any competition concern and as such may not need any further scrutiny by it.

Therefore, based on the aforesaid analysis, Commission does not find alleged contravention of the provisions of Section 4 of the Act against WhatsApp or Facebook being made out. [Harshita Chawla v. WhatsApp,  2020 SCC OnLine CCI 32, decided on 18-08-2020]

Op EdsOP. ED.

Introduction

Post liberalisation in 1991, Indian economic policies had to undergo drastic changes to adapt to the global practices and national agenda. In 2002, the Competition Act[1] was enacted to replace the Monopolies and Restrictive Trade Practices Act, 1969[2], as it was considered insufficient to control anti-competition practises and nurture competition. The Competition Act, focused mainly on abuse of dominance, anti-competition agreements, competition advocacy and regulation of combinations. The Act had been implanted with efficiency, however, with the change in the market trends a need was felt to further analyse the Act in light of the current situations. The Government therefore constituted the Competition Law Review Committee in 2018[3], to study the current market trends and examine whether the Competition Act is in sync with the market practises. The Committee’s mandate was: to suggest any changes in the current regime taking into account the market trends, best international practises, other governmental policies and regulatory mechanisms which overlap the Competition Act, and any other related competition issues. The Competition (Amendment) Bill, 2020 [4] was then drafted based on the recommendations of the Committee.

The Bill aims to bring major changes to the current system. The key takeaways can be classified in the following categories.

Structural Changes 

Taking into account the Supreme Court’s decision in Brahm Dutt v. Union of India[5] and the Delhi High Court’s decision in Mahindra Electric Mobility Ltd.  v. CCI[6], the Committee acknowledged that the functions performed by the Competition Commission of India (CCI) is multifarious and therefore to establish a regulatory body in lines with other regulatory bodies in the country, the Bill introduced the establishment of a governing body[7], consisting of part time members and ex officio members. The objective behind the introduction of governing body is twofold, firstly to reduce the burden on the CCI, as the governing body will be responsible to carry out all the quasi-legislative function and policy decision, and secondly with the introduction of part time members and ex officio members, will bring in external perspective and will strengthen the democratic legitimacy and accountability of the CCI.

The Bill aims to merge the office of Director General (DG) constituted under Section 16 of the Competition Act, as an investigation branch of the CCI. Earlier the DG was not answerable to the CCI, but to the Central Government, however this classification was merely de jure. The Committee while recommending such change took into accounted practices adopted by European Union, China, United States and Brazil, and the Supreme Court’s decision in CCI v. Steel Authority of India Ltd.[8]

Changes in the functioning of the CCI

The Bill introduces provisions recognising the settlement or consent orders, in case of antitrust proceedings. The Bill proposes the introduction of certain provision which permit an investigated party to offer a settlement[9] or voluntary undertake certain commitments[10] in relation to an anti-competitive vertical agreement or abuse of dominance proceeding. The Bill under these provisions envision the mechanism to be adopted to permit such settlement or commitment mechanism. The objective of adoption of such orders was to enable the CCI resolve antitrust cases faster, which would in turn help the businesses to avoid long investigation procedure and uncertainty. This procedural change is a sign of relief to the corporate field.

Changes in provisions relating to combinations

The definition of control under the Act had not defined the minimum standards required to establish such control, therefore the CCI had used the yardstick of the ability to exercise ‘decisive influence’ and ‘material influence’. The Bill proposes to statutorily recognise the standards of ‘material influence’[11]. The introduction of such standards serves twin purpose, firstly, it would bring certainty and consistency in the decisions and secondly, it will ensure that a larger number of transactions are scrutinised while an investment friendly economy is maintained.

The Bill introduces many changes with regards to the regulations of combinations. Some of these are, the principal act prescribed certain specific grounds which would constitute combination and the parties involved in such a transaction would be under an obligation to notify CCI before the execution of any such agreement. The Bill introduces the power of the central government in consultation with CCI to identify any other ground which would constitute combination[12], further the Bill also states that the power would also include the power to delist any ground which would otherwise constitute combination[13]. It is a welcome change as it increase the jurisdictional threshold of CCI, such an amendment would help include a number of digital transactions which were currently out of the scope of scrutiny of CCI, as it did not had any residuary power under the act. 

The Bill purposes to statutorily recognise the Green Channel Process. The rationale behind introduction of such process is to enable fast-paced regulatory approvals for vast majority of mergers and acquisition that may have no major concerns regarding appreciable adverse effects on competition. The aim is to move towards disclosure based regime with strict consequences for not providing accurate or complete information. The power of green channel will also extend to approve resolutions arrived at in an insolvency resolution process under the Insolvency and Bankruptcy Code. Further to ensure time bound assessment of combination a mandatory 30days timeline is also included in the act[14]. The Bill also reduces the time within which the CCI has to issue its preliminary opinion on whether a combination would cause adverse effect on competition, from thirty working days to twenty calendar days[15]. Such timelines would help ease the burden on the parties involved in the transactions.

Inclusion of Technology and New Age Markets

The Bill purposes to expand the scope of the act to include within its scope the digital markets, in order to achieve the said goal the Bill makes a numbers of changes in the existing system. Some of the changes are, express inclusion of hub and spoke arrangement[16], and buyer’s cartel.  The Committee recognised the tactics used by the companies to escape scrutiny under the act and also took into account the orders issued by the CCI in  Hyundai Motors case[17] and Uber case[18], and recommended that the element of ‘knowledge’ or ‘intention’ should not be considered under such agreements.

The Bill seeks to widen the scope of section 3, the principal act restricted the scope of section to horizontal or vertical agreement leading to adverse effect on competition. The Bill intents to include other agreements too, taking into account the decision in Ramakant Kini v. Dr. L.H. Hiranandani Hospital[19] and to expand the scope of the provision to include agreement entered in the digital market. The Bills expressly includes the ‘control over data’ or ‘specialised assets’ under the list of conditions which constitute dominance of a company in the market[20]. The rationale behind such inclusion was to expand the scope of the section to online businesses collecting customer data through user feedback loops, which would have the company have a more targeted approach. 

Changes in the Enforcement Functions

The principal Act did not grant any punitive powers to the DG or the CCI, therefore the institution was toothless in case of noncompliance of the orders. The Bill intends to introduce wide range of powers to the DG as well as the CCI. The Bill introduces provision[21] under which any person who (a) fails to produce any documents, information or record, (b) did not appear before the DG or fail to answer any question by the DG, (c) or sign the note of cross-examination, shall be punishable with imprisonment of term extending up to six months or fine up to one crore rupees. The Bill introduces the maximum cap of penalty as the 10% of income of the individual in the preceding three years, in case of formation of cartels[22].

The Bill intends to adopt practises prevailing in countries like UK, US, Singapore and Brazil, where the cartel under investigation has disclosed some relevant information of some other existing cartel will be liable to lesser punishment[23]. The power to compound offences is introduced in the Bill[24].

Shortcomings in the proposed amendment

  1. The Committee recommended that the governing body should only have the power to perform quasi-legislative functions and policy decision and not the adjudicatory functions, however the Bill does not clearly demarcates such powers. Further the Bill is silent on the procedure of election of the part time member and ex officio members, which raises serious concerns of independence of such members.
  2. The Committee while recommending the adoption of the integrated agency model did not take into account the impact it would have on the system of check and balance established by separating the investigative and adjudicatory branches of an organisation. Such merger is against the principle enunciated by the Supreme Court in Excel Crop Care Ltd. v. CCI[25], wherein the Court accorded greater independence to the office of the DG. The Court held that although the base for any investigation is the allegation made in a complaint, however if any new facts are revealed the office of DG is empowered to include such facts in its report. Furthermore the Bill does not take into account protective measures suggested by the Committee in order to maintain the due process, such as the DG in order to maintain functional autonomy, should directly report to the Chairperson of CCI, the parties should have adequate right to representation and examine evidence, and there should be strong appellate forum. 
  3. The Bill is silent on a number of aspects of the settlement or commitment order, such as whether such order would have a precedential value i.e. whether such an order would have to be taken into account while deciding similar pending cases and whether the right to compensation would survive such order.
  4. The Bill merely introduces the concept of compounding of offences by the NCLAT, but it does not provide for the procedure to be adopted by the NCLAT. Furthermore, the Committee recommended that a Bench of NCLAT should be dedicated to hear appeals under the Act, however the recommendation was not incorporated under the Act. Such an action would have an adverse impact on the effective implementation of the Act. Since COMPAT established under the Act is scrapped, the rate of disposal of appeals have decreased considerably. And if the recommendation is not incorporated in the Act, it will hamper the national initiatives like Make in India. 
  5. The power to review which was initially granted to the CCI, was repealed by the 2007 amendment. However later in Google Inc. v. CCI[26] the Court held that such power of review is inherent in nature. While there have been other contrary judgements, the Committee should have recommended the introduction of the power to review, however no such recommendation was made.

Conclusion

The introduction of the amendment Bill is a welcome step, as the country is at a very critical juncture where it is imperative for the Government to properly assess each recommendation before implementing the same. The Government in order to reap maximum benefit of the huge market, it must maintain a balance between robust administration and market friendly regime. The Bill is currently open for suggestion by the interested stakeholders, but a brief analysis of the proposed amendment reveals that the Government is motivated to implement a regime where the interest of all the stakeholders are taken into account. 


*4th year student, MNLU Nagpur. The author can be contacted at jhs.shivamtripathi@gmail.com

[1] Competition Act, 2002

[2] Monopolies and Restrictive Trade Practices Act, 1969

[3] Government of India, MCA, ‘Government constitutes Competition Law Review Committee to review the Competition Act’ (30 September 2018) <https://pib.gov.in/newsite/PrintRelease.aspx?relid=183835> accessed on 11 March 2020.

[4] Draft Competition (Amendment) Act, 2002 <http://feedapp.mca.gov.in/pdf/Draft-Competition-Amendment-Bill-2020.pdf> accessed on 09 March 2020.

[5](2005) 2 SCC 431

[6] (2019) SCC Online Del 8032

[7] Under Section 8

[8] (2010) 10 SCC 744, para 8. 

[9] Under Section 48-A

[10] Under Section 48-B.

[11] Under Explanation of clause (a), Section 5. 

[12] Under proviso to Section 5.

[13] Under second proviso to Section 5.

[14] Under Section 6(2).

[15] Under Section 29(1-A).

[16] Under Section 3(3).

[17] Fx Enterprise Solutions India Pvt. Ltd. v. Hyundai Motor India Ltd., 2017 SCC OnLine CCI 26 

[18] Samir Agrawal v. ANI Technologies Pvt. Ltd., 2018 SCC OnLine CCI 86 

[19] Ramakant Kini v. Dr. L.H. Hiranandani Hospital, 2014 SCC OnLine CCI 17  

[20] Under Section 19(4)

[21] Under Section 41(8).

[22] Under Sections 27 and 48.

[23] Under Section 46(3).

[24] Under Section 59-A

[25] (2017) 8 SCC 47

[26] 2015 SCC Online Del 8992

Cyril Amarchand MangaldasExperts Corner

Introduction

The Supreme Court of India (Supreme Court) in a landmark judgment has after a wait of almost four years allowed the Director General (DG) to investigate into the alleged dominance of Uber India Systems Pvt. Ltd. (Uber) and abuse thereof in the radio taxi services market in the Delhi-NCR area[1]. The Uber Order[2] emanates from an information filed by Meru Travel Solutions Private Limited (Meru), that was dismissed by the Competition Commission of India (CCI) stating that Uber is not prima facie dominant in the relevant market and thus, closing the case under Section 26(2) of the Competition Act, 2002 (CCI order). 

The CCI order was then challenged by Meru before the Competition Appellate Tribunal (Compat)[3] which reversed the findings of the CCI regarding the prima facie dominance of Uber and expanded the relevant geographical market from Delhi to Delhi-NCR. The Compat primarily differed from the CCI on the issue of reliance on a market research report by New Age TechSci Research Private Limited (TechSci). Whereas the CCI did not consider the TechSci report due to contrary findings in a 6Wresearch report, the Compat noted that the CCI in an earlier case has relied upon a TechSci report and that the two reports showing contrary results is a good reason to order an investigation into the matter. Consequently, the Compat judgment ordering the DG to investigate the matter was challenged and upheld by the Supreme Court in appeal.

The Uber Order[4] supplements the growing competition law jurisprudence in India and highlights “predatory pricing” as a factor for both establishing dominance and abuse of dominance. The primary reasons for the Supreme Court to interfere in the matter was that the information filed before the CCI was presented has been shown to them which prima facie depicts that Uber has been engaging in predatory pricing by offering huge discounts to consumers and high incentives to driver-partners resulting in an average loss of INR 204 to Uber on each trip. The Supreme Court based on this information alone stated that it would be very tough to say that there is no prima facie case under Section 26(1) of the Competition Act, 2002. 

CCI Jurisprudence on Predatory Pricing So Far

Thus far, the CCI has stated that predatory pricing is exclusionary and can be indulged in only by enterprises(s) which are dominant in a relevant market[5]. To this extent, the major elements in the determination of predatory behaviour include : 

(a) Establishment of the dominant position of the enterprise in the relevant market,

(b) Pricing below cost for the relevant product in the relevant market by the dominant enterprise,

(c) Intention to reduce competition or eliminate competitors, which is, traditionally known as the predatory intent test. [6]

The timeline and the evolution of CCIs jurisprudence in respect of predatory pricing has been discussed below: 

In MCX Stock Exchange Ltd. v. National Stock Exchange of India Ltd. (2011)[7], the CCI held that predatory pricing is a subset of unfair price and as the unfair price has not been defined anywhere, the unfairness has to be determined on the basis of the facts of the case. The unfairness has to be examined in relation to the customer or the competitor. The CCI stated that there is no justifiable reason for the National Stock Exchange of India (NSE) to continue offering its services free of charge for such a long duration and stated that the conduct of zero pricing, in this case, is beyond promotional or penetrative pricing. 

The CCI in its orders has laid down the factors to be taken into consideration while assessing the allegations of predatory pricing, specifically with regard to whether there is reduction or elimination of competition.

 In Transparent Energy Systems (P) Ltd. v. TECPRO Systems Ltd. (2013)[8], the CCI provided that the following findings are relevant for the identification of predation :

(a) The prices of the goods or services of the enterprise are at a very low level;

(b) the objective is to drive out competitors from the market, who due to the low pricing would be unable to compete at that price;

(c) there is significant planning to recover the losses if any, after the market rises again; or

(d) the competitors have already been forced out. 

The allegation of predatory pricing was the primary issue argued before the CCI in Bharti Airtel Ltd. v. Reliance Industries Ltd. (2017)[9]. The issue arose from an allegation that Reliance Jio Infocomm Limited (RJIL) since its inception has been providing free telecom services below its average variable cost with the intention of eliminating competitors. The CCI noted that the alleged predatory conduct should be investigated only if RJIL is prime facie dominant in the relevant market and in the absence of such dominance, there is no question of any investigation for predatory pricing. The CCI’s observation disclosed that the informant had not demonstrated reduction of competition or elimination of any competitor arising from RJIL’s actions. The CCI also noted that RJIL was a new entrant to market and its competitive pricing is a short-term business strategy to penetrate the market and establish its identity. The CCI accordingly dismissed the information filed against RJIL and closed the case under Section 26(2) of the Competition Act, 2002.

In Fast Track Call Cab (P) Ltd. v. ANI Technologies (P) Ltd. (2017)[10], similar allegations as in the Uber Order[11] were raised before the CCI i.e. pertaining to predatory pricing. The CCI, concurring with the DG’s investigation, found that ANI Technologies Pvt. Ltd. (Ola) did not exercise dominant position in the market. The informants put forth the allegation that the conduct of predatory pricing, was an evidence of dominance in itself. In this regard, the CCI noted that 97. … New entrants commonly engage in such practices to gain a toehold in the market and holding them dominant based on simple observation of conduct may have the undesirable result of chilling competition [12]. and accordingly, closed the case against Ola. 

Uber Order—Impact on Establishing Dominance and Predatory Pricing

The importance of establishing “dominance” of an enterprise before proceeding with an investigation has been clearly emphasised by the CCI in its jurisprudence. However, the Supreme Court has taken a slightly divergent view in the Uber Order [13]. It has stipulated that predatory pricing itself could tantamount to proof of dominance as it affects the competitors of a relevant enterprise in its favour as per Explanation (a) of Section 4 of the Competition Act, 2002. In this regard, the Supreme Court in the Uber Order[14] cited that 6. … if … a loss is made for the trips, Explanation (a)(ii) would prima facie be attracted inasmuch as this would certainly affect the appellant’s competitors in the appellant’s favour or the relevant market in its favour. 

The CCI in its orders has not considered predatory pricing as a factor for ascertaining dominance of an enterprise rather dominance has been taken as an after-effect of dominance. For e.g., in the NSE case[15], the CCI considered, inter alia, the ability of NSE to sustain zero pricing in the relevant market for long enough to outlive competition as a factor to ascertain the position of strength of NSE, however, did not state that engaging in predatory pricing can itself amount to proof of dominance. 

Takeaways 

The CCI has not held predatory pricing to be abusive under all circumstances. It has been held to be a legitimate strategy for a new entrant to capture market share and attracting customers to a new product or service. However, the same practice becomes abusive when it is continued indefinitely with the intent of driving out existing competitors and subsequently recouping losses incurred while carrying out the predatory pricing.

The Uber Order[16] has taken a circular approach to dominance. This approach was discussed in the Ola case[17] where it was argued that predatory pricing is evidence of dominance in itself. However, the CCI’s position in the Ola case[18] does not get compromised by the Uber Order[19] and this is because the CCI explained that the market for radio taxis was at a nascent stage and the low prices are not because of cost efficiency but because of the funding it has received from private equity funds.  

Thus, the Ola case[20] is not rendered wholly inconsistent with the approach of the Supreme Court. It will be interesting to watch whether the CCI going forward considers predatory pricing as proof of both dominance and abuse of such dominance.


Dhruv Rajain, Principle Associate, can be contacted at dhruv.rajain@cyrilshroff.com.

Shubhankar Jain, Associate can be contacted at shubhankar.jain@cyrilshroff.com, Aakriti Thakur, Associate can be contacted at aakriti.thakur@cyrilshroff.com and with the Competition Law Practice at Cyril Amarchand Mangaldas.

[1] Uber (India) Systems (P) Ltd. v. CCI, (2019) 8 SCC 697 (Uber Order).

[2] (2019) 8 SCC 697.

[3] Erstwhile Appellate Tribunal replaced by the National Company Law Appellate Tribunal by way of Notification in the Gazette
of India dated 26-5-2017 available at <http://egazette.nic.in/WriteReadData/2017/176250.pdf>.

[4] (2019) 8 SCC 697.

[5] Advocacy Booklet on Provisions Relating to Abuse of Dominance available at
<https://www.cci.gov.in/sites/default/files/advocacy_booklet_document/AOD.pdf>.

[6]  Ibid

[7] 2011 SCC OnLine CCI 52.

[8] 2013 SCC OnLine CCI 42.

[9] 2017 SCC OnLine CCI 25.

[10] 2017 SCC OnLine CCI 36.

[11] (2019) 8 SCC 697.

[12] 2017 SCC OnLine CCI 36.

[13](2019) 8 SCC 697.

[14] (2019) 8 SCC 697, 700.

[15] 2011 SCC OnLine CCI 52.

[16] (2019) 8 SCC 697.

[17] 2017 SCC OnLine CCI 36.

[18] Ibid

[19] (2019) 8 SCC 697.

[20] 2017 SCC OnLine CCI 36.

Business NewsNews

The Competition Commission of India (CCI) received the following three Green Channel combinations filed under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) read with Regulation 5A of the Competition Commission of India (Procedure in regard to the transactions of business relating to combinations) Regulations, 2011 (Combination Regulations):

  1. Acquisition of IDBI Asset Management Ltd. (IAML) and IDBI MF Trustee Company Ltd. (IMTL) by Muthoot Finance Limited (MFL) [filed on 16th December 2019]

The notification relates to the acquisition of 100% equity shares of both IAML and IMTL by MFL. MFL, a non-deposit taking NBFC registered with the RBI and provides secured and unsecured loan (financing) against collateral of gold jewellery to companies and individuals. IAML’s principal activity is to act as an asset management company to the IDBI Mutual Fund. IMTL acts as the trustee company of IDBI MF in India. IDBI Bank holds 100% shareholding in IMTL.

Summary of the Proposed Combination is available at: https://www.cci.gov.in/sites/default/files/notice_order_summary_doc/C-2019-12-710.pdf 

  1. Acquisition of Adani Electricity Mumbai Limited (AEML) and Adani Electricity Mumbai Services Limited (AEMSL) by Qatar Holding LLC (QH) [filed on 19th December, 2019]

The notification relates to the acquisition by QH of 25.1% equity shares of AEML and AEMSL from Adani Transmission Limited.  QH, registered as a FPI with SEBI, is an investment holding company of Qatar Investment Authority (QIA).  AEML is the licensee for an integrated power distribution, transmission and generation business. AEMSL is a newly incorporated entity and is currently not engaged in any business activity. AEMSL intends to provide certain captive services to AEML and ATL.

Summary of the Proposed Combination is available at

https://www.cci.gov.in/sites/default/files/notice_order_summary_doc/C-2019-12-712.pdf

3. Acquisition of GVK Airport Holdings Limited (GVKAHL ) by Green Rock B 2014 Limited (Green Rock), National Investment and Infrastructure Fund (NIIF) and Indo-Infra Inc. (Indo-Infra) [filed on 19th December, 2019]

The notification relates to acquisition of shares of, and control over, GVKAHL (and/or of its affiliates) and through GVKAHL (and/or through its affiliates), control over GVKAHL’s subsidiaries, Mumbai International Airport Limited (MIAL) and Navi Mumbai International Airport Private Limited (NMIA) by Green Rock, NIIF, and Indo-Infra. Green Rock, a trustee of Green Stone Trust has made certain investments in India and does not carry out any business activities directly in India. NIIF is an alternative investment fund with a focus to provide long-term capital to the country’s infrastructure sector. Indo-Infra is a holding company and part of the PSP group. PSP is a Canadian Crown corporation established by the Canadian Parliament under the Public Sector Pension Investment Board Act. GVKAHL is an affiliate of the GVK group. GVKAHL is a holding company for MIAL and its subsidiaries and joint ventures, and is also intended to engage in the business of developing infrastructure facilities and investing in companies directly or indirectly developing, operating and managing airports.

Summary of the Proposed Combination is available at

https://www.cci.gov.in/sites/default/files/notice_order_summary_doc/C-2019-12-713.pdf

          The Proposed Combinations filed under sub-section (2) of Section 6 of the Act read with regulations 5A of the Combination Regulations (i.e. notice for approval of Combinations under Green Channel) shall be deemed to have been approved upon filing and acknowledgment thereof.

CCI Green Channel

The CCI introduced an automatic system of approval for combinations under ‘Green Channel’. Under this process, the combination is deemed to have been approved upon filing the notice in the prescribed format. This system would significantly reduce the time and cost of transactions and thereby contributing towards ease of doing business in India.


Ministry of Corporate Affairs

[Press Release dt. 20-12-2019]

[Source: PIB]

Hot Off The PressNews

Competition Commission of India (CCI) approves the following Combinations under Section 31(1) of the Competition Act, 2002:

  1. Acquisition of Dixcy Textiles Pvt. Ltd. (DTPL) by Varenna Holdings Limited (Varenna)

The proposed transaction entails acquisition of equity shares in DTPL by Varenna. Varenna already holds 60% of the shares in DTPL.

Varenna is an indirect subsidiary of funds managed by Advent International Corporation.

DTPL is primarily engaged in manufacturing of hosiery products including men’s inner wear (including boy’s inner wear), women’s innerwear (including girl’s innerwear) and casual wear (including T-shirts, Tracks, sweatshirts, shorts, leggings, athleisure, thermal wear, capris and skirts).

  1. Acquisition of approximately 25% shareholding of Federal-Mogul Goetze (India) Limited (FMGI) by Icahn Enterprises L.P. (IEP LP); American Entertainment Properties Corp. (AEP); and IEH FMGI Holdings L.L.C. (IEH)

The proposed transaction contemplates an acquisition of approximately up to 25.02% shareholding of FMGI by the Acquirers from the public shareholders of FMGI. Under the SEBI (Substantial Acquisitions of Shares and Takeover) Regulations, 2011, IEP LP and AEP, together with its subsidiary, IEH are the persons acting in concert with Tenneco Inc.

FMGI (the target) manufactures and sells pistons, piston rings, valve seats, valve guides and structured parts for a wide range of applications including two/three-wheelers, cars, sport utility vehicles, tractors, light commercial vehicles, heavy commercial vehicles, stationary engines and high output locomotive diesel engines.

  1. Restructuring of pharmacy business of Apollo Hospitals Enterprise Limited (AHEL) and its subsequent acquisition by Enam Securities Private Limited, Jhelum Investment Funds I and Hemendra Kothari.

In terms of the proposed combination, the front end standalone pharmacy business of AHEL shall be transferred by AHEL to Apollo Pharmacies Limited (APL) by way of slump sale pursuant to approval of the National Company Law Tribunal, Chennai Bench.

AHEL is a part of the Apollo Group and provides integrated healthcare services in India and internationally. AHEL healthcare facilities comprise primary, secondary, and tertiary care facilities.

APL is engaged in the business of buying, selling, importing, exporting, distribution or dealing in or manufacturing, Medical and Pharmaceuticals products like intravenous sets, intravenous solutions, all kinds of drugs, disinfectants, tinctures, colloidal products, injectable and all pharmaceuticals and medical preparations and other related products.


[Source: PIB]

Ministry of Corporate Affairs

[Press Release dt. 24.09.2019]

Cyril Amarchand MangaldasExperts Corner

The Indian e-commerce sector’s revenue is expected to jump from USD 39 billion in 2017 to USD 120 billion in 2020, growing at an annual rate of 51%, which is the highest in the world.[1]The emergence of the e-commerce sector as a popular mode for distribution in the digital economy has made it prone to vertical restraints.[2] In the wake of the global trend of an antitrust crackdown on tech giants, including e-commerce marketplaces, the “Competition Commission of India” (CCI) has also started looking into allegations dealing with vertical restraints by major e-commerce companies like, Flipkart, Snapdeal, Jabong, Myntra and Amazon.

However, most of the vertical restraint cases dealt by the CCI so far have been related to price restraints like minimum “Resale Price Maintenance” (RPM) or fixed pricing policies and non-price restraints like exclusive distribution network or other kinds of exclusive agreements. But owing to the growing complexities in the e-commerce markets including the economics of the two-sided markets, it is important to take note of other novel types of vertical restraints like “Across Platforms Parity Agreements” (APPA) or retail “Most Favoured Nation” (MFN) clause, “geo-blocking” or “geo-filtering” and advertising restrictions.[3] Here a pertinent question that arises is whether the CCI is currently equipped to deal with such peculiar issues in such a fluid and fast-growing market like e-commerce in India?

Regulatory Framework for Vertical Restraints in the E-Commerce Sector

The CCI has the power to scrutinise any agreement pertaining to the e-commerce sector that leads to an “Appreciable Adverse Effect on Competition” (AAEC) under Section 3 of the Competition Act, 2002 (Act), which lays down the framework for regulating anti-competitive agreements, including vertical restraints. Section 3(4) of the Act specifically deals with vertical restraints and states that:

“Any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade-in goods or provision of services, including—

(a) tie-in arrangement;

(b) exclusive supply agreement;

(c) exclusive distribution agreement;

(d)  refusal to deal;

(e)  resale price maintenance…”

The section clearly mentions that any of the above agreements/arrangements would amount to a contravention of Section 3 of the Act if they cause an AAEC in India.

CCI’s Take on the E-Commerce Sector

The crucial questions that the CCI faced while dealing with a few of the cases on vertical restraints in the e-commerce sector have primarily been on the appropriate market definition. Whether online vertical agreements between e-commerce platforms and third-party businesses selling on such platforms qualify as distributors in a vertical distribution chain or as providers of inter-mediation platform services? However, several questions still remain agonisingly unresolved, like, what are the relevant criteria to distinguish between the two? What about platforms that also compete with third party sellers on the platforms?

The CCI has held that, although offline and online markets differ in terms of discounts and shopping experience, they are merely different channels of distribution of the same product and are not two different relevant markets. In Ashish Ahuja v. Snapdeal[4], the CCI noted that consumers weigh available options in both online and offline markets before taking any decision and are likely to shift to online or offline market if the price in any one of these markets increases.

In Mohit Manglani v. Flipkart India (P) Ltd.[5] the CCI considered the unique features specific to the e-commerce sector as such platforms provide an opportunity to the consumers to compare prices as well as various characteristics of the products simultaneously. However, the CCI did not consider it necessary to delineate the relevant market as e-commerce due to the parties not being dominant in both the online and offline markets individually.

Despite the reluctance of the CCI to accept e-commerce market as a separate relevant market initially, in certain recent judgments the CCI has laid importance on considering the specific characteristics of the e-commerce sector as compared to the offline markets. Recently, in All India Online Vendors Association v. Flipkart India (P) Ltd.[6], the CCI noted that from the end consumers’ perspective, the distinction line between online and offline sellers are sometimes blurry, yet it cannot be denied that online marketplaces offer convenience for sellers and buyers. For sellers, they save costs in terms of setting up of a store, sales staff, electricity and other maintenance charges, while the benefits afforded to buyers include the comfort of shopping from their homes thus saving time, commuting charges and at the same time they can compare multiple goods. Moreover, the CCI noted that the increasing number of buyers who visit online platforms lead to network effects in the online market, an important phenomenon missing in online retail stores or offline markets.

In light of the above, it may be said that there has been a shift in the CCI’s approach in considering e-commerce as a stand-alone market as the CCI has appreciated that e-commerce markets are unique and have different implications, unlike other regular markets.

Vertical Restraints in the E-Commerce Sector in India

As mentioned above, e-commerce sector is very prone to competition issues arising out of vertical restraints. Some of the most popular and conventional vertical restraints that the CCI has handled in this sector consist of RPM, selective distribution network and the exclusive distribution networks.

Minimum RPM

In Jasper Infotech (P) Ltd. (Jasper) v. Kaff Appliances (India) (P) Ltd. (Kaff)[7], Jasper, which owns and operates Snapdeal, alleged that Kaff, a manufacturer of chimneys and hobs sold on Snapdeal, was attempting to impose a “Minimum Operating Price” (MOP) on Snapdeal to make sales not below a minimum price and threatened to ban online sales if such prices were not maintained. This was the CCI’s first substantial order [under Section 26(6)] where the CCI dealt with allegations of RPM, particularly minimum RPM, on online platforms. However, Kaff was not penalised as the CCI observed that the restrictions imposed on Snapdeal did not cause an AAEC in the market.

Similarly, in Counfreedise v. Timex Group India Ltd.[8], the CCI delved into the alleged anti-competitive conduct in the nature of RPM wherein it was alleged that the opposite party was discriminating against the informant vis-à-vis other e-commerce players like Cloudtail, XL Retail, etc. It was observed that for RPM to be effective in form of discount control, it has to be imposed on all online retailers and not just the informant and any agreement in the nature of RPM must meet the test of causing AAEC in India in order to be termed as anti-competitive.

Based on the above cases, we can infer that the CCI has taken a rule of reason approach in relation to dealing with cases on vertical restraints like minimum RPM, given the effects based approach in the above cases. Nevertheless, in Jasper v. Kaff, it has acknowledged the pernicious effects of minimum RPM and its treatment as a hardcore restriction in many antitrust jurisdictions.

Objective Justifications and Pro-Competitive Benefits

In Jasper v. Kaff, the CCI accepted that, many a time, vertical agreements do protect the interests of the end consumer and are pro-competitive. Although restraints such as minimum RPM may adversely affect the price competition between retailers/distributors, vertical restraints nevertheless are a commercially viable option and desirable from the perspective of both manufacturers/retailers and consumers when the intra-brand price competition between retailers/distributors provides an incentive to free ride in the short-run and under-provisioning in the long-run.

Free riding is the most common practice which can be resolved by regulation of the online vertical restraints by the CCI. One retailer may free ride on the investment of another, typically possible where a manufacturer invests in the marketing and promotion at one retailer’s premises which a competing manufacturer takes advantage of. This is where the need to vertical restraints come in handy and effectively safeguard the investments made by the stakeholders of a product.

Other accepted justifications include protection of one’s brand reputation and goodwill, quality control and authenticity certification or protection from counterfeit/spurious products (an issue that is rampant in India’s e-commerce ecosystem), etc. Another important issue which can be dealt with by regulating online vertical restraints is in relation to information asymmetries between buyers and sellers, where the end consumers have lesser information about products than their online sellers due to the inability of the consumer to physically inspect a product prior to purchase.

Unchartered Territories

In Jasper v. Kaff, the CCI took cognizance of the international jurisprudence on online vertical restraints imposed by or on e-commerce platforms, including certain novel vertical restraints peculiar to the online market, namely, MFN clauses, APPAs, non-price restrictive clauses, etc. However, the CCI, till date, has not had the opportunity to deal with these issues. With the Indian e-commerce market emerging as a prime global attraction, it is pertinent to look at what these practices entail and see the kinds of issues that the CCI may have to deal in the near future:

APPAs.—A vertical agreement between a seller/manufacturer and an online platform wherein the seller agrees to sell at a retail price that is not higher than that charged on other platforms.

MFN Clauses.—In situations where a particular APPA condition covers the seller’s/manufacturer’s own online and/or offline platforms, such types of APPAs amount to retail MFN.

Both APPAs and MFNs are parity arrangements. They may also apply to quantity or volumes which can restrict a supplier’s ability to allocate inventory across a range of distribution channels in response to competition between platforms.[9] Parity agreements foreclose the market by (i) deterring entry of rival platforms as they make it harder for new entrants to attract suppliers to the new platforms; (ii) preventing an intermediary from selling directly; and (iii) enabling horizontal collusion in the downstream market leading to higher prices on consumers (like a “hub and spoke” cartel).

Geo-Blocking.—This is a practice where sellers operating in a country/region block or limit public access to their online interfaces, like apps or websites, for consumers hailing from other countries wishing to partake in cross-border transactions. The European Commission’s Geo-blocking Regulation of 2018 condemns this as discriminatory, based on a consumer’s nationality, place of residence or establishment with the European Union. This is a unique vertical restraint which concerns cross-border online sales.

The Way Ahead

In light of the above discussions, it is clear that anti-competitive arrangements in the e-commerce sector are just as innovative as the sector itself. These are by no measure traditional vertical restraints, with their distinct sets of effects and implications for competition regulation.

We believe that Section 3(4) of the Act can squarely cover these anti-competitive practices. However, it may require the aid of e-commerce sector-specific rules and regulations to enable the CCI to deal with the intricacies and peculiarities of the e-commerce sector, such as network effects, cross-border sales, use of algorithms, counterfeiting, etc. However, one aspect that the CCI has got right is its rule of reason approach, as in case of online vertical restraints, it is essential that the regulator balances the anti-competitive effects with the pro-competitive rationale or objective justification of the particular restriction while adjudicating these cases.


Dhruv Rajain, Principal Associate, can be contacted at dhruv.rajain@cyrilshroff.com. Nandini Pahari, Associate can be contacted at nandini.pahari@cyrilshroff.com, Satvik Mohanty, Associate can be contacted at satvik.mohanty@cyrilshroff.com and with the Competition Law Practice at Cyril Amarchand Mangaldas

[1]    <https://www.ibef.org/industry/ecommerce.aspx>

[2]    <https://www.oecd.org/document/DAF/COMP/WD(2018)52/en/pdf>p. 2

[3]    <http://www.oecd.org/competition/VerticalRestraintsForOnlineSales2013.pdf>, p. 11

[4]    2014 SCC Online CCI 65

[5]    2015 SCC Online CCI 61

[6]    2018 SCC Online CCI 97

[7]    2014 SCC Online CCI 150

[8]    2018 SCC Online CCI 67

[9]    <https://centrocedec.files.wordpress.com/2015/07/special-project_online-vertical-restraints-2015.pdf>, p. 66

Cyril Amarchand MangaldasExperts Corner

The enactment of the Insolvency and Bankruptcy Code, 2016 (IBC) in 2016 was one of the most significant reforms introduced by the Government of India (GoI) in the recent years. However, it lacked clarity on its interface with various other regulatory authorities, particularly the Competition Commission of India (CCI). Pertinently, the IBC did not contemplate the timelines for a resolution applicant to notify and seek the approval of the CCI, thereby posing several complex questions, in particular—what would qualify as a binding agreement for insolvency cases? Whether notification process can be triggered prior to approval of a resolution plan? Whether IBC related cases would be granted an expedited approval? Whether preferential treatment would be granted to companies approaching the CCI post obtaining an approval from the Committee of Creditors (CoC)?

With the notification of the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 (Second Amendment), the Ministry of Corporate Affairs has provided much needed clarity to all stakeholders in relation to the above issues. The Second Amendment by way of introduction of a new provision, mandates the approval of the CCI prior to the approval of a resolution plan by the CoC, thereby taking away the discretion exercised earlier by resolution applicants as to the timelines of notifying the CCI. In this backdrop, the article touches upon the merits of the amendment, active role of the CCI in the past two years and the way forward.

Legal Framework

The corporate insolvency resolution process (CIRP) is initiated with the admission of an application against a corporate debtor to the National Company Law Tribunal (NCLT). Thereafter, a resolution professional issues request for resolution plans inviting the interested bidders to submit resolution plans in relation to resolution of the corporate debtor. This is followed by approval of such resolution plan by the CoC and stamping of final approval by the NCLT. The IBC mandates a 180-day period which can be extended to 90 days for the completion of the CIRP.

In the construct of Section 5 of the Competition Act, 2002 (Competition Act), where certain jurisdictional thresholds prescribed under it are breached, a transaction under the CIRP would trigger a mandatory approval from the CCI before closing such a transaction. Under the Competition Act, the CCI is required to form a prima facie opinion of whether a transaction notified to it causes an appreciable adverse effect on competition (AAEC) within a period of 30 working days from the date of such notification. Besides the 30 working day period, the CCI is required to approve/reject/approve with modification any notified transaction within 210 days from the date of such notification, which can be extended to 60 days in limited cases where remedies are warranted. It is important to note that a majority of the cases notified to the CCI have been approved in Phase I of the review period i.e. within the preliminary 30 working day period.

Reasons for the Second Amendment vis-à-vis Competition Act

The Ministry of Corporate Affairs by way of its Notification dated 17-8-2018 added Section 31(4) to the IBC, which inter alia provides that—

… where the resolution plan contains a provision for combination, as referred to in Section 5 of the Competition Act, 2002 (12 of 2003), the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors.

The above amendment is a welcome step as it clarifies the trigger event for a transaction under the CIRP i.e. essentially the stage at which the CCI approval should be sought. Having a clear mandate to obtain approval from the CCI will go a long way in preventing complex situations which have come up due to the regulatory uncertainties around the CCI approval process.

In the past, we have seen certain cases being notified to the CCI both prior to and post the approval of the CoC. For instance, in the acquisition of Binani Cement Limited (BCL) (one of the first few IBC matters examined by the CCI) two resolution applicants i.e. Dalmia Cement Limited (Dalmia) and UltraTech Cement Limited (UltraTech), both filed separate notifications with the CCI prior to receiving an approval from the CoC. The CCI accorded an approval, finding no AAEC to both Dalmia and UltraTech. However, the approval to UltraTech was accorded by the CCI post the CoC’s approval of the Dalmia resolution plan, thereby making CCI’s approval of UltraTech immaterial.

In another case on point relating to the acquisition of Electrosteel Steels Limited (Electrosteel) by Vedanta Limited (Vedanta), the CCI was notified post the approval of the resolution plan by the CoC. Importantly, Vedanta’s resolution plan was subsequently approved by the NCLT during the CCI’s review process. Such a situation i.e. approval by the NCLT pending the CCI approval could possibly lead to two issues — (1) disqualification of Vedanta and ultimately liquidation of Electrosteel assuming that CCI’s approval took more than 270 days (mandated under the IBC); and (2) potential gun-jumping concerns under the Competition Act because of the conflict between the IBC and the Competition Act resulting from the implementation of “control” provisions under a resolution plan (pursuant to the approval of NCLT).

CCI, IBC and the Way Forward

The CCI has up until now expeditiously assessed a number of IBC transactions and approved such transactions, with an average of 20 days per transaction. As mentioned above, the Second Amendment is a welcome step given that it clarifies the exact timelines for notifying the CCI in the CIRP framework. The Second Amendment emphasises the intent of the GoI to ensure expedited clearances for transactions, defined roles for the various regulators and harmony between the implementation of the statutes.

More importantly, the mandate of the Second Amendment requiring a resolution applicant to obtain approval from the CCI prior to the CoC approval of a resolution plan ensures that the two potential issues highlighted above are avoided, even if it results in multiple filings for the same transaction before the CCI by different resolution applicants.

While the Second Amendment (to the extent it applies to the Competition Act) is an outcome of the need for streamlining regulatory approval process, it would also be interesting to see whether further amendments will be rolled out in this regard or, whether the GoI, following the suit of Securities and Exchange Board of India, would resort to exempting such transaction from the purview of CCI altogether.


*Anshuman Sakle is a Partner with the Competition Law Practice at Cyril Amarchand Mangaldas and can be contacted at anshuman.sakle@cyrilshroff.com.  Dhruv Rajain, Senior Associate can be contacted at dhruv.rajain@cyrilshroff.com and Ruchi Verma, Associate, can be contacted at ruchi.verma@cyrilshroff.com with the Competition Law Practice at Cyril Amarchand Mangaldas.

Cyril Amarchand MangaldasExperts Corner

In December 2018, the Competition Commission of India (CCI) amended the Competition Commission of India (General) Regulations, 2009 (General Regulations) and included a new regulation restricting advocates from accompanying individuals summoned by the office of the Director General (DG). Specifically, the newly inserted Regulation 46-A (2) of the Competition Commission of India (General) Amendment Regulations, 2018 does not allow advocates to, “sit in front of the person so summoned” and states that an advocate, “shall not be at a hearing distance and shall not interact, consult, confer or in any manner communicate with the person, during his examination on oath”.[1] In case of contravention of these conditions, the amendment states that an advocate may be held liable for misconduct, such that he or she may be disallowed from appearing before the DG and the CCI for a time period the CCI deems necessary. Additionally, in cases of misconduct, the CCI may also forward a complaint against the relevant advocate to the Bar Council of the State of which the advocate is a member.

Pursuant to the notification of this amendment, the Tamil Nadu Advocates Association (TNAA) along with the former Vice-Chairman of the Bar Council of Tamil Nadu and Puducherry filed a petition challenging the validity of the amendment on grounds of it violating provisions of the Advocates Act, 1961 and that it attempts to usurp the exclusive functions of the Bar Council of India with respect to undertaking disciplinary action against advocates. In this regard, on 4-1-2019, the Madras High Court (HC) issued an interim stay on the implementation of the amendment until further orders. In this context, currently there exists an inherent ambiguity with regard to the position of advocates vis-à-vis the amendment and the Competition Act, 2002.

Inherent Ambiguity and HC Interim Stay

The amendment is the first attempt to frame written rules and/or regulations on advocates accompanying persons summoned by the DG. Despite lack of such rules and regulations, in practice, advocates would, in any case, be placed in a position wherein he or she could not communicate, consult, or confer with the person being examined under oath. While this has now been codified in the amendment, there is additional language that states that an, “advocate shall not be at a hearing distance” from the person being examined under oath. This is a major concern and creates significant ambiguity, as advocates being placed in a different room from the person being examined becomes a real possibility.

Further, the amendment does not elaborate on what essentially constitutes “misconduct” and nevertheless goes on to detail methods of punishment that the CCI can impose on the advocate in cases of misconduct, which includes the ability to disallow an advocate to appear before the DG and CCI. This magnifies the amendment’s ambiguity, as an advocate’s misconduct is left to the subjective assessment of the DG at the time of the deposition/examination of a person under oath. Moreover, the ability to discipline such an advocate who engages in misconduct is also a prima facie encroachment of the powers of the Bar Council of India that is empowered to discipline advocates in accordance with the provisions of the Advocates Act, 1961. While the HC appears to have taken cognizance of the latter fact i.e. potential encroachment of the Bar Council of India’s powers and has issued an interim stay on the implementation of the amendment pursuant to the petition filed by TNAA, the inherent ambiguity of the amendment is yet to be examined as a ground for invalidity.

Prevalent Scenario

In light of the interim stay passed by the HC on the implementation of the amendment, there seems to be a procedural vacuum in relation to advocates accompanying persons summoned by the DG. Prior to the amendment, an advocate would accompany the person without any prior notification to the DG, if there existed an executed power of attorney in favour of the advocate. Presently, despite the interim stay of the HC, advocates duly authorised by a power of attorney to represent the person summoned by the DG must file a letter prior to the date of interrogation requesting that he or she can accompany the person summoned by the DG and the presence of an advocate during such an integration which is essential to the interest of the client is uncertain .


*Anshuman Sakle is a Partner with the Competition Law Practice at Cyril Amarchand Mangaldas and can be contacted at anshuman.sakle@cyrilshroff.com.  Dhruv Rajain, Senior Associate can be contacted at dhruv.rajain@cyrilshroff.com and Balaji Venkatakrishnan, Associate can be contacted at  balaji.venkatakrishnan@cyrilshroff.com with the Competition Law Practice at Cyril Amarchand Mangaldas.

[1] The Competition Commission of India (General) Amendment Regulations, 2018, available at <https://www.cci.gov.in/sites/default/files/regulation_pdf/193680.pdf>.

 

Cyril Amarchand MangaldasExperts Corner

 


It is not uncommon for companies to commence integration process right after the deal documents for the transaction are signed. While the senior management of the parties delight at the prospect of speedy harmonisation between the two businesses pending regulatory clearances and formal closing, often the reasonable boundaries of legitimate information exchange are trespassed. This excessive exchange of information and coordination between parties prior to consummation of a transaction is often susceptible to antitrust laws and can lead to heavy penalties.

This issue has been scrutinised by the French Competition Authority (FCA) in a recent decision in Altice Case[1] (Altice order) where the parties to the transaction had exchanged strategic information between signing and closing, including the acquirer intervening in the targets commercial and pricing policy requiring the target to take buyers consent for few activities, and exchanging price sensitive information. The exchange of such information was considered to be “gun jumping” and the FCA imposed a penalty of EUR 80 million on Altice.

Considering the trend of exchanging information in mergers and acquisitions, a common query that often arises is what can be done, and what cannot be, to ensure a seamless transition yet not draw the wrath of the antitrust authorities. In pursuance of answering this question, the Federal Trade Commission of United States of America has recently issued a brief guidance (FTC Guidance) explaining how the parties can reduce antitrust risk when exchanging competitively sensitive information prior to closing.

The FTC Guidance provides that the party disclosing the information should share the least amount of information needed for effective due diligence or premerger integration planning issue and such information should be narrowly tailored. If more detailed information is required for integration purposes, then resort should be taken to have clean teams to share such information. The Guidance further provides that if customer and competitive information is required to be given, then such information should be masked and consolidated and customer identities should be protected through redactions. Care should also be taken to ensure that information is not provided in tranches which can be consolidated to recover confidential information. Lastly, due care should also be taken to ensure that post due diligence or in the event of failure of the transaction finally taking place, the information provided is destructed. As for the receiving party, the FTC Guidance provides that, any employee handling the confidential information should be aware of the terms of confidentiality and clean teams should be established with third-party consultants. Clean team should also be vetted by outside counsel, and members of the clean team should have a strategy in place regarding who may access the acquired information. Clean teams should also undertake diligence to ensure that information meant for the clean team is not provided to members outside the clean team, and if such information is required to be provided, then, such information should be blinded, aggregated and vetted by an outside counsel before dissemination.

While this is an FTC Guidance, “gun jumping” issues are similar across all jurisdictions where there is a mandatory merger control regime which requires a pre-clearance before closing. India too is a mandatory suspensory regime where transactions which require a notification to the Competition Commission of India (CCI) pursuant to the Competition Act, 2002 (Act) are required not to consummate the transaction in part or whole before the CCI clearance or the expiry of the waiting period of 210 days. Since 2011, while the CCI has passed significant number of orders under Section 43-A of the Act penalising companies which have partly/wholly consummated the transaction before the same is notified to the CCI or before the receipt of approval, thus far there has been no specific decision in relation to gun jumping issues relating to information exchange. However, the CCI in its recent order in Hindustan Colas (P) Ltd./Shell India Markets (P) Ltd.[2] has furthered its jurisprudence by holding that pre-payment of consideration constitutes gun jumping as it creates a tacit collusion which may cause an adverse effect on competition even before consummation of the transaction, effectively stating that the actions of the parties which can have a possibility of affecting the independent behaviour of the transacting parties could be amenable to antitrust scrutiny.

The issue of what affects the independent behaviour of transacting entities prior to the final closing is somewhat foggy in India. However, what is rather clear is that while the exchange of benign information between the parties pre-closing is permissible, information which is commercially or competitively sensitive in nature such as strategic pricing information etc. would constitute “gun jumping” and therefore frowned upon. Having said that, given the practicalities of conducting business, sensitive business information is often shared even prior to closing through a safeguarded mechanism such as the one mentioned in the FTC Guidance (i.e. clean teams).

In this regard, although the competition regulators recommend that clean teams comprise external advisors, employees/personnel of the parties not closely associated with the day-to-day business operation and management of the transacting companies can also safely form a part of the clean teams arrangement subject to strict non-disclosure commitments ring-fencing the confidential information’s flow beyond the clean team members. This is one of the reasons why clean teams is fairly popular with the corporate houses as it allows effective integration planning sans the risk of antitrust concerns. Finally, in case of a doubt, it is best to seek the counsel of an external advisor to ensure that an otherwise harmless integration planning is not sabotaged resulting into a heavy fine from the CCI.

 

Anshuman Sakle is a Partner with the Competition Law Practice at Cyril Amarchand Mangaldas and can be contacted at anshuman.sakle@cyrilshroff.com. Anisha Chand is a Principal Associate with the Competition Law Practice at Cyril Amarchand Mangaldas and can be contacted at anisha.chand@cyrilshroff.com. Authors would like to thank Soham Banerjee, Associate, Competition Law Practice, for his contribution.

[1] Decision No. 16-D-24 of 8-11-2016.

[2] Combination Registration No. C-2015/08/299.

 

Cyril Amarchand MangaldasExperts Corner


The Indian telecom sector has witnessed continual activity in the recent years, with the entry of new players such as Reliance Jio, consolidation between existing players such as Vodafone and Idea Cellular and the exit of incumbent players such as Telenor and Tata Teleservices. This constant transformation has intensified the battle between industry players to garner market shares and attract consumers. In addition to competing in the marketplace, telecom operators have also been fighting legal battles on competition issues such as cartelisation and predatory pricing as well as on telecom issues such as interconnection. Given that the issues at the core of these matters relate to both competition and telecom laws, a turf war has arisen between the Telecom Regulatory Authority of India (TRAI) and the Competition Commission of India (CCI) re jurisdiction.

Notably, CCI had, through a letter to TRAI last year, highlighted its competence to look into matters relating to predatory pricing. The letter was a result of a consultation paper issued by TRAI in February 2017 on anti-competitive concerns in tariffs by Telecom Service Providers (TSPs).[1] In his letter, the CCI Chairperson stipulated that “issues and questions for consultation relating to delineation of relevant market, assessment of dominance and predatory pricing” are “issues of determination for the Commission”.[2]

Responding to CCI, TRAI stressed that it had the experience and capability to examine all matters, including competitive issues, falling within the purview of tariffs.[3] In line with its assertion, pursuant to the Telecommunication Tariff (Sixty-third Amendment) Order, 2018 (the Amendment Order)[4], TRAI has recently amended the Telecommunication Tariff Order, 1999 (the Tariff Order), to regulate tariffs offered by TSPs on the basis of competition law principles. Through the amendment, TRAI has introduced concepts of “significant market power” and “predatory pricing” in the Tariff Order.

According to TRAI, such regulatory powers are set out under the Telecom Regulatory Authority of India Act, 1997 (the TRAI Act), which requires it to take “measures to facilitate competition and promote efficiency in the operation of telecommunication services so as to facilitate growth in such services”. To further this mandate of facilitating competition, TRAI in its Amendment Order has provided guidance on non-predation, through the insertion of the following definitions:

(a) “Non-predation” has been defined as not indulging in predatory pricing by a service provider having significant market power;

(b) “Significant market power” has been defined as a TSP holding a market share of at least 30% in the relevant market, which is to be determined on the basis of either subscriber base or gross revenue. The Amendment Order simultaneously recognises that the concept of ‘SMP’ flows from the concept of ‘dominance’ under competition laws;

(c) “Predatory pricing” has been defined as the provision of a telecommunication service in the relevant market at a price which is below the average variable cost, with a view to reduce competition or eliminate the competitors in the relevant market—Interestingly, the Amendment Order also refers to the definition of “predatory pricing” under the Competition Act, 2002 (the Competition Act) to emphasise that intent is the key;

(d) “Relevant market” has been defined as the market which may be determined by TRAI with reference to the relevant product market for distinct telecommunication services (such as Wireline Access Service, National Long Distance Service, International Long Distance Service) and the relevant geographical market;

(e) “Relevant product market” has been defined as the market in respect of a distinct telecommunication service for which the licensor grants licence to the TSP;

(f) “Relevant geographic market” has been defined as a market comprising the respective licence service area for which the licensor grants licence to the TSPs to provide distinct telecommunication services.

In addition to requiring the TSPs to conduct a self-check of tariffs at the time of reporting it to TRAI in order to ensure that there is no predation, the Amendment Order also confers suo motu powers on TRAI to examine tariffs to determine the occurrence of any predatory pricing, thus extending its jurisdiction to ex-post abusive conduct. In case of predation, a penalty not exceeding INR 50 lakhs per tariff plan for each service area can be imposed by TRAI.

Post the introduction of the Amendment Order however, officials of TRAI have clarified that dominant operators may match tariffs offered by a new entrant, and such actions would not be seen as predatory.[5]

On the other hand, the Competition Act established a sector agnostic regulator to prevent practices having adverse effect on competition and to promote and sustain competition in markets. The Competition Act sets out specific prerogatives of CCI to prohibit anti-competitive agreements and abuse of dominance. The abusive practices identified include predatory pricing. However, affording due consideration to the market dynamics, the Competition Act requires CCI to holistically examine such conduct. The in-depth examination required by CCI includes the delineation of the relevant market on the basis of factors such as end-use, pricing, consumer preferences, regulatory barriers, transport costs, etc.[6] Subsequently, CCI is required to make a determination of dominance giving due regard not only to the market share of the enterprise, but also to its size and resources, economic power, entry barriers, countervailing buyer power, market structure, etc.[7] Similar to clarifications from TRAI officials, the Competition Act also provides for a carve-out against predatory pricing if such pricing has been adopted to “meet the competition”.

However, contrary to the bright-line test of 30% under the Amendment Order, CCI’s decisional practice repeatedly cautions against adopting a blanket market share test for detection of dominance. As noted by CCI’s Chairperson in the letter to TRAI, market interactions should ideally be assessed on a case-by-case basis without any presumptions based on a formulaic framework.[8] CCI’s holistic approach is evidenced by its recent orders in the telecom sector, where it has approved mergers of key telecom players, despite the significant aggregate market shares, after having weighed in factors such as buyer power, increased switching, absence of switching costs, presence of other players, dynamic nature of the market, etc.[9]

The difference in the regulatory frameworks gives a preview of the contrasting approach to be adopted by the regulators for the same contravention and the conflicting regulatory views that the industry is likely to witness in the coming months. Moreover, while contrasting views may make compliance by TSPs difficult, similar findings may also lead to double jeopardy.

The regulatory conflict has already surfaced before courts, with the Bombay High Court finding that the Competition Act itself is not sufficient to decide and deal with the issues arising out of the provisions of TRAI Act and the contract conditions, under the relevant regulations.[10] The appeal to the Bombay High Court had been filed against a prima facie order of the CCI finding that TSPs, such as Airtel and Vodafone, had cartelised to deny adequate point of interconnections to Reliance Jio to thwart its entry into the telecom market. The decision of the High Court has now been appealed to the Supreme Court.

While the way forward is unknown, this fight for regulatory supremacy can only end with the CCI and TRAI joining forces to coordinate and consult with each other in matters that involve questions of competition and telecom laws. This will also be in line with the intent of the legislators who foresaw this situation and included a provision[11] under the Competition Act for a reference of matters inter se CCI and other statutory regulators.

 

Anshuman Sakle is a Partner with the Competition Law Practice at Cyril Amarchand Mangaldas and can be contacted at anshuman.sakle@cyrilshroff.com.  Arunima Chandra is a Senior Associate with the Competition Law Practice at Cyril Amarchand Mangaldas and can be contacted at arunima.chandra@cyrilshroff.com.

[1] Available at http://www.trai.gov.in/sites/default/files/Consultation_paper_03_17_feb_17_0.pdf.

[2]Available at https://www.thehindubusinessline.com/info-tech/turf-war-rages-between-cci-and-trai-over-telecom-tariffs/article9791247.ece.

[3]Available at http://www.financialexpress.com/industry/trai-tells-cci-it-has-power-to-settle-competitive-telecom-tariff-issues/798026/.

[4] Available at http://trai.gov.in/sites/default/files/TTO_Amendment_Eng_16022018.pdf.

[5]Available at http://www.livemint.com/Industry/O00tAdsmeBgcObcQSE42uO/Telecom-firms-free-to-match-Reliance-Jios-cheap-tariffs-ru.html.

[6] Sections 19(6) and (7) of the Competition Act.

[7] Section 19(4) of the Competition Act.

[8]Available at http://www.livemint.com/Industry/uzSqE22Uk4Lgt1jX8PjCOJ/CCI-to-Trai-Consult-us-on-predatory-pricing-issues.html.

[9]Vodafone/Idea, Combination Registration No. C-2017/04/502; Bharti Airtel Ltd./Tata Teleservices Ltd., Combination Registration No. C-2017/10/531.

[10] Vodafone India Ltd. v. Competition Commission of India, 2017 SCC OnLine Bom 8524.

[11] Sections 21 and 21-A of the Competition Act.

Op EdsOP. ED.

The Competition Act, 2002 (the Act) is a giant step towards reformation of anti-competitive policies over its precursor, the Monopolistic and Restrictive Trade Practice Act, 1969 (MRTP). Becoming fully operational in 2009, the Competition Commission of India (CCI) in these 9 years has witnessed varying kinds of cases coming up related to issues of economic concentration and unfair trade, with its jurisdiction extending to a wide area of e-commerce cases involving both online and offline transactions.[1] It has brought about many changes and has had wide-ranging effects on the business sector, both private and public.

Extraterritorial jurisdiction: To infinity and beyond

The Act incorporates extraterritorial jurisdiction as under Section 32 of the Act which is based on the “effects doctrine”.[2] The absence of such provision under the MRTP Act barred the scope of action against any anti-competitive conduct involving imports, and foreign cartels in particular.[3] The Act has categorically removed this restriction, thus having an enabling effect and giving CCI the power to take action against any foreign business entity indulging in any sorts of anti-competitive behaviour.

However, its application remains contentious as far as the turnaround time for the approval of combinations and quick decision making is concerned. There exist apprehensions if the CCI is logistically equipped sufficiently to strike a chord between the international competition law developments and domestic legislation and responsibilities. If the law does have extraterritorial reach and a domestic court or tribunal has jurisdiction to hear the case, practical problems of enforcement with respect to the obtaining of evidence and the implementation of any fines or penalties are likely to arise.

The CCI, despite being well empowered has not been successful in laying down any procedures or formulating any regulations to govern the time frame to act in matters falling outside India’s territorial jurisdiction. In today’s scenario, corporate dealing involving MNC’s often result in the creation of different synergies within different countries and hence are likely to give rise to conflicting opinions about the issue within competition regulators having jurisdiction over the case involved.[4] Considering the paucity of the jurisprudence on this issue, the stance of the CCI in the future matters would be of huge relevance in the determination of any well-settled position.

Penalising the guilt: The is and the ought

CCI imposes a plethora of penalties[5] for the reasons enshrined in the section and in Part VI of the act with the entire funds being credited to the Consolidated Fund of India.[6] In its first investigation, CCI had imposed a penalty of Rs 1 lakh on movie producers colluding against multiplexes.[7] However, recent trends show that former was nominal imposition for having an amicable start with penalties being imposed in huge proportions in the times to come. For example, the CCI did impose an equally hefty penalty of Rs 2500 crores in Automobiles case[8], Rs 1700 crores in the case against Maharashtra State Power Generation Company[9], etc.

In the last 9 years, the CCI has taken a different turn, recently approving the first ever leniency application for a cartel member because the partner of the firm confessed to the anti-competitive practices which prompted the CCI to reduce the fine by 75%. It recently notified the Competition Commission of India Lesser Penalty Amendment Regulations, 2017, stating that a confession about Cartelisation (if witness was complicit) will provide them with an amnesty/leniency from the imposed liability. This depicts that CCI is going through a streamlined approach adopting the propensity to charge more proportionally.

In Iridium India Telecom v. Motorola Inc.[10], the Supreme Court held that companies can be prosecuted for offences involving mens rea with the intent and direction provided by the directors and promoters being attributable to the company. However, under the Act there exists a criminal sanction only for non-compliance of the order passed[11] with no specific provision of such liability for anti-competitive practices. Keeping in view, these aspects the Act needs amendment for incorporation of criminal sanction to maintain the deterrence in conformity with Section 6 of the Act.

Appeals of CCI orders: Hear Hear

The increasing number of appeals to High Courts against the Competition Appellate Tribunal (COMPAT), the Competition Statutory Appellate Tribunal has not be welcomed positively since it leads to the overlapping of powers and multiplicity of efforts. In State of M.P. v. Nerbudda Valley Refrigerated Products Co. (P) Ltd.[12], the Supreme Court held that any writ petition cannot be accepted by any High Court if a statutory appellate mechanism exists. On the contrary, Paradip Port Trust v. Sales Tax Officer[13] laid down that no bar on such appeal to the High Court exists when there is any violation or non-compliance with the principles of natural justice or exceeding of jurisdictional limits by Compat, even if there exists any statutory appeal mechanism.

In 2013, the position was finally settled that such writ petitions filed against the CCI order are procedurally unfair as they lead to a direct appeal to High Court by surpassing COMPAT’s authority. In the Automobiles case[14] between Mahindra and Tata Motors the Court held the order should be challenged before COMPAT since it is functional. High Courts are not to interfere at this stage unless it is found to be a case of gross transgression of the jurisdiction or results in the breach of natural justice principles.[15] Otherwise, constitutionally, Article 226 is of a discretionary nature granting power to exercise the same to the High Court. Since most of the cases of appeal deal with statutory authority such conflict of jurisdiction requires a settled position of law.

Case closed or not

According to the Act, the Commission on the receipt of a complaint has to direct the initiation of an investigation into the allegations, based on which the Director General is supposed to submit a report. Though the Act explicitly grants CCI the authority to direct the Director General to investigate and close the matter if he detects no contravention and furthers the investigation, it does not provide for closure of the case even if the Director General finds any contravention with the Act during the investigation. Section 26 of the Act fails to provide for a situation where the Commission may not agree with the Director General’s findings after it finds a contravention, often nullifying the power of the parties to appeal to the higher authorities such as to the COMPAT or to the Supreme Court after the case has been struck down by the Commission.

Such a lacuna inherent in the Act has often led to a dispute about the powers granted under the Act to CCI and the authority and binding value of the Director General’s report. This contention was laid to rest in Gulf Oil Corp. Ltd. v. CCI[16] where the Court held that Director General’s report merely has a recommendatory nature and the CCI need not proceed under Section 26(7) in every case where it disagrees with the Director General’s report. There have been situations where cases have been closed by the Commission despite Director General stating otherwise, but this uncertainty can be resolved only when there is either a legislative amendment or by way of some purposive interpretation the judiciary.

Lag due to the lack: Recommendation for way ahead

The competition law requires multi-disciplinary inputs in its implementation and enforcement. The data reflects the inability of CCI to keep pace with the new market players due to technological advancements, insufficiency of data and shortage in staff and panel experts, thus affecting the process of expediting investigation and adjudication of matters. The initial few years witnessed a trend of delay in the disposal of cases due to lacking number of officials requiring appointment of experts from legal and economic backgrounds at different levels to help handle these cases. Resultantly, the performance has improved with respect to the disposal of case with the average disposal rate of merger control cases reducing from around 16.5 days in 2011-2012 to around 26.4 days in 2015-2016.[17]

To deal with the existing laxity, greater man power is needed which is presently built up through deputations and imports of officers from other departments. Thus a specialised task force would be more advantageous that this deputation based enforcement since such enforcement needs the expertise and sufficiency of manpower oriented to handle anti-competitive wrongdoings to move ahead. Thus, we recommend instituting a separate cadre for the CCI through the Indian competition services for the better and speedier addressing of the matters at hand. Under this service, we recommend to institutionalise the existing task force which would remove arbitrariness in the existing subjective standards.

The reason why CCI lags behind is because of its inability to keep pace with the latest advancements. An institutionalised workforce would address these concerns by providing a better equipped organisation structure that would facilitate in disposal mechanism, etc. The Indian competition regime has come a long way in the fields analysed above and it still has a long way to go to maintain the “fairplay” in Indian markets.

————-

* IIIrd year students, BA, LLB (Hons.), Batch of 2021, National Law University, Delhi.

[1]  Fairplay, Quarterly newsletter of CCI (2016) p. 19.

[2]  Kartik Maheshwari, Simonc Reis Extraterritorial Application of the Competition Act and its Impact, (2012) CompLR 144, 148.

[3]  Haridas Exports v. All India Float Glass Manufacturer’s Assn., (2002) 6 SCC 600 : AIR 2002 SC 2728.

[4]  Haridas Exports v. All India Float Glass Manufacturer’s Assn., (2002) 6 SCC 600 : AIR 2002 SC 2728.

[5]  Competition Act, 2002, S. 27.

[6]  Competition Act, 2002, S. 47.

[7]  Film & Television Producers Guild of India v. Multiplex Assn. of India, 2013 SCC OnLine CCI 89.

[8]  CCI, Shamsher Kataria v. Honda Shiel Gas India Ltd., 2015 SCC OnLine CCI 114 : [2015] CCI 133

[9]  Maharashtra State Power Generation Co. Ltd. v. Mahanadi Coalfields Ltd., 2017 SCC OnLine CCI 11.

[10]  (2005) 2 SCC 145.

[11]  Competition Act, 2002, Ss. 42, 48.

[12]  (2010) 7 SCC 751.

[13]  (1998) 4 SCC 90.

[14]  CCI, (n. 8)

[15]  State of U.P. v. Mohd. Nooh, AIR 1958 SC 86.

[16]  2013 SCC OnLine Comp AT 132 : [2013] Comp AT 122.

[17]  Competition Commission of India, Annual Report 2015 (2016), p. 50.

Cabinet DecisionsLegislation Updates

The Union Cabinet has given its approval for rightsizing the Competition Commission of India (CCI) from 1 Chairperson and 6 Members (totalling seven) to 1 Chairperson and 3 members (totalling 4) by not filling the existing vacancies of 2 members and 1 more additional vacancy, which is expected in September, 2018 when one of the present incumbents will complete his term.

Benefits:

The proposal is expected to result in reduction of 3 posts of members of the Commission in pursuance of the Governments objective of “Minimum Government – Maximum Governance”.

As part of the Governments objective of easing the mergers and amalgamation process in the country, the Ministry had revised de minimis levels in 2017, which have been made applicable for all forms of combinations and the methodology for computing assets and turnover of the target involved in such combinations, has been spelt out. This has led to reduction in the notices that enterprises are mandated to submit to the Commission, while entering into combinations, thereby reducing the load on the Commission.

The faster turnaround in hearings is expected to result in speedier approvals, thereby stimulating the business processes of corporates and resulting in greater employment opportunities in the country.

Background:

Section 8(1) of the Competition Act, 2002 (the Act) provides that the Commission shall consist of a Chairperson and not less than 2 and not more than 6 members. Presently, the Chairperson and 4 members are in position.

An initial limit of 1 Chairperson and not more than 10 members was provided in the Act, keeping in view the requirement of creating a Principal Bench, other Additional Bench or Mergers Bench, comprising at least 2 members each, in places as notified by the Central Government. In the Competition (Amendment) Act, 2007 (39 of 2007), Section 22 of the Act was amended removing the provision for creation of Benches. In the same Amendment Act, while the Competition Appellate Tribunal (CAT) comprising one Chairperson and 2 members was created, the size of the Commission itself was not commensurately reduced and was kept at 1 Chairperson and not less than 2 but not more than 6 members.

The Commission has been functioning as a collegium right from its inception. In several major jurisdictions such as in Japan, USA and U.K. Competition Authorities are of a similar size.

[Press Release no. 1527701]

Cabinet

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