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) held that, in the case of both Swiggy and Zomato, prima facie there existed a conflict of interest situation, warranting detailed scrutiny into its impact on the overall competition between the RPs vis-à-vis the private brands/entities which the platforms may be incentivised to favour.

An information had been filed under Section 19(1)(a) of the Competition Act, 2002 by National Restaurant Association of India (Informant/NRAI) against Zomato and Swiggy (OPs) alleging that the practices of Zomato and Swiggy were in violation of Section 3(4) read with Section 3(1) of the Act.

Factual Background


NRAI submitted that the OPs provide restaurant partners (RPs) a listing service and allow consumers to interact with them through their platforms.

Further, NRAI stated that it is only because of the network effects of the OPs that, despite their anti-competitive practices, RPs are still dependent on the platforms to earn revenues, which shows the absence of countervailing buyer power with the RPs.

Bundling of Food Delivery

It was alleged that the stated delivery services are not optional for the RPs who wish to avail listing service and they are forced to take the delivery service of the platform.

Adding to the above, NRAI stated that the bundling of delivery services is an unfair imposition.

It is violative of Section 19(3) of the CCI Act.

Data Masking

RPs receive no data or information about the end-consumers to whom the food is delivered, which is a practice of OPs.

Due to the above-stated, RPs are not aware of where the foods is being delivered, to whom and in how much time, which creates a lack of transparency.

Vertical Integration 

NRAI has further alleged that OPs are engaging in a dual role on their platform where they list their own cloud kitchen brands exclusively on their platform, akin to private labels, thereby creating an inherent conflict of interest in the platform’s role as an intermediary on one hand and as a participant on the other hand.

One-Sided Contracts

It was alleged that Zomato and Swiggy enter into one-sided contracts with RPs owing to their superior bargaining power.

Further, NRAI has alleged that Zomato and Swiggy often compel the RPs to commit exclusively to be listed on their respective platform through incentives, lower commissions etc. to maintain their competitive edge in the market, at the exclusion of other new entrants. This creates/strengthens barriers for a new entrant into the market which would find itself deprived of essential and interdependent inputs like RPs and customers which would be locked-in to the incumbents’ platforms.

Infact, price parity terms have also been imposed on the RPs through their respective contracts.

NRAI has also alleged that the commissions which are charged by the OPs from RPs are unviable and are to the tune of 20% to 30%, which are extremely exorbitant for the RPs.

In view of the above allegations, NRAI sought an inquiry under the Act against the OPs.

Analysis and Decision


Coram stated that it emerged from the claims made by Zomato and Swiggy that bundling delivery with ordering enables them to control the time taken for delivery and qualitatively standardise such delivery for the end consumer.

In Commission’s opinion, bundling did not seem to raise any competition concern as such. Even otherwise, the Informant was not able to substantiate its claim that bundling of delivery with ordering, in itself, led to cause AAEC either between restaurants or between hyperlocal delivery service providers.

Moving further, the Commission was of the view that prima facie a conflict-of-interest situation arose in the instant case, both with regard to Swiggy and Zomato, because of the presence of commercial interest in the downstream market, which may come in the way of them acting as neutral platforms.

Coram added that the above-said required detailed examination and further, remarked that,

Given that platforms are vertically related with the RPs, including their private brands and those operating through their respective cloud kitchens, such arrangements whereby preferential treatment is accorded to some entities can be looked as a potential contravention of Section 3(4) read with Section 3(1) of the Act. 

Both Swiggy and Zomato operate as major intermediary platforms in the food delivery space, underscoring their market power and ability to adversely as well as appreciably affect the level playing field. 

Commission also observed that a holistic examination is required to ascertain whether the intermediaries prevent competition on merits, creating an ecosystem likely to cause an appreciable adverse effect on competition.

Further, the price parity clause may discourage the platforms from competing on a commission basis as RPs need to maintain similar prices on all platforms and provide similar prices to the customers, regardless of the commission rates paid to the platform. Hence, the said arrangements can cause AAEC on the market, therefore investigation is made out.

In Commission’s opinion, the allegations pertaining to delayed payment cycle, imposition of one-sided clauses in the agreement, charging of exorbitant commission etc., they did not seem to have an effect on competition.

Concluding the matter, Commission held that prima facie with respect to the conduct of Zomato and Swiggy, investigation by the DG to determine whether the conduct of the OPs have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) was required.[National Restaurant Association of India v. Zomato India Ltd., 2022 SCC OnLine CCI 22, decided on 4-4-2022]

Case BriefsHigh Courts

Bombay High Court: The Division Bench of G.S. Patel and Madhav J. Jamdar, JJ., directed the Competition Commission of India not to take any coercive actions against Asianet Star Communications Private Limited, Disney Broadcasting and Star India.

In the present matter, the challenge was to an order issued by Competition Commission of India on 28-2-2022, wherein an investigation under Section 26(1) of the Competition Act 2002 was directed.

The Bench stated that the purpose of the present order was to simply hold the parties in a form of a status quo or a neutral position until they can be heard fully once the Court reopens after the summer recess and once the CCI has been given a reasonable opportunity to file an affidavit and submit a compilation of relevant law.

Additionally, the High Court intended to give 2nd respondent, the complainant, an opportunity before the CCI to file a further affidavit.

Factual Background

The 2nd respondent ADNPL a Multi-System Operator (MSO) had filed an application with CCI seeking an order under Section 26(1) of the Competition Act. It was stated that ADNPL provides digital TV services predominantly in Kerala but also in Karnataka, Andhra Pradesh, Telangana and Odisha. It has been in the business of distribution of TV channels for the better part of three decades.

Whereas the petitioners are stated to be satellite-based TV channels, and each has multiple channels in different languages and genres. ADNPL receives broadcasting signals from these broadcasters and both petitioners and ADNPL have had a commercial business relationship for nearly two decades.

As per the regulations and decisions of TRAI and TDSAT, broadcasters must not have discriminatory pricing in commercial contracts with multi-service operators. The 2017 Regulations cap discounts and distribution fees payable to distributors.

ADNPL submitted that due to various discriminatory acts, it had to seek legal redress.

In view of ADNPL, the petitioners were in the position of dominance and had provided a direct competitor of ADNPL in Kerala, one Kerala Communicators Cables Limited (KCCL) significant discounts though these were indirectly buried in the form of allied agreements that apparently offered a cashback system.

Whether the above is correct or not was still to be determined.

The primary complaint of ADNPL was that agreements were intended to bypass the TRAI/TDAST set caps or upper limits, or to subvert them and to that extent were shame or bogus agreements only ostensibly complying or being in accordance with what was permissible but actually designed to provide unfair advantage ADNPL’s competitor, KCCL.

Hence, CCI had directed the DG to cause an investigation and submit a report.

High Court opined that CCI must be afforded an opportunity of placing its case fully before the Court. Further, ADNPL too may wish to place a law or filed a further affidavit.

The Bench held that it would hold the matter over to the 8th June 2022 when it will be placed high on the supplementary board for directions so that it can fix a date for final disposal at the admission stage. CCI will file its Affidavit in Reply and compilation of documents by 7th May 2022. By that date, any further Affidavit in Reply by the complainant must also be filed. Court will permit a Rejoinder by 3rd June 2022.

High Court directed CCI to not pass any orders or adjudicate further on the 2nd respondent’s complaint until further orders of the Court.

Matter to be listed for 8-6-2022.[Asianet Star Communications (P) Ltd. v. CCI, WP No. 3755 of 2022, decided on 6-4-2022]


Advocates before the Court:

Mr DJ Khambata, Senior Advocate, with Kunal Dwarkadas, Rajendra Barot, Nafisa Khandeparkar, Ambareen Mujawar, Nitin Nair, Varun Thakur, Akshay Agarwal, i/b AZB Partners, for the Petitioner in WP/3860/2022.

Mr Musatafa Doctor, Senior Advocate, with Rajendra Barot, Nafisa Khandeparkar, Ambareen Mujawar, Nitin Nair, Varun Thakur, Akshay Agarwal, i/b AAB Partners, for the Petitioner in WP/3755/2022.

Mr Navroz Seervai, Senior Advocate, with Avinash Amaranath, Tarun Donadi, Nikhil Gupta & Priyanka Chaddha, i/b Wadia Ghyandy & Co, for Respondent No. 2, in WP/3860/2022.

Mr Somsekhar Sundaresan, with Abhishek Venkatraman, Viswajit Deb, Manu Chaturvedi, Malhar Desai Hafeez Patanwala, i/b Juris Corp, for Respondent No. 1, in all matters.

Dr Birendra Saraf, Senior Advocate, with Pradeep Bakhru, Avinash Amaranath, Tarun Donadi, Nikhil Gupta & Priyanka Chaddha, i/b Wadia Ghandy & Co, for Respodnent No. 2 in WP/3755/22 & WP/3845/2022.

Mr Rajendra Barot, with Nafisa Khandeparkar, Ambareen Mujawar, Nitin Nair & Varun Thakur, i/b AZB Partners, for Respondents Nos. 3 & 4, in WP/3845/2022.

Mr. Vivek Menon, Counsel a/w Mr. Siddharth Chopra & Mr. Thomas George and Mr. Ranjeet Sidhu & Mr. Mudit Tayal i/b Saikrishna & Associates

Legal RoundUpTribunals/Regulatory Bodies/Commissions Monthly Roundup

18 Reports to Read


Competition Commission of India (CCI)


Star India providing bouquet of channels at lesser prices resulting significant loss in consumer base of Asianet Digital Network: Star India abusing dominance of its position? 

The Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) noted allegations against Star India for providing a bouquet of channels at lesser prices resulting in denying of market access and also amounting to unfair pricing.

Read full report here…

7 entities indulged in anti-competitive agreement for supply of signages for branches/offices/ATMs of SBI: E-mails exchanged between parties formed basis for manipulation of bidding process

Noting that in respect of cases concerning cartels that are hidden or secret, there is little or no documentary evidence and may be quite fragmentary, Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members)  imposed penalties on 7 entities and signages for bid-rigging activities and cartelization with respect to the supply of signage for branches, offices and ATMs of State Bank of India.

Read full report here…

Forcing buyers to purchase insurance policies?  Even if dealers offer to sell insurance policies to customers, customers may yet have option to buy such policies from alternative channels

The Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) addressed a matter wherein it was alleged that certain Car Companies were abusing their dominant position and denying the cashless claim to consumers if the insurance policy had not been obtained through them, their dealers or their insurance broking companies.

Read full report here…


Customs, Excise and Service Tax Appellate Tribunal (CESTAT)


Amount deposited during the investigation, ipso facto, becomes pre-deposit when the assessee carries the dispute before the Appellate Forum

Anil Choudhary (Judicial Member) dismissed applications filed by the Revenue pertaining to rectification of mistakes.

Read full report here…


Income Tax Appellate Tribunal (ITAT)


Notice issued against a dead person is null and void and all consequent proceedings/orders being equally tainted are liable to be set aside

The Coram of Amit Shukla (Judicial Member) and Pradip Kumar Kedia (Accountant Member) allowed an appeal against a revisional order passed under Section 263 of the Income Tax Act, 1961.

Read full report here…

Does Income Tax Act prohibit HRA Exemption On Rent Paid To Wife?

An appeal was filed by the assessee against the order of CIT(A)-21, New Delhi dated 21-01-2019 before the bench comprising of Sh. A. D. Jain (Vice-President) and Dr. B. R. R. Kumar (Accountant Member).

Read full report here…


National Consumer Disputes Redressal Commission (NCDRC)


When a Statute provides for a particular period of limitation, it has to be scrupulously applied, as an unlimited limitation leads to a sense of uncertainty

The Coram of Justice R.K. Agrawal (President) and Dr S.M. Kantikar (Member) expressed that, when a Statute provides for a particular period of limitation, it has to be scrupulously applied, as an unlimited limitation leads to a sense of uncertainty.

Read full report here…

Will Tax deducted at source be attracted on compensation awarded under Consumer Protection Act “in the form of simple interest”?

The Coram of Dinesh Singh (Presiding Member) and Justice Karuna Nand Bajpayee (Member) expressed that in the ‘service’ of ‘housing construction’, if, in a particular case, “compensation” is computed “by way of interest” on the deposited amount it shall not be differently treated than the other cases in which the term “interest” may not at all be used in computing the compensation.

Read full report here…

If a person conceals facts about pre-existing fatal disease at the time of taking insurance, would it be a breach of insurance contract?

The Coram of Dinesh Singh (Presiding Member) and Karuna Nand Bajpayee (Member) upheld the decision of the District Commission with respect to concealment of pre-existing fatal diseases at the time of taking insurance.

Read full report here…

Consensus between dentists and patients essential to standardize treatment plans and methods: No X-ray conducted prior to performing root canal treatment: Read how NCDRC found dentist negligent

Expressing that, the consensus between the dentists and patients is essential to standardize treatment plans and methods, Coram of Justice R.K. Agrawal (President) and Dr S.M. Kantikar (Member) addressed a case of dental negligence and remarked that,

“The teeth are only part of the face and it cannot be simply concluded that the whole face will become more beautiful once the teeth become neat.”

Read full report here…


National Company Law Tribunal (NCLT)


Whether Shareholders have the right to remove Directors of a company? NCLT explains in light of Companies Act, 2013

Expressing that the management of business affairs in a company is not a sole duty of a Director, the results of a company’s performance is a team of work of Board of Directors, the Coram of Ashok Kumar Borah, Judicial Member and Shyam Babu Gautam, Technical Member, held that, Companies Act gives shareholders the right to remove the Directors of the company.

Read full report here…

National Company Law Tribunal orders insolvency proceedings against Supertech: Indebted and defaulted repayment of loan

The Coram of P.N. Prasad, Judicial Member and Rahul Bhatnagar, Technical Member, declared insolvency proceedings against the builder Supertech Limited.

Read full report here…

Logix Insolvent? NCLT initiates insolvency proceedings against Logix City Developers

The Coram of Bachu Venkat Balaram Das (Judicial Member) and Narender Kumar Bhola (Technical Member) initiates insolvency proceedings against Logix City Developers due to default in payment.

Read full report here…


National Company Law Appellate Tribunal (NCLAT)


Reduction of Capital’ is a ‘Domestic Affair’ of a particular company in which, ordinary, a Tribunal will not interfere because of the reason that it is a ‘majority decision’ which prevails

“A ‘special resolution’ is required to determine those matters for which the Act requires a ‘special resolution’ and except these matters in all other situations an ‘Ordinary Resolution’ is to be passed.”

Read full report here…


National Green Tribunal (NGT)


Unregulated tourism activities resulting in damage to environment in eco-sensitive Himalayan States of India: NGT takes suo motu cognizance

The Coram of Justice Adarsh Kumar Goel (Chairperson) and Justice Sudhir Agarwal (Judicial Member), Prof. A. Senthil Vel (Expert Member) and Dr Vijay Kulkarni (Expert Member) took suo moto cognizance based on media report highlighting the damage to the environment in eco-sensitive Himalayan States of India due to unregulated tourism.

Read full report here…


Securities Exchange Board of India (SEBI)


Can SEBI proceed against a Chartered Accountant for lack of due diligence? SAT analyses

The Coram of Justice Tarun Agarwala (Presiding Officer) and Justice M.T. Joshi (Judicial Member) while addressing a matter whether a Chartered Accountant could be held guilty by SEBI for lack of due diligence, held that,

Lack of due diligence can only lead to professional negligence which would amount to a misconduct which could be taken up only by ICAI.


Uttar Pradesh Real Estate Appellate Tribunal


Developer issued two allotment letters, increasing cost of a unit in second by correcting taxes, lease rent and advance maintenance charges: Read whether UPRERA finds it to be illegal

The Division Bench of Justice Dr D.K. Arora (Chairman) and Rajiv Misra (Administrative Member) set aside the decision of the Regulatory Authority and held that the developer did not conceal the details of the project including the status of the same.

Read full report here…


West Bengal Taxation Tribunal


Can States levy ‘Entry Tax’?

The Coram of Justice Malay Marut Banerjee (Chairman) and Suranjan Kundu (Judicial Member) and Chanchalmal Bachhawat (Technical Member), expressed that, Article 304(a) frowns upon discrimination (of a hostile nature in the protectionist sense) and not on mere differentiation.

Read full report here…

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) addressed a matter wherein it was alleged that certain Car Companies were abusing their dominant position and denying the cashless claim to consumers if the insurance policy had not been obtained through them, their dealers or their insurance broking companies.

Manav Seva Dham (Informant) alleged contravention of provisions of Sections 3 and 4 of the Competition Act, 2002 by Maruti Suzuki India Limited (OP 1/Maruti), Tata Motors Ltd. (OP 2/Tata), Hyundai Motor India Limited (OP 3/Hyundai), Hero Moto Corp Limited (OP 4/Hero), Mahindra and Mahindra Limited (OP 5/Mahindra) and Toyota Kirloskar Motor Private Limited (OP 6/Toyota).

It was stated that the OP were enjoying a dominant position in the market for automobiles and motor insurance in India, which enables them to operate independently of competitive forces.

Further, it was added that there had been apparent monopoly and cartelization by the OPs in selling insurance policies through their fully owned insurance broking or subsidiary companies and servicing and repairing motor vehicles in respect of the insurance policies sold by them, which is detrimental to the insurance policyholders.

Due to the above stated, the informant has received several complaints from the insurance companies as well as insurance policyholders about the monopolistic practices of the OPs.

OPs even ensure that the genuine spare parts are only available with their authorised dealers, and their authorised dealers continue to charge arbitrary high prices from the consumers, who are forced to avail the services for repairing and maintaining their motor vehicles since the genuine spare parts, diagnostic tools, and technical information required to service their cars are not made available to independent repair workshops, failing which, the warranty of the vehicle would lapse.

Hence, the OPs have created a monopoly over the motor insurance and repair services for their motor vehicles.

Analysis of the Commission

Primarily, the Informant was aggrieved by the alleged conduct of the OPs of disallowing of the cashless claim to consumers if the insurance policy has not been obtained through them, their dealers, or their insurance broking companies.

Whether the Opposite Parties are in a position of dominance and have abused their dominant position, as alleged?

Commission noted that nothing concrete has been submitted in the regard to the allegations made.

Further, the Coram expressed that,

Consumers have a choice to purchase their vehicle from various manufacturers and the same also is true in respect of availing insurance facility for vehicles.

Informant had alleged regarding some arrangement of OPs with their insurance broking companies for the provisions of insurance services to customers who buys vehicles from them.

Commission observed that, even if dealers offer to sell insurance policies to customers, the customers may yet have the option to buy such policy from alternative channels should they want.

“…facility of cashless claim may be an additional benefit extended by certain brokers and may not be confined to the broking arms of the aforementioned Opposite Parties alone.”

Hence, no prima facie case existed. [Manav Seva Dham v. Maruti Suzuki India Ltd., 2022 SCC OnLine CCI 17, decided on 22-3-2022]

Law School NewsLive Blogging

Welcome to the 13th NLU Antitrust Law Moot Court Competition, 2022 organized by National Law University, Jodhpur.

The Competition is scheduled from March 11 – March 13, 2022 and is being organized under the patronage of the Competition Commission of India, in collaboration with Cyril Amarchand Mangaldas and our knowledge partners, SCC Online and Eastern Book Company. The Competition has always been known for its excellent mooting and judging, and this year, its bigger than ever, with 37 participating teams from some of the country’s most prestigious law schools. 

We at NLU, Jodhpur believe that education unless and until complemented by intellectually invigorating challenges fails its purpose. Cognizant of this responsibility and with a vision to foster the advancement of learning and research in the field of competition law, we will ensure that this competition will help all participants hone their mooting skills along with exploring the nuances of competition law with an exciting and challenging proposition. The organizing team has left no stone unturned in their diligent endeavour to make this competition an enriching experience, this time virtually!

We welcome all the judges and the participants, and hope that we are able to make this a memorable event for all. The Moot Proposition revolves around contemporary issues in the field of competition law, including the role of sectoral regulators vis-a-vis the role of the competition authority. The proposition also entails challenging issues pertaining to cartelization and abuse of dominance by entities in the automotive manufacturing industry.

The competition is about to begin, and we will keep you updated on everything. For more information, you may also follow us on Instagram, Twitter, Linkedin, and Facebook.

Best wishes to all the participating teams! 

DAY -1

9:00 AM – Inaugural Ceremony and Exchange of Memorials

The ceremony started with a welcome address by Ms. Rishika Arya, Convenor of the Moot Court Committee. Dr. I.P. Massey, Dean of Law, and Mr. Rohan C. Thomas, Chairperson of the Moot Court Committee, virtually inaugurated the 13th NLU Antitrust Law Moot Court Competition. With this, we start with the Competition. The participants’ queries have been answered and and exchange of memorials between the teams has taken place to the satisfaction of the participants.

 Inaugural Ceremony_13th NLU Antitrust Law               Moot Court Competition, 2022

The Preliminary Rounds begin at 11 a.m. All the competing teams have our best wishes.

Judges Briefing

The judges for the Preliminary Rounds have been briefed, this time through e-mail. A comprehensive bench memorial and a condensed version of the memorial prepared by the Moot Court Committee were mailed to the judges. The judges for the rounds are distinguished legal experts in their fields. Our distinguished judges are here to assess each team’s understanding and command over the law. 

11:00 AM – Preliminary Rounds 

With an unfettering zeal, the Preliminary Round has taken off in full swing in all the courtrooms and the teams are presenting their arguments, which they have worked tirelessly on, in high spirits. The judges are actively attempting to dissect the counsels’ arguments and the questions pour in. The teams are well prepared and they answer the questions by citing the relevant law. Following the intense mooting session, the teams also present their respective rebuttals and sur-rebuttals

             Preliminary Rounds
              Preliminary Rounds

1:00 PM End of Preliminary Rounds

The competition has taken off to a spirited start as we conclude our preliminary rounds. The teams await with bated breath for the Reverse Preliminary Rounds, which will start at 3 PM. Both these rounds together will determine which teams qualify for the Octa-Finals. We look forward to seeing the teams showcasing their talent! We wish all the teams the best of luck.

3:00 PM – Reverse Preliminary Rounds 

All the teams are back on track with fresh energy and high spirits to present their arguments. In the Reverse Preliminary Rounds, the teams get to present arguments for the side opposite to the one they argued for in the preliminary round, to ensure fairness. The rounds are underway and the participants are putting forth some impressive arguments and showcasing their great mooting skills. May the best teams prevail!

        Reverse Preliminary Rounds
         Reverse Preliminary Rounds

3:00 PM End of Reverse Preliminary Rounds

The reverse preliminary rounds have also come to an end. The teams continued to showcase their great preparation with splendid performances. These rounds were just as heated as the preliminary rounds and with their culmination, the battle for the top 16 spots now stands concluded.

The wait for the results is finally over!

Here we present the top 16 teams that have qualified for the Octa Finals Round –

National Law University, Odisha

Symbiosis Law School, Hyderabad

Dr. Ram Manohar Lohiya National Law University, Lucknow

National Law School of India University, Bangalore

Institute of Law, Nirma University, Ahmedabad

Jamia Millia Islamia, New Delhi

Damodaram Sanjivayya National Law University, Vishakhapatnam

Gujarat National Law University

Army Institute of Law, Mohali

National University of Study and Research in Law, Ranchi

National Law Institute University, Bhopal

Hidayatullah National Law University, Raipur

Symbiosis Law School, Pune

Maharashtra National Law University, Nagpur

Tamil Nadu National Law School, Tiruchirapalli

NMIMS Kirit P Mehta School of Law, Mumbai

 

It has been an exhilarating experience so far. We excitedly await to see what tomorrow holds for us. Our best wishes to all the teams.

DAY – 2

It is the 2nd day as sixteen teams are ready and eager to fight it out in the Octa-Final Rounds of the 13th NLU Antitrust Law Moot Court Competition, 2022. The teams have had the night to prepare themselves and we look forward to some inspired rounds of mooting!

9:00 AM Octa-Final Rounds

The stage is all set with the commencement of the exciting Octa-Final Rounds, with the teams pitted against one another for a thrilling show of events. We anxiously wait to find out which of the teams’ manage to keep their wits and make it to the next rounds of the Competition. 

 

             Octa-Final Rounds

 

Octa-Final Rounds

 

11:00 AM – End of Octa-Final Rounds

With the teams continuing to exhibit great argumentation and mooting skills, the Octa-Final Rounds have finally concluded.
Here are the teams qualifying to the Quarter Finals- 

TNNLS Tiruchirappalli
National Law Institute University, Bhopal
Jamia Millia Islamia, New Delhi
Institute of Law, Nirma University, Ahmedabad
Army Institute of Law, Mohali
Symbiosis Law School Hyderabad
NLU Odisha
Symbiosis Law School, Pune

1:00 PM – 3:00 PM  Quarter-Final Rounds

The qualifying teams charge forward with zeal as the Quarter Final Rounds commence! The teams are well prepared and they answer the questions posed by the judges confidently by citing relevant legal provisions and precedents. 

  Quarter-Final Rounds

Quarter-Final Rounds

4:30 PM: The much awaited results of the Quarter-Final Rounds have been declared. Following a tremendous effort from everyone, the following teams have advanced to the Semi-Finals-

Army Institute of Law, Mohali
Symbiosis Law School, Pune
NLIU, Bhopal
Symbiosis Law School Hyderabad

5:00 PM – Semi-Final Rounds

Court Room – 1

Army Law Institute, Mohali versus Symbiosis Law School, Hyderabad was a fierce round of arguments and counter-arguments. The learned bench comprised of Mr. Abir Roy, Mr. Mohan Ronanki and Mr. Bharat Budholia. The round began with the team from Army Law Institute, Mohali presenting their arguments as Appellants. The first speaker for appellant dealt with the first and fourth issue. The counsel was grilled on the facts of the case as well as the similarity with issues and facts of the cases relied upon by the counsel in his speech. He handled the questions very well. The second speaker dealt with the second and third issue of the proposition. Counsel was questioned thoroughly regarding the applicable law and its applicability to the facts of the case. The appellants concluded with an extension of 12 minutes. Symbiosis Law School, Hyderabad then took over as Respondents. The first speaker addressed the first and second issue of the proposition. The counsel was grilled by all three judges regarding the jurisdiction of the competent court in the first issue. He handled all questions tactfully and the judges seemed satisfied by the reasoning provided. The second speaker dealt with the third and fourth issues. The judges at the outset stated the argument made by counsel for appellant and asked the counsel to rebut the same. The counsel handled all questions well. The Respondents concluded with an extension of 9 minutes. Fine speaking skills were put on display by all the participants. The teams showed a thorough knowledge of the law and cited various authorities to back their arguments. It was a closely contested round, adding to the anticipation of the results. 

Semi-Final Rounds

Court Room – 2

The Court Room was charged with enthusiasm and energy as National Law Institute University, Bhopal and Symbiosis Law School, Pune competed against each other. The learned bench comprised of Mr. Rahul Rai, Mr. Rudresh Singh, and Ms. Sunaina Dutta. The round began with the team from Symbiosis Law School, Pune presenting their arguments as Appellants. Speaker 1 from the Appellant’s side argued on the anti-competitive nature of the agreement and the anti-competitive effect in the market for electric automobiles. Speaker 2 cited practical examples to support his arguments. Both the speakers cited strong authorities coupled with relevant facts to support their arguments. An extension of approximately 3 minutes was granted to both the speakers by the judges. National Law Institute University, Bhopal then took over as Respondents. Speaker 1 from the side of the Respondent  began by arguing on monopoly in the relevant market and abuse of dominant position. Both the speakers were questioned on the case laws and other authorities that they had cited. The Counsels also demonstrated the harms caused by sharing sensitive information among the competitors. An extension of 3 minutes was granted to both the speakers by the judges. The rounds were indeed highly charged with display of excellent mooting skills and greatly nuanced legal arguments from both the parties.

Semi-Final Rounds

7:30 PM: The much awaited results of the Semi-Final Rounds have been declared and the teams qualifying to the Final Rounds of the 13th NLU Antitrust Law Moot Court Competition, 2022 are –

National Law Institute University, Bhopal

Army Institute of Law, Mohali

With this, we come to the conclusion of Day 2. It has been an enthralling experience so far. We excitedly await to see what tomorrow holds for us. Our best wishes to all the teams.

DAY-3 – Final Rounds

Welcome Back to the 13th NLU Antitrust Law Moot Court Competition, 2022!

10:05 AM: The final rounds between Army Institute of Law Mohali and National Law Institute University, Bhopal are about to begin!The Final Round of the Competition is being judged by a varied panel of eminent lawyers and economists. Ms. Payal Malik is the Advisor and Head of the Economics Division at the Competition Commission of India. Dr. Geeta Gouri is a former Member of the Competition Commission of India. Prof. Harpreet Kaur is a Professor of Law and the Registrar of National Law University, Delhi. Mr. Ram Kumar Poornachandaran is a Partner at AZB & Partners. Mr. Yaman Verma is a Partner at Shardul Amarchand Mangaldas & Co.

10:09 AM: The final rounds have begun with the team from Army Institute of Law, Mohali presenting their arguments as Appellants. The first speaker for the Appellants begins with the first issue relating to jurisdiction. The speaker starts by citing the case of CCI v. Bharti Airtel, to argue that the sectoral regulator in the instant case i.e., TRAI should be given primacy in jurisdiction over the Competition Authority. The researcher assists the speaker by sharing the relevant paragraphs from the case compendium for the judges’ convenience. Before moving on to the second issue, the judges ask few questions and these are tackled skillfully and swiftly by the counsel!

Final Rounds

10:20 AM: The judges are grilling the counsel on the legal aspects but he remains unfazed and answers the questions to the satisfaction of the judges.  Dr. Geeta Gouri raises a pertinent question regarding necessity to look into the relevant market  when discussing the issue surrounding the licensing arrangement. 

10:40 AM: The counsel uses a pie chart to explain the market division in the automobile industry. The counsel argues that Eitri does not hold a dominant position in the relevant market. The counsel also argues that even if Eitri is found to be dominant, it has not abused its dominant position and that it has not employed predatory pricing. The counsel concludes and passes the baton to his co-counsel.

Final Rounds

11:05 AM: The second speaker takes the podium and starts presenting the arguments. The first issue that he deals with is whether Eitri has violated Section 3(4)(c) of the Competition Act, 2002. The speaker argues that the agreement between Eitri and Ultron does not impose an absolute restriction, and thus, is not violative of Section 3(4)(c). After a bout of questions from the judges, the counsel concedes that the JV does put a restriction, however, such restriction is reasonable.

11:30 AM: The speaker contends that Eitri is not dominant in the relevant market since the requisite thresholds are not met. Herein, Mr. Yaman Verma asks whether the market dominance of Ultron would be relevant while analysing a possible violation of Section 3(4), given that Ultron is the sole supplier of 8G UHF and the exclusive supply agreement with Eitri, proscribes other competitors to enter the market.

11:40 AM: Ms. Payal Malik asks the speaker to address the issue of whether there is distribution agreement between Eitri and Ultron, and whether there is any verticality i.e., whether Ultron and Eitri operate in the same level of production or not. The speaker answers that there is no verticality between the parties and cites relevant authorities.

11:48 AM: The Appellants after concluding their arguments on the fourth issue vis a vis violation of Section 3, rest their case. The Respondents have begun now.

11:50 AM: Speaker 1 starts with requesting the researcher to share the memo, and explaining the issue division. Speaker 1 begins with Issue 1 dealing with jurisdictional tussle between TRAI and NFTC. He starts by laying down the factual matrix relevant to his argument.

11:55 AM: Beginning with the first leg, the speaker submits that the Bharti Airtel case will not be applicable to the present case as issues before the Competition Authority and Telecom Regulator were inherently different.  Ms. Payal Malik questions the speaker regarding necessity of delineating relevant market in this issue to which he answers that relevant market is of no consequence to the issue at hand. 

Final Rounds

12:10 PM: Ms. Geeta Gouri asks whether TRAI has the right to intervene in a licensing decision to which the speaker answers that the question would be discussed in detail by the second speaker. The speaker goes on to argue that principle of sub-judice will not be applicable, and relies on Steel Authority of India  v. CCI case, and submits that the proceedings before TRAI are administrative, and not judicial or quasi-judicial in nature.

12:20 PM:  Moving to Issue 4, the speaker relies on the Flashlights case and contends that there is a violation of Section 3 in the instant case. Ms. Payal Malik then questioned the speaker on the standard of evidence being presented and whether Whatsapp chats and emails are admissible. The speaker swiftly answered this question by stating that when we combine electronic and circumstantial evidence, that suffices to make it admissible. The speaker asks for extension of time, which is granted by the bench. Prof. Harpreet Kaur asks for a clarification on whether the effect of the JV on customers needs to be looked into to figure out pro -competitiveness. The Speaker answers stating that based on rule of reason under Section 19(3), benefits to customers needs to be examined, and states that there is no benefit accruing to consumers. The speaker then summarises his arguments and passes the baton to his co-counsel.

Final Rounds

12:40 PM: The Counsel starts by presenting arguments on Issue 2, which pertains to whether there is a violation of Section 3(4) of the Competition Act. Ms. Payal asks the speaker to provide the bench with precedents wherein there was no absolute restriction and reasonability of restriction was determined. The Speaker is also questioned on whether there was any other player in the market which had the capabilities of harnessing 8G for remote charging when the investigation was carried. The speaker states that there is no mention of presence of other competitors in the Proposition. 

12:50 PM: Speaker 2 starts with Issue 3, which deals with abuse of dominance. First, the speaker states that in the electric automotive industry, the very fact that Eitri’s market share is over 50% shows that they are the dominant player. This Counsel submits that this coupled with the fact that there is dependence of consumers on Eitri helps in establishing dominant position. The speaker cites the Hindustan Coca Cola Beverages case to argue that high level of vertical integration leads to high level of dependence. Second, the speaker states that by application of the essential facilities doctrine, one cannot refuse access to an essential facility to other competitors and that in this case, the 8G facility is an essential facility, which is impossible to replicate because it is a completely different network spectrum. Concluding her arguments, the speaker submit that Sections 3 and 4 of the Competition Act have been violated by Eitri.

1:00 PM:  REBUTTAL – The Speaker from the side of the Appellant states that the Respondents were unable to prove why the ratio of Bharti Airtel case will be inapplicable in the present case. The Speaker also states that the Respondents were unable to show how the JV was not efficient, other than the cost factor. The Counsel concludes on the note that market share alone is not sufficient for proving dominance.

SURREBUTTAL – The Speaker from the side of the Respondent address all the points raised in the Rebuttals. With respect to dominance, they state that apart from market share, there are other factors as well, such as vertical integration by Eitri and dependence of consumers. 

                        Final Rounds

With this, we come to the conclusion of the Final Rounds of the 13th NLU Antitrust Law Moot Court Competition, 2022. What an engaging session it has been, with the judges asking interesting and pertinent questions, to test the knowledge and the depth of research undertaken by the parties. The Results will be announced in the Valedictory Ceremony, which will commence at 3:00 PM today. We look forward to seeing you there!

3:00 PM – Valedictory Ceremony 

The moment you all have been waiting for is finally here! After months of research, practice, and hard work, the winning team gets to take it all! The following are participants that have emerged victorious at the rounds! 

Winning Team: Team 006 (Army Institute of Law, Mohali)
Runners-Up Team: Team 017 (NLIU, Bhopal)
Best Memoranda: Team 009 (NLU, Odisha)
Best Student Advocate: Palak Jagetia (RMLNLU)
Second Best Student Advocate: Swechchha Singh (RMLNLU)
Best Student Advocate of the Finals: Ranjul Malik (Army Institute of Law, Mohali)

 

                  Valedictory Ceremony

This marks the conclusion of the 13th NLU Antitrust Law Moot Court Competition, 2022. This edition of the Anti-trust Moot Court Competition was like none other before! It had us tackling new challenges on almost every front. With this edition, we reached a new milestone and were able to livestream the Final Rounds on Youtube for all viewers! The successful completion of the event, leaves us wishing we had the warm opportunity of hosting the judges and the teams on campus. We hope that during the course of the Competition, the participants found chances to grow, and developed fondness for the law.  At the end of these three days, we sincerely hope that we have been able to deliver the expectations that the participants and the judges had from us. See you all next year, but hopefully not virtually! 

 

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Noting that in respect of cases concerning cartels that are hidden or secret, there is little or no documentary evidence and may be quite fragmentary, Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members)  imposed penalties on 7 entities and signages for bid-rigging activities and cartelization with respect to the supply of signage for branches, offices and ATMs of State Bank of India.

Factual Matrix

Present matter was taken up by the Commission suo motu pursuant to a complaint received alleging bid-rigging and cartelization in the tender floated by SBI Infra Management Solution (P) Ltd. for the supply and installation of new signages/replacement of existing signages for branches/offices/ATMs of SBI located at specified metro centres of various circles of SBI across India.

With the object of distorting the fair bidding process, certain bidders were coordinating and fixing the prices of their services as well as allocating the market amongst themselves.

As per Commission’s prima facie view, case of contravention of the provisions of Section 3(1) read with Section 3(3) of the Act was made out with respect to the Impugned Tender. Hence, DG was directed to investigate.

DG had concluded that the OP indulged in anti-competitive agreement/conduct and concerted practices to rig the Impugned Tender, as well as geographically allocated amongst themselves the circles for which the tender was issued, thereby contravening the provisions of Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act. The DG also identified certain individuals of the OPs to be liable in terms of Section 48 of the Act.

Conclusion

An ‘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.

Definition under Section 2(b) of the Act covers even those situations where the parties act on the basis of a nod or a wink. 

Further, it was observed that there is rarely direct evidence of action in concert, Commission must determine whether those involved in such dealings had some form of understanding and were acting in co-operation with each other.

“Since the prohibition on participating in anti-competitive agreements and bid rigging and the penalties which the infringers may incur are well-known, it is normal for such practices and agreements to take place in a clandestine fashion, for meetings to be held in secret and for associated documentation to be reduced to a minimum.”

 Commission held that OP-1 to OP-7 had entered into an agreement resulting in geographical market allocation as well as bid-rigging in the Impugned Tender.

“…cartelisation, including bid-rigging, is a pernicious form of competition law contravention.”

Additionally, Coram also added that, any collusive or concerted conduct amongst competitors by way of exchange of commercial information resulting in inter alia determining price or geographical allocation of provision of services etc., itself stands captured within the prohibition imposed and is presumed to have AAEC, by virtue of provisions of Section 3(1) of the Act read with Section 3(3).

Liability under Section 48

Commission held that it is no longer res integra that the Commission can simultaneously proceed against individuals of a company under Section 48 of the Act along with the company and the same has been settled by various decisions of the Courts.

Section 48(1) of the Act is a deeming provision, which implies that when contravention of any provision of the Act (say Section 3) is committed by a company, then, an individual(s) who was in-charge of and responsible to the company for the conduct of its business at the time of contravention, shall be deemed to be guilty of such contravention.

Section 48(2) of the Act, all individuals that play an active role in the illegal conduct of a company, are made liable in addition to the company.

Commission decided to impose penalty @1% of the average of individual’s incomes, for the three financial years. Though Commission decided to grant to OP-4 and its individuals, the benefit of reduction in penalty by 90% (per cent) in terms of Regulation 4(a) of the Lesser Penalty Regulations.

Lastly, the Coram directed entities/persons to deposit their respective penalty amounts within 60 days of the receipt of the present order.[Alleged anti-competitive conduct by various bidders in supply and installation of signages at specified locations of State Bank of India across India, In Re., 2022 SCC OnLine CCI 16, decided on 3-2-2022]


Advocates before the Commission:

For Diamond Display Solutions Pvt. Ltd. and its individuals:

Mr. Rajshekhar Rao, Senior Advocate with Ms. Ameyavikrama Thanvi and Mr. Siddharth H. Raval, Advocates and Mr. R.G. Venkatesh (in-person)

For AGX Retail Solutions Pvt. Ltd and its individuals:

Ms. Shivanghi Sukumar, Advocate, Mr. Arjun Reddy and Mr. Ritanshu Mohan (both in-person)

For Opal Signs Pvt. Ltd. and its individuals:

Mr. Anandh Venkatramani, Advocate and Mr. Ramesh Bharadwaj (in-person)

For Avery Dennison India Pvt. Ltd. and its individuals:

Mr. Rudresh Singh, Advocate

For Amreesh Neon Pvt. Ltd. and its individuals:

Mr. Anjaneya Mishra, Advocate

For Macromedia Digital Imaging Pvt. Ltd. and its individuals:

Mr. Rajshekhar Rao, Senior Advocate with : Mr. Nithin Chowdary Pavuluri, Advocate and Mr. Naresh Kumar Dasari (in-person)

For Hith Impex Pvt. Ltd. and its individuals:

Ms. Rohini M. Amin, Advocate

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), noted allegations against Star India for providing a bouquet of channels at lesser prices resulting in denying of market access and also amounting to unfair pricing.

Background

Informant had filed information under Section 19(1)(a) of the Competition Act, 2002 against Star India (P) Ltd. (OP 1), Disney Broadcasting (India) Limited (OP 2) and Asianet Star Communications Private Limited (OP 3) alleging, inter alia, contravention of the provisions of Sections 4 of the Act.

Further, the informant was stated to be a Multi-System Operator engaged in the business of providing digital TV services, predominantly in Kerala. It also operated in Karnataka, Andhra Pradesh, Telangana and Odisha. Informant provides digital TV services to its customers directly as well as through Local Cable Operators (LCO) and currently provides services to about 10.02 lakh customers in Kerala and a minimal 1.19 lakh customers in all other States combined.

OP 2 was a broadcaster of satellite-based TV channels in India, having multiple channels of different languages and various genres including general entertainment, movies, kids’ entertainment, sports and infotainment.

As per the business arrangement, informant received broadcasting signals from OP-1 for a monetary consideration for the purposes of supplying the channels of OP-1 to customers and for that the informant entered into agreements with OP-1 from time to time.

Allegation

Informant alleged the abuse of dominant position by OPs by discriminating the informant in not extending the discounts, which are offered by its competitors.

Hence, offering discriminatory discounts was alleged to be in contravention of the provisions of Section 4(2)(a)(ii) of the Act being unfair/discriminatory prices, as also the provisions of Section 4(2)(c) as it denied market access to the informant as well due to the inability of the Informant to compete in the downstream market of the distribution of TV channels given the unfair advantage OP-1 had conferred upon the informant’s competitors.

After the introduction of the New Regulatory Framework, ADNPL started losing subscribers to Kerala Communicators Cable Limited (KCCL) as the latter offered low prices to LCOs who, in turn, offered lower prices to subscribers.

In gist, the informant alleged that OP-1 was in a dominant position on account of its significant market share, size and economic resources since it was a part of the global media conglomerate, dependence of consumers and its countervailing power. The said conduct violated provisions of Section 4(2) (a) (ii) of the Act and Section 4(2) (c) thereof since the discriminatory discounts amount to unfair/discriminatory price and denied market access to the Informant as it was unable to compete in the downstream market of distribution of TV channels considering the unfair advantage of OP-1 had conferred upon ADNPL’s competitor KCCL.

Analysis and Decision

The Commission observed that the crux amongst all the allegations was the offering of additional discounts to select MSOs and the main competitor of ADNPL in Kerala, viz KCCL, OP-1 had placed the MSOs at a huge disadvantage which was detrimental to the competition and competitors in the market.

Coram noted that the OP-1 had around 50 entertainment channels and over 15 sporting channels with exclusive content of the major sporting events such as ICC, IPL, ODIs, Wimbledon, French Open etc. making access to its bouquet of channels indispensable for any MSO operator, especially when some of the most popular as per TRPs, regional and nationwide channels belonged to the OPs.

OP-1 enjoyed a position of dominance in the relevant market.

KCCL was getting channels at about 30% of the MRP with about 70% discount whereas the maximum permissible discounts under the New Regulatory Framework was capped at 35%. OP 1 was alleged to have chosen an indirect way to provide discounts to circumvent the new Regulatory Framework by way of promotion and advertisement payments to KCCL through high valued advertising deals.

In view of the above, the Informant was constrained to price its channels at a higher price than that of KCCL and ultimately pay the price by losing consumers consistently whereas KCCL had gained new consumers.

Ultimately, the informant was offering services at loss making price just to prevent the subscriber base from migrating to KCCL’s services but in vain.

Due to the alleged discriminatory conduct of price discrimination between different MSOs and OP-1 resulted in significant loss in the consumer base of the informant and therefore, prima facie appeared to be a violation of the provisions of Section 4(2)(a)9ii) of the Act as also in contravention of the provisions of Section 4(2)(c) of the Act due to discriminatory pricing and denial of market access.

Therefore, alleged discriminatory conduct of price discrimination between different MSOs of OP-1 resulted into significant loss in the consumer base of the Informant and therefore prima facie appeared to be in violation of provisions of Section 4(2)(a)(ii) of the Act as also in contravention of the provisions of Section 4(2)(c) of the Act due to discriminatory pricing and denial of market access respectively.

Commission directed DH to cause an investigation in the above matter. [Asianet Digital Network (P) Ltd. v. Star India (P) Ltd., 2022 SCC OnLine CCI 5, decided on 28-2-2022]

Legal RoundUpTribunals/Regulatory Bodies/Commissions Monthly Roundup

Appellate Tribunal for Electricity (APTEL)


State commission disallows benefit of increase in the tariff based on the change in law provision; Tribunal directs reconsideration

A Coram of R.K. Gauba (Officiating Chairperson) and Sandesh Kumar Sharma (Technical Member) decided on an appeal which was filed by Solar Power Project Developer (“SPD”) assailing order passed by respondent Bihar Electricity Regulatory Commission (“the State Commission”) disallowing the benefit of increase in the tariff based on the change in law provision with respect to increased Operation and Maintenance (O&M) costs of its 10MW solar power generating system.

Read full report here…


Armed Forces Tribunal (AFT)


AFT grants war injury pension to soldier who sustained injuries resulting in disability during Operation Hifazat

The Bench of Justice Dharam Chand Chaudhary (Member J) and Vice Admiral HCS Bisht (Member A), granted war injury pension to the ex-serviceman who had sustained injuries resulting in disability during Operation Hifazat.

Read full report here…


Arbitral Tribunal, New Delhi


Arbitral Tribunal finds SJDA at fault; directs to refund bid amount of Rs 84.24 crores to the claimant in New Township Project

“No permission for conversion of land was obtained and, therefore, even if all other conditions were fulfilled, the Claimant-Developer could not have commenced construction activities on the agricultural lands without obtaining conversion of land use.”

Read full report here…


 Competition Commission of India (CCI)


Apple charging a commission of up to 30% on all payments made through its in-app purchase system, is a violation of its dominant position? CCI orders investigation 

“Some consumers may have preference for closed ecosystem like Apple and others may have a preference for open ecosystems like that of Google.” 

Read full report here… 

Why did CCI suspend the Amazon-Future deal? Detailed analysis of CCI order imposing Rs 202 crores penalty on Amazon

“Amazon had misled the Commission to believe, through false statements and material omissions, that the Combination and its purpose were the interest of Amazon in the business of FCPL.”

Read full report here…

Is Google abusing dominant position in news aggregation? CCI gives prima facie findings; discusses Snippets, Mirror Image Websites, Paywall Options, etc.

“Google appears to operate as a gateway between various news publishers on the one hand and news readers on the other. Another alternative for the news publisher is to forgo the traffic generated by Google for them, which would be unfavourable to their revenue generation.”

Read full report here…


 Customs Excise & Service Tax Appellate Tribunal (CESTAT)


“Obiter dictum” not legally binding as precedent; jurisdictional commissioner cautioned for filing frivolous applications

Suvendu Kumar Pati (Judicial Member) dismissed an appeal which was filed in response to the order passed by this Tribunal for rectification of mistake on the ground that the order to the extent of availment of service of outdoor catering was not proper.

Read full report here…

Jurisdiction for claim of refund filed/initiated to be dealt under the provision Central Excise law and not by the provision of CGST law

Ashok Jindal (Judicial Member) dismissed the application filed by the Revenue (CCE & ST, Panchkula) for ratification of mistake in a final order by the Tribunal which was noticed by the Applicant. The Tribunal dealt with two issues (a) whether to ratify previous order & (b) to deal with the jurisdiction

Read full report here…

Is there any provision under Cenvat Credit Rules, 2004 or Finance Act, 1994 for reversal of CENVAT credit for services provided for which no consideration is received by an assessee? CESTAT analyses

“CENVAT Credit Rules or Finance Act there was no provision for reversal of CENVAT credit for the services provided for which no consideration for service provided was received by an assessee.”

Read full report here…


District Consumer Disputes Redressal Commission, Kolkata


Consumer cannot be forced to pay “service charge” in a restaurant: Consumer Forum finds conduct of restaurant contrary to principles of Consumer Protection Act

“The OPs must have been aware of the guidelines of Fair Trade Practice related to changing of service charge from the consumers by hotels/restaurant issued by Department of Consumer Affairs, Government of India, inter alia, stipulating that service charge on hotel and restaurant bill is “totally voluntarily” and not mandatory.”

Read full report here…


Income Tax Appellate Tribunal (ITAT)


If lessee is not actual owner of property, can actual rental expenses be claimed on return of income? ITAT decides

“The assessee-company has merely taken the assets on lease from the owner, and it is accordingly eligible to claim actual rental expenses in the return of income.”

Read full report here… 

Can merely disowning bank accounts exempt assessee from paying tax? Read why ITAT approved addition of Rs 12.81 Crores under S.68 of Income Tax Act

“Merely disowning the bank accounts by the assessee does not lead to the conclusion that the accounts are not maintained by him when there is a direct evidence contrary to the contention of the assessee.”

Read full report here…


 National Consumer Disputes Redressal Commission (NCDRC)


Homebuyers cannot be expected to wait indefinitely for taking possession: NCDRC allows consumer complaint against Builder, directs refund, imposes costs

Commission dealt with a complaint filed under Section 21 read with Section 2(c) of the Consumer Protection Act, 1986 by the complainant in respect of a plot allotted to him promoted by the OP, claiming deficiency of service due to delay in handing over possession of the plot allotted and claiming refund of amount deposited with compensation.

Read full report here… 

Insurer refuses to issue insurance policy as Risk Confirmation letter obtained on concealment of material fact by Insurance Broker: Policy will be vitiated? NCDRC answers

“Section 19 of Contract Act, 1872, provides that when the consent of an agreement is caused by coercion, fraud, or misrepresentation, the agreement is voidable at the option of the party whose consent is so caused.”

Read full report here…

Plastic pieces found in slices of bread, but compensation denied to consumer. Read why NCDRC set aside State Commission’s order of compensation

Ram Surat Maurya (Presiding Member) addressed a matter wherein Britannia was alleged to have pieces of plastic in its bread, but the complainant failed to prove that the bread was manufactured by the said company.

Read full report here…

Minor treated for “Measles” instead of “Stevens-Johnson Syndrome” due to wrong diagnosis and leading to medical negligence: Read detailed report on NCDRC’s decision

“The patient at her young age of 12 years suffered very serious and potentially fatal SJ syndrome. It was the patient’s sheer good luck that she survived in spite of such grossly inappropriate/inadequate treatment at every stage.”

Read full report here…


National Company Law Appellate Tribunal (NCLAT) 


Is it proper for NCLT to record finding regarding default when RP is yet to consider it and submit report? NCLAT discusses Ss. 95, 97, 99 IBC

“…there cannot be any dispute with the statutory scheme as contained in Section 97 that when application is filed by the Resolution Professional under Section 95, the Adjudicating Authority shall direct the Board within seven days of the date of the application to confirm that disciplinary proceedings pending against the Resolution Professional or not and the Board was required within seven days to communicate in writing either confirming the appointment of the Resolution Professional or rejecting the appointment of the Resolution Professional and nominating another Resolution Professional.” 

Read full report here…

Aggrieved with the categorisation as ‘unsecured creditor’, Tribunal secures ‘secured creditor’, having relinquished the security interest

The Coram of Ashok Bhushan J, (Chairperson), and Dr Alok Srivastava (Technical Member) while accepting the appeal and rejecting the claim of the respondent, the Tribunal was of the opinion that the Adjudicating Authority committed an error in rejecting the claim of the appellant to be ‘secured creditor’.

Read full report here…

Is approval with 90% vote of CoC required before allowing withdrawal of CIRP application even where CoC was not yet constituted? NCLAT clarifies law on S. 12-A IBC 

“…when the application is filed prior to the constitution of Committee of Creditors, the requirement of ninety percent vote of Committee of Creditors is not applicable and the Adjudicating Authority has to consider the Application without requiring approval by ninety percent vote of the Committee of Creditors.”

Read full report here…

Dominant position and Predatory Pricing or Win-Win for riders and drivers? NCLAT upholds CCI’s decision

“We do not think that Ola could operate independently of other competitors in the relevant market, and hence it did not enjoy a dominant position in the market.”

Read full report here…

Once Adjudicating Authority approves Resolution Plan, does it still remains a confidential document? Read what NCLAT says

“The category of creditors including the Members of the suspended Board of Directors or the partners of the corporate persons, who are entitled to participate in the meeting of the Committee of Creditors are entitled to receive copies of all documents.”

Read full report here…


 National Green Tribunal (NGT)


Rampant noise pollution, incessant use of horns; a Deplorable state of affairs! NGT finds Rajasthan in contempt of Supreme Court’s order 

While addressing the issue of pressure/air horns and motor vehicles being driven with intolerable sound in Rajasthan, the Bench comprising of Justice Sheo Kumar Singh (Judicial Member) and Dr. Arun Kumar Verma (Expert Member) found the State of Rajasthan in contempt of the Supreme Court’s order and issued notice to the state government to reply within three weeks.

Read full report here…


Securities Exchange Board of India (SEBI)


Twitter, Telegram and the tattered chances-Illicit act of swindlers recommending stock tips on social media; Tribunal acts immediately

“The tips circulated through the Channel create an inducing impact which are then followed by the subscribers and ironically, such stock tips may also prove to be true, if large number of recipients of such tips believe it and collectively act on it. Slowly and gradually, after seeing the price of the said thinly traded scrip actually rising, more and more subscribers start believing in the tips and start acting on it, which further strengthens the belief of such tips being genuine, as large number of individuals end up acting on such tips and by their collective buying actions, convert the deceitful, specious and baseless tips to realty”

Read full report here…

‘Billionaire’ dream turns into dread-Unauthorsied investment advisory amounted to fraud & misrepresentation

S.K. Mohanty, Whole Time Member while affirming an ex-parte interim order of SEBI, was of the view that the activities of the Noticees, Billionaire Solutions Pvt. Ltd. (Sole proprietor Akash Jaiswal) was covered within the definition of “fraud” defined under regulation 2(1)(c) of the PFUTP Regulations, 2003. And therefore was held liable for the violation of provisions of Section 12A (a), (b), (c) of the SEBI Act, 1992, Regulations 3 (b), (c) & (d), 4(1), 4(2)(k) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (PFUTP Regulations, 2003).

Read full report here…

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): On finding merit in allegations of news publishers’ Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) expressed that,

Google appears to operate as a gateway between various news publishers on the one hand and news readers on the other. Another alternative for the news publisher is to forgo the traffic generated by Google for them, which would be unfavourable to their revenue generation.

Digital News Publishers Association (Informant) filed the present information under Section 19(1)(a) of the Competition Act, 2002 against Alphabet Inc., Google LLC, Google India Private Limited and Google Ireland Limited (referred to as ‘Google’/OPs’) alleging violation of Section 4 of the Competition Act.

Trajectory of the Facts

Informant averred that its members have endeavored to provide credible and fact-checked news, which is the bedrock of any democracy.

Further, as per the Informant, the majority of the traffic on news websites comes from online search engines (more than 50%), wherein Google is claimed to be the most dominant search engine. Based on the same, the Informant averred that more than 50% of the total traffic on the news websites is routed through Google and, being the dominant player in this field, Google, by way of its algorithms, determines which news website gets discovered via search.

Informant contended that Google not only has a monopolistic position in search in India, it has also a very strong position in advertising intermediation and controls/retains the major share at each level.

Adding to the above facts, informant stated that Google was the major stakeholder in the digital advertising space, and it unilaterally decides the amount to be paid to the publishers for the content created by them, as well as the terms on which the aforesaid amounts have to be paid.

The dependency of the customer on Google is also stated to be a well-known fact.

Hence, the OPs abused their dominant position in the market and violated provisions of Section 4 of the Competition Act, 2002.

Analysis and Discussion

The essence of the allegations noted by the Commission was the impugned conduct of Google, resulting in denial of fair share in the digital advertising revenue to news publishers and disclosure of inadequate information to reach a fair settlement.

Further, digitalization of the economy has resulted in higher spending on digital advertising, increasing the dependence of the news publishers on digital advertising.

It was noted that the informant was aggrieved by the denial of fair advertising revenue to its members resulting from the abuse of its dominant position by Google.

Commission in Google Search Bias case held that Google is dominant in both relevant markets, i.e., market for online general web search services and market for online search advertising services in India.

In relation to the dependence of news publishers on Google, it was averred that Google’s search engine results were a prominent source of online traffic to news website publishers. The said fact was corroborated from the traffic data accessed from similarweb.com, which indicated that search engines generate 25% to 77% (depending on the publisher) of the total traffic to news publisher websites. Hence, the discoverability for news publishers appeared to be dependent on search results from Google.

Commission prima facie opined that Google was dominant in both the relevant markets, i.e. market for online general web search services and market for online search advertising services in India.

Coram noted that Google displays news content (a) on its search engine page(s) in the form of general/organic search results, i.e., Google Search, as well as through (b) its news aggregator vertical, i.e., Google News. In response to a search query related to news items, in addition to organic results, Google also displays a ‘Top Stories’ carousel on its search engine result page.

Further, Google provides a news tab on Google Search, which groups news articles related to the search query. The news tab displays the title of the news article, an excerpt from the article, the thumbnail as well as the publisher’s name.

Google displays news content in a variety of ways through hyperlinks, thumbnails, extracts, etc. These hyperlinks, when clicked, take the users to the websites of the respective news publishers. Such access by the users allows the news publishers to monetize their content by offering advertising space on their websites to potential advertisers. 

The Commission stated that it cannot deny that by virtue of its position of strength of its vertically integrated ecosystem which covers not only the markets of Online General Web Search Services and Online Search Advertising Services but also the online digital advertising intermediation services, Google appears to be a preferred service provider to publishers wanting to offer search and advertising services on their websites.

Further, the Coram prima facie was satisfied that based on the global presence of Google, it can be reasonably inferred that Google occupies a significant position in the market for online digital advertising intermediation services as well and investigation would bring out the said aspects in detail.

What appears from the above trajectory?

It appeared that the news publishers are dependent on Google for the majority of the traffic, which makes Google an indispensable trading partner for news publishers.

Prima facie, it appeared that news publishers have no choice but to accept the terms and conditions imposed by Google.

Google appears to operate as a gateway between various news publishers on the one hand and news readers on the other. Another alternative for the news publisher is to forgo the traffic generated by Google for them, which would be unfavourable to their revenue generation.

The alleged opacity on critical aspects such as data and audience management practices, or generation and sharing of revenue with publishers, exacerbates the information asymmetry and is prima facie prejudicial to the interest of publishers, which, in turn, may affect the quality of their services and innovation, to consumer detriment.

Hence, the imposition of such unfair conditions as well as price by Google in the provisions of its various services was prima facie violation of Section 4(2)(a) of the Act.

Snippets on Google

It needs to be examined whether the use of snippets by Google is a result of the bargaining power imbalance between Google on the one hand and news publishers on the other, and whether it affects the referral traffic to news publisher websites, and thus, their monetization abilities.

Coram expressed that in a well-functioning democracy, the critical role played by news media cannot be undermined, and it needs to be ensured that digital gatekeeper firms do not abuse their dominant position to harm the competitive process of determining a fair distribution of revenue amongst all stakeholders.

Therefore, the alleged conduct of Google appeared to be an imposition of unfair conditions and price which prima facie was a violation of Section 4(2)(a) of the Act.

Mirror image websites

The alleged issue with regard to publishers being forced to build mirror-image websites using the AMP format, with Google caching all articles and serving the content directly to mobile users, can have revenue implications for the publishers.

Paywall Options

Since Google restricts paywall options unless publishers rebuild their paywall options and their meters for AMP, which may amount to an unfair imposition on publishers, the said aspects would be suitably examined during the investigation.

Further, it also needs to be examined whether Google imposes any discriminatory condition or price on various news publishers, which would violate Section 4(2)(a) of the Act.

Therefore, in Commission’s opinion, prima facie, Google violated the provisions of Section 4(2)(a) of the Act, which merits investigation and the informant also alleged that Google’s conduct has also violated the provisions of Section 4(2)(b)(ii) as well as Section 4(2)(c) of the Act.

DG can appropriately examine the above-stated.

Google using its dominant position in the relevant markets to enter/protect its position in the market for news aggregation services in violation of Section 4(2)(e) of the Act also needs detailed investigation.

Commission took note of the development in some countries such as France and Australia, as referred by the Informant, that Google has been asked to enter into fair/ good faith negotiation with news publishers for paid licensing of content to address the bargaining power imbalance between the two and the resultant imposition of unfair conditions by Google.

Therefore, Commission was satisfied that a prima facie case was made out against the alleged conduct of Google, which merits an investigation. [Digital News Publishers Assn. v. Alphabet Inc., 2022 SCC OnLine CCI 1, decided on 7-1-2022]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) in view of a deliberate design on the part of Amazon to suppress the actual scope and purpose of the Combination, levied the maximum penalty of INR One Crore each under the provisions of Sections 44 and 45 of the Competition Act. Due to failure to notify combination under Section 6(2) of the Act, Section 43A of the Act, a penalty was imposed.

Purpose of this Order

The present order shall govern the disposal of the proceedings initiated against the Amazon.com NV Investment Holdings LLC (Amazon) under Sections 43A, 44 and 45 of the Competition Act, 2002 in relation to its acquisition of 49% shareholding in Future Coupons Private Limited (FCPL) in pursuance of the show cause notice based on application dated 25-3-2021 of FCPL.

CCI had approved the Combination under Section 31(1) of the Act upon competition assessment of the overlapping business activities of Amazon, FCPL and their group entities and after arriving at the opinion that the Combination is not likely to cause any appreciable adverse effect on competition in India.

 Initiation of proceedings under Sections 43A, 44 and 45 of the Act

 FCPL filed an application stating that Amazon had initiated arbitration proceedings in relation to transfer of assets of FRL, a company in which FCPL holds 9.82% of the shareholding and there are related litigations pending before the constitutional courts.

It was alleged that Amazon took completely contradictory stands in the arbitration proceedings and constitutional courts with respect to its investments in FCPL as compared to the representation and submissions made before the Commission. Such contradictions were said to establish false representation and suppression of material facts before the Commission.

Commission was of prima facie view that

(a) Amazon failed to identify and notify FRL SHA as a part of the Combination, in terms of Regulation 9(4) and Regulation 9(5) of the Combination Regulations;

(b) Amazon had concealed its strategic interest over FRL; and

(c) Amazon had made false and incorrect representations and concealed/suppressed material facts in contravention of the provisions of the Act.

In view of the above, Commission issued SCN under Sections 43A, 44 and 45 of the Act to Amazon, on 4th June, 2021.

Commission received a letter on 20-10-2021 from Amazon inter alia intimating that it has shared with Future Group, the Response to SCN and related correspondence with the Commission.

Later, Commission decided to hear both FCPL and Amazon on 4-1-2022.

Question for Consideration:

Whether alleged conduct (s) of Amazon is in contravention of the provisions of Sections 43A, 44 and 45 of the Act?

Whether Amazon has made misrepresentation, false statement or suppression/concealment of material facts in relation to the scope and purpose of the Combination and failed to identify and notify FRL SHA as an inter-connected part of the Combination, in terms of Regulations 9(4) and 9(5) of the Combination Regulations?

Analysis and Discussion

Commission noted the contract summary and internal e-mail dated 19th July, 2019 of Amazon Group with the subject ‘Request for APPROVAL for Project Taj [Future]…’, which elaborated the business summary and summary of key terms of the Combination (Approval Request). This e-mail was sent by Mr Rakesh Bakshi to Mr Jeff Bezos, seeking approval to sign definitive documents in relation to the Combination.

As per the internal communications and negotiations between the parties relating to the Combination, wherein Amazon initially planned to partner with Future Group, being a key player in the offline retail market, by acquiring 9.99% shareholding in FRL as well as entering into a business commercial framework to build and accelerate ultra-fast delivery services across the top-20 cities in India, leveraging the national footprints of Future Group.

The Approval Request dated 18th July, 2019 suggests that, in view of certain developments relating to foreign investments in India, instead of directly acquiring 9.9% shareholding in FRL, Amazon would use a twin-entity investment structure to invest in FRL i.e., Amazon would acquire 49% shareholding in FCPL which, in turn would hold 8 – 10% of the shareholding in FRL.

Coming to the Notice, it required the notifying party to disclose ‘Economic and Strategic purpose (including business objective and rationale for each of the parties to the combination and the manner in which they are intended to be achieved) of the Combination’.

Further, the Internal Correspondence of Amazon made it abundantly clear that Amazon was all along focussed/interested in FRL. The Internal Correspondence of Amazon did not speak about the business potential of FCPL, as had been claimed and projected in the Notice and in the responses to the letters of the Commission. Similarly, the Notice presented the rationale of indirect rights over FRL, as protection to investment in FCPL.

The expressions used by Amazon to describe the rationale behind the indirect rights over FRL varied from time to time: ‘strategic rights’ in its Internal Correspondence; ‘protection to investment in FCPL’ in the Notice given to Commission; and ‘rights derived from FRL SHA are to protect the interest of the investor [Amazon]’ in the response to SCN.

Commission observed that, in every case of investment, the acquirer would want to protect the value of its investment and the returns.

The purpose of securing strategic interest over FRL and commercial partnership with FRL is much different from FRL, a company with strong financials and futuristic outlook, being merely taken as an element of financial strength and protection to the investment in FCPL.

How has the Suppression of fact continued?

The Internal Correspondence of Amazon clearly showed different purposes for envisaging the Combination (i.e., ‘foot-in-door’ in the Indian retail sector, secure rights over FRL that are considered as strategic by Amazon and Commercial Arrangements between the retail business of Future Group and Amazon).

Amazon in its responses to the letters of the Commission, continued to suppress the actual purpose of the Combination. It was obvious that the purpose of Amazon to pursue the Combination was not the potential of the gist and loyalty card business of FCPL, as had been claimed in the Notice. Rather, FCPL was envisaged only as a vehicle in the Combination to which no value or purpose is ascribed in the Internal Correspondence.

In Commission’s opinion the present matter was a clear, conscious and wilful case of omission to state the actual purpose of the Combination despite the disclosure requirement under Item 5.3 of Form I read with Regulation 5 of the Combination Regulations and Section 6(2) of the Act.

Amazon failed to provide any material or plausible explanation in its response to the SCN and in the subsequent submissions to demonstrate that its disclosures against Item 5.3 are correct and that business potential of FCPL was consideration for Amazon to pursue the Combination.

Adding to the above, Coram also stated that Amazon, in addition to the omission to state the purpose of the Combination, has misrepresented the Commission by stating that the purpose of the Combination is an opportunity arising from the business potential of FCPL and to add credibility to FCPL’s financial position, FCPL invested and proposed to further invest in FRL, a company with strong financials and futuristic outlook.

Amazon had misled the Commission to believe, through false statements and material omissions, that the Combination and its purpose were the interest of Amazon in the business of FCPL.

Further, the Coram added in respect to disclosure against Item 8.8 of Form I that,  True and complete disclosure against Item 8.8 enables the Commission to determine the appropriate framework for competition assessment of the Combination.

In response to Item 8.8, Amazon had furnished a presentation titled ‘Taj Coupons – Business Plan for 5 years’. The eight- page presentation provides only a brief idea of the gift voucher business of FCPL, its business operating model, estimated five-year business size, organisation design, sales team and financial summary, without any reference to FRL.

Commission in view of the above stated that Amazon knowingly suppressed relevant and material documents to be furnished under Item 8.8. of Form I.

Hence, Commission held that the conduct of Amazon amounted to suppression and misrepresentation of the purpose of the Combination and the said was in contravention of the provisions contained n clauses (a) and (b) of Section 44 and clause (a) and sub-section (1) of Section 45 of the Act.

The conduct of Amazon in supressing relevant and material documents against the disclosure requirement under Item 8.8 of Form I is a contravention of clause (c) of sub-section (1) of Section 45 of the Act. Similarly, the rights over FRL that were considered as strategic in the Internal Correspondence of Amazon, were represented as mere investor protection rights. Such repeated assertions, contrary to their actual purport, amount to statements that are false in material particular, in contravention of the provisions contained in clauses (a) and (b) of Section 44 and clause (a) of sub-section (1) of Section 45 of the Act.

Whether FRL SHA was identified and notified as an inter-connected part of the Combination?

In the present matter, Combination was a composite of acquisition of shares, rights and commercial contracts. These together were for the purpose of strategic alignment amongst the business of the parties, in particular to expand the ultra-fast delivery service of Amazon.

The fact that FRL SHA was part of the Combination and was executed at the behest of Amazon, was overwhelmingly evident from the email dated 4-1-2019 of Amazon to Future Group. Commission observes that mere consideration of the values of the asset and turnover of FRL cannot be considered as notification of FRL SHA and BCAs, as parts of the Combination.

Coram stated that details of FRL SHA were not mentioned in Item 5.2. As has emerged now, FRL SHA and the commercial agreements were inter-connected parts of the Combination and accordingly, their details ought to have been disclosed against Item 5.1.2.

The Notice, nowhere disclosed the fact that FRL SHA was negotiated as part of the Combination and was executed for the purpose of Amazon acquiring rights over FRL, through FCPL SHA, and that Amazon had insisted for FRL SHA to be entered into as a prerequisite to Transaction III. In the absence this material fact being disclosed, footnote 3, read with the disclosures and statements in the Notice and subsequent submissions of Amazon, including those against Items 5.1.2 and 5.2 of Form I, statements made in paragraphs 34 of the Notice and paragraph 44 of the submission dated 15th November, 2019 (in response to the letter dated 9th October, 2019 of the Commission), the impugned statement was self-evidently misleading to the effect that FRL SHA was not a part of the Combination and is only pursuant to the Warrants Transaction.

CCI held that, the categorical statements that FRL SHA and BCAs were independent of the Combination sufficiently establish that the same were not notified to the Commission as a part of the Combination, which is a contravention of the obligation contained in Section 6(2) of the Act, which attracts penalty under Section 43A of the Act.

Coram noted that Section 6(2) of the Act requires any person proposing Combination ‘to give notice to the Commission in the form as may be specified…disclosing the details of the proposed combination’.

If a party conceals/suppresses and/or misrepresents to the Commission the scope and purpose of the Combination and obtains approval, the same would effectively amount to approval/consent having been obtained by way of fraud.

Therefore,

Amazon ought to have notified the combination, inter alia, consisting of the following inter-connected steps: (a) Transaction I; (b) Transaction II; (c) Transaction III; (d) FRL SHA for the purpose of acquisition of strategic rights over FRL through FCPL SHA; and (e) commercial agreements between Amazon and Future groups, for the purpose of establishing strategic alignment and partnership between Amazon Group and FRL as well as have a ‘foot-in-the-door’ in the India retail sector.

The Commission directed Amazon to give notice in Form II within a period of 60 days from the receipt of this order and till disposal of such notice, the approval granted vide Order dated 28-11-2019, in Combination, shall remain in abeyance.

Penalty

The Commission considers it appropriate to levy the maximum penalty of INR One Crore each under the provisions of Section 44 and Section 45 of Act. Accordingly, Amazon is directed to pay a penalty of INR Two Crore.

Due to failure to notify combination in terms of the obligation cast under Section 6(2) of the Act, Section 43A of the Act enables the Commission to impose a penalty, which may extend to one percent of the total turnover or the assets, whichever is higher, of such a combination. Accordingly, for the above-mentioned reasons, the Commission hereby imposes a penalty of INR Two Hundred Crore upon Amazon.[ Proceedings against Amazon.com NV Investment Holdings LLC under Sections 43A, 44 and 45 of the Competition Act, 2002, In Re., 2021 SCC OnLine CCI 71, decided on 17-12-2021]


Advocates before the Commission:

For Amazon: Mr. Gopal Subramanium and Mr. Amit Sibal, Senior Advocates with Mr. Anand S. Pathak, Ms. Sreemoyee Deb, Ms. Anubhuti Mishra and Mr. Rajat Moudgil, Advocates alongwith Mr. Rakesh Bakshi, Mr. Ankur Sharma, Ms. Ujwala Uppaluri and Ms. Hina Doon, representatives of Amazon

For FCPL: Mr. Harish Salve and Mr. Ramji Srinivasan, Senior Advocates with Mr. Raghav Shankar and Mr. Pranjit Bhattacharya, Advocates alongwith Mr. Sanjay Rathi, representative of FCPL

For CAIT: Mr. Krishnan Venugopal and Mr. Saurabh Kirpal, Senior Advocates with Mr. Rajat Sehgal and Mr. Debayan Gangopadhyay, Advocates

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma, Bhagwant Singh Bishnoi (Members) directs the investigation in view of an alleged violation of provisions of the Competition Act.

The informant had filed the present information under Section 19(1)(a) of the Competition Act, 2002 against Apple Inc. (OP-1) and Apple India Private Limited (AIPL) alleging contravention of various provisions of Section 4 of the Act.

Informant alleged that Apple uses a barrage of anti-competitive restraints and abuse of dominant practices in markets for distribution of applications (‘apps’) to users of smart mobile phones and tablets, and processing of consumers’ payments for digital content used within iOS mobile apps (‘in-app content’).

Further, it was added that Apple imposes unreasonable and unlawful restraints on app developers from reaching users of its mobile devices unless they go through the ‘App Store’ which is stated to be controlled by Apple. Adding to this, Apple required app developers who wish to sell digital in-app content to their consumers to use a single payment processing option offered by Apple, carrying a 30% commission.

The 30% commission may also amount to a form of ‘margin squeeze’ in breach of the provisions of Section 4 of the Act.

In contrast to the above position, app developers could make their products available to users of an Apple personal computer in an open market, through a variety of stores or even through direct downloads from a developer’s website, with a variety of payment options and competitive processing fees that average 2-5%.

In the informant’s view, the above-stated amounted to abuse of its dominant position on the part of Apple.

Apple’s marketing restrictions makes it difficult for multi-platform apps to inform their users of the ability to make out- of-app purchases, and since Apple has a monopoly over the distribution of iOS apps, app developers have no choice but to assent to this anti-competitive tie-in- arrangement and such conduct on part of OPs is in violation of the provisions of Section 4(2)(d) and Section 4(2)(e) of the Act.

Mandating the use of IAP limits the ability of the app developers to offer payment processing solutions of their choice to the users for app purchases as well as IAPs and amounts to imposition of unfair terms and condition in the purchase or sale of goods or services and moreover, it amounts to denial of market access for the competing payment gateway in violation of the provisions of Section 4(2)(c) of the Act.

Elaborating further, Apple expressly conditions the use of its App Store on the use of its In-App Purchase to the exclusion of alternative solutions in a per se unlawful tying arrangement.

Analysis, Law and Decision

While analysing the matter, Coram firstly noted that Apple’s ecosystem is tightly knit and vertically and exclusively integrated throughout the value chain wherein it offers apps, app store as well as smart devices.

Some consumers may have preference for closed ecosystem like Apple and others may have a preference for open ecosystems like that of Google.

 Apple’s proprietary in-app purchase system (IAP)

Apple prohibits app developers to include a button/link in their apps which take/steer the user to third party payment processing solution other than Apple’s IAP. While the App Store policies of Apple allows users to consume content such as music, e-books, etc. purchased elsewhere (e.g., on the website of the app developer) also in the app, its rules restrict the ability of app developers to inform users about other purchasing options through a notification in the app itself, which might be cheaper. This would result in higher price for the users of such apps.

Commission found that the lack of competitive constraint in the distribution of mobile apps affects the terms of which Apple provides access to its App Store including the commission rates and terms that thwart certain app developers from using other in-app payment systems.

Coram prima facie opined that mandatory use of Apple’s IAP for paid apps & in-app purchases restrict the choice available to the app developers to select a payment processing system of their choice especially considering when it charges a commission of up to 30% for app purchases and in-app purchases.

Market power being enjoyed by Apple due to its grip over iOS ecosystem resulted in ‘allegedly’ high commission fee of up to 30%.

Commission also observed that the intermediation by Apple between the app developer and the app user for payment-processing purposes, would also result in leveraging on the part of Apple as it is using its dominant position in the app store market to enter/protect its downstream market of various verticals in violation of Section 4(2)(e) of the Act.

The app developers have to agree to the usage of Apple’s IAP payment processing service, if they want to distribute their apps to the iOS users through Apple’s App Store. Apple conditions the provision of app distribution services on the app developer accepting supplementary obligations which by their nature or according to commercial usage, have no connection with the subject of the contract for the provision of distribution services, which results in violation of Section 4(2)(d) of the Act.

The above conduct, prima facie results in leveraging by Apple of its dominant position in App Store market to enter/protect its market for in-app purchase payment processing market, in violation of Section 4(2)(e) of the Act.

Another significant point noted by Commission was that App Store is the only channel for app developers to distribute their apps to iOS consumers which are pre-installed on every iPhone and iPad. Further, third party app stores are not allowed to be listed on Apple’s App Store.

Therefore, the above conduct prima facie results in denial of market access for the potential app distributors/app store developers in violation of Section 4(2)(c) of the Act. The said also results in limiting/restricting the technical or scientific development of the services related to the app store for iOS, due to reduced pressure of Apple to continuously innovate and improve its own app store, in violation of Section 4(2)(b) of the Act.

Conclusion

Coram prima facie opined that Apple violated the provisions of Section 4(2)(a), 4(2)(b), 4(2)(d) and 4(2)(e) of the Act, and hence warranted detailed investigation.

The Commission directed the Director-General to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act also directed the DG to complete the investigation and submit the said report. [Together We Fight Society v. Apple Inc., 2021 SCC OnLine CCI 62, decided on 31-12-2021]


Additional Read:

Apple: A monopolist under Federal or State Law? A win for Epic or Apple? Read to know

Business NewsNews

Acquisition approval by Competition Commission of India 


The Competition Commission of India (CCI) approves acquisition by HDFC Bank Limited (Acquirer) of shareholding in HDFC ERGO General Insurance Company Limited (Target) under Section 31(1) of the Competition Act, 2002.

The Proposed Combination involves acquisition of 4.99% of the outstanding equity share capital of the Target by the Acquirer from Housing Development Finance Corporation (HDFC).

Background of the Acquirer and Target

The Acquirer is a public listed banking company registered with the Reserve Bank of India which provides a wide range of banking services covering commercial and investment banking on the wholesale side and transactional / branch banking on the retail side. As a part of the retail banking segment, the Acquirer also engages in the distribution of life and general / non-life insurance products.

The Target is a joint venture between HDFC and ERGO International AG and is engaged in the business of general / non-life insurance in India and offers a complete range of general / non-life insurance products.


Competition Commission of India 

[Source: PIB]

[Dt. 25-10-2021]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Noting a nationwide cartel amongst certain Beer companies, Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma, Bhagwant Singh Bishnoi (Members) imposed penalty on three beer companies on finding regular communications with respect to planning and coordinating of price hikes to propose to State authorities

CCI initiated the present matter suo motu, pursuant to the filing of an application by Crown Beers India Private Limited (OP-2) and SABMiller India Limited (OP-3), both ultimately held by Anheuser Busch InBev SA/NV (Ab InBev) against the captioned parties (OPs) for alleged cartelization in relation to the production, marketing, distribution and sale of Beer in India.

Commission noted that there appeared existence of collusion amongst OPs 2 and 3 along with United Breweries (OP-1) and Carlsberg India Private Limited (OP-4) to:

  • Align the prices of Beer
  • Seek/implement price adjustments in several States and Union Territories of India, irrespective of whether the model of distribution of alcohol (including Beer) therein was of corporation market, auction market or free market.

The aim of the companies appeared to be to ensure consistency in their pricing policies, in particular, price increases and to achieve this aim, OP1 to OP-4 appeared to have coordinated by way of series of multilateral and bilateral meetings and e-mail exchanges amongst themselves as well as through common platform of All India Brewers’ Association (OP-5).

On 31-10-2017, Commission passed an order forming an opinion that prima facie, the conduct of the OPs appears to be in contravention of the provisions of Section 3(1) read with Section 3(3)(a) of the Act and consequently, directed DG to cause an investigation into the matter. 

DG’s Report

DG noted that the sale of liquor (including Beer) does not fall within the ambit of the Goods and Services Tax (‘GST’). As such, each State/UT in India has its own unique method of regulating the sale of liquor (including Beer) within its territory, leading to differences in pricing regulations and approvals, imposition of different taxes, different excise duties and differing terms of licensing, among others.

Issue

  • Whether the OP’s indulge in cartelization in the domestic Beer market I India in contravention of the provisions of Section 3 of the Act?

DG concluded that OPs 1,3 and 4 indulged in the exchange of vital information amongst themselves about pricing and other confidential and business-sensitive information. These companies approached the State Governments collectively through the common platform of OP-5 to get price revisions to agreed levels so as to avoid price wars among themselves.

Hence, they contravened the provisions of Section 3(3)(a) read with Section 3(1) of the Act.

Analysis

Commission noted that the DG has established cartelization amongst the OPs in 10 States/UTs out of total 36 States/UTs in India.

In view of evidences collected by the DG, and analysed by the Commission, in the following States/UTs, cartelization amongst the OPs stood established:

(1) Andhra Pradesh – Price co-ordination between OP-1 and OP-3 in 2009 and 2013, in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act;

(2) Delhi – Price co-ordination between OP-1, OP-3 and OP-4 through OP-5 in 2013, in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act;

(3) Karnataka – Price-co-ordination between OP-1 and OP-3 from 2011 to 2018 with OP-4 joining in from 2012, in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act; and cartelisation between OP-1 and OP-3 with respect to supply of Beer to premium institutions in the city of Bengaluru in 2010, in contravention of the provisions of Section 3(3)(c) read with Section 3(1) of the Act;

(4) Maharashtra – Price co-ordination between OP-1 and OP-3 from 2011 to 2018 with OP-4 joining in from 2012, in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act; cartelisation between OP-1 and OP-4 to restrict/limit the supply of Beer in 2017, in contravention of the provisions of Section 3(3)(b) read with Section 3(1) of the Act; and sharing of market between OP-1, OP-3 and OP-4 from 2013 to 2017, in contravention of the provisions of Section 3(3)(c) read with Section 3(1) of the Act;

(5) Odisha – Price co-ordination between OP-1 and OP-3 in 2009 and 2010, in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act; price co-ordination by OP-4 in 2015 and 2016, in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act; and cartelisation between OP-1, OP-3 and OP-4, through OP-5, to restrict/limit the supply of Beer in 2015–16, in contravention of the provisions of Section 3(3)(b) read with Section 3(1) of the Act;

(6) Puducherry – Price co-ordination between OP-1, OP-3 and OP-4 in 2017, in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act;

(7) Rajasthan – Price co-ordination between OP-1, OP-3 and OP-4 through OP-5 from 2011 to 2018 with OP-4 joining in from 2014, in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act; and

(8) West Bengal – Price co-ordination between OP-1 and OP-4 through OP-5, from 2012 to 2018, in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act; and cartelisation between OP-1 and OP-4, through OP-5, to restrict/limit the supply of Beer in 2018, in contravention of the provisions of Section 3(3)(b) read with Section 3(1) of the Act.

Second-Hand Bottles

Further, apart from price co-ordination and limiting/restricting supply of Beer in various States/UTs, the DG also reached to a finding of co-ordination amongst OP-1 and OP-3 with respect to purchasing of second-hand bottles.

Commission observed that the provisions of the Act do not just pertain to the end-consumers of goods/services.

“No distinction in the Act, for the purposes of assessment of anti-competitive conduct, is made between the end-consumers, and intermediaries falling in the supply chain.”

 Coram opined that given the sheer magnitude and size of the OP companies, their countervailing buying power over small time bottle collectors, would have been substantial.

Hence, cartelization amongst OP-1 and OP-3 from at least 2009 to 2012 in the purchase of second-hand bottles was clearly established.

OP-1 and OP-3 had an ‘understanding’ to share their off-take of old bottles from the market for re-use in their breweries. They had also agreed upon the rate at which they would procure such bottles from the bottle collectors. They closely monitored each other’s purchase of old bottles. Such conduct of OP-1 and OP-3 may have resulted in limiting and controlling the supply of second-hand Beer bottles in the market, amounting to contravention of the provisions of Section 3(3)(b) read with Section 3(1) of the Act.

 OP-4 was not found guilty of cartelization with respect to second-hand Beer bottles.

Commission stated that OP-1 and OP-3 indulged into nation-wide cartelisation from 2009 to at least 10.10.2018 (till the DG conducted search and seizure operation at the premises of the OPs), with OP-4 joining in from 2012 and with OP-5, since 2013, serving as a platform for facilitating such cartelisation, which is in contravention of the provisions of Section 3(3)(a), 3(3)(b) and 3(3)(c) read with Section 3(1) of the Act.

15 individuals were liable for the anti-competitive conduct of their respective companies.

Conclusion

In terms of proviso to Section 27(b) of the Competition Act, in cases of catelisation, Commission is empowered to impose upon the contravening entities penalty of upto 3 times of the profit of each year of the continuance of the cartel, or 10% of its turnover for each year of the continuance of the cartel, whichever is higher.

Commission determined the quantum of penalty imposed on the parties @ 0.5 times profit for each year of the continuance of the cartel or 2% of the turnover for each year of the continuance of the cartel, whichever is higher.

Lastly, the Coram directed the parties to cease and desist in future from indulging in any practice/conduct/activity, which has been found in the present order to be in contravention of the provisions of Section 3 of the Act. [Alleged anti-competitive conduct in the Beer Market in India, In Re.; 2021 SCC OnLine CCI 53, decided on 24-9-2021]


Advocates before the Commission:

For United Breweries Ltd. (UBL), Mr. Kalyan Ganguly of UBL, Mr. Kiran Kumar of UBL, Mr. Perry Goes of UBL and Mr. Shekhar Ramamurthy of UBL:

Mr. Amit Sibal, Senior Advocate alongwith Mr. Ravishekhar Nair, Ms. Avantika Kakkar, Mr. Sahil Khanna, Mr. Abhay Joshi, Mr. Kirthi Srinivas, Mr. Ambar Bhushan, Mr. Saksham Dhingra, Mr. Animesh Kumar, Ms. Shreya Joshi and Ms. Sree Ramya Hari, Advocates and Mr. Govind Iyengar, Senior VP Legal of UBL, Mr. Kiran Kumar in person, Mr. Perry Goes in person and Mr. Shekhar Ramamurthy in person

For Mr. Shalabh Seth of UBL:

Mr. Ramji Srinivasan, Senior Advocate alongwith Mr. Gaurav Desai, Ms. Apurva Badoni and Mr. Shivkrit Rai, Advocates

For Mr. Steven Bosch of UBL:

Mr. Prashanto Chandra Sen, Senior Advocate alongwith Ms. Nisha Kaur Oberoi, Mr. Gautam Chawla, Mr. Rishabh Juneja and Ms. Shambhavi Sinha, Advocates

For Anheuser Busch InBev SA/NV (i.e., Crown Beers India Private Limited and SABMiller India Limited):

Mr. Manas Kumar Chaudhari, Mr. Pranjal Prateek, Mr. Sagardeep Rathi and Ms. Radhika Seth, Advocates alongwith Ms. Ajita Pichaipillai, Legal and Compliance Director of AB InBev

For Mr. Anil Arya of SABMiller India Ltd.: For Mr. Nilojit Guha of SABMiller India Ltd.:

Mr. Talha Abdul Rahman, Advocate
Mr. Tahir Ashraf Siddiqui, Advocate with Mr. Nilojit Guha in person

For Mr. S. Diwakaran of SABMiller India Ltd.:

Mr. Shreyas Mehrotra, Advocate

For Carlsberg India Pvt. Ltd. (CIPL), Mr. Anil Bahl of CIPL, Mr. Dhiraj Kapur of CIPL, Mr. Mahesh Kanchan of CIPL, Mr. Michael Jensen of CIPL and Mr. Nilesh Patel of CIPL

Mr. Rajshekhar Rao, Ms. Manika Brar, Ms. Atrayee Sarkar, Mr. Anandh Venkataramani, Mr. Nilav Banerjee, Ms. Kajori De, Ms. Afreen Abbassi and Ms. Raveena Sethia, Advocates alongwith Mr. Amit Sethi of CIPL

For Mr. Pawan Jagetia of CIPL:

Ms. Deeksha Manchanda and Mr. Shruti Rao, Advocates

For All India Brewers’ Association (AIBA): For Mr. Sovan Roy of AIBA:

Mr. Subodh Prasad Deo and Ms. Rinki Singh, Advocates, with Mr. Sovan Roy in person

Op EdsOP. ED.

The Government in June 2021 released the proposed amendments to Consumer Protection (E-Commerce) Rules, 2020 (hereinafter “proposed amendments”), with a view to regulate the e-commerce space more closely from a consumer protection perspective. The proposed amendments seek a substantial increase in compliances and liabilities, along with a broader scope of the term “e-commerce”. In addition to these, the proposed amendments are not in alignment with existing regulatory frameworks. One such significant overlap is with the competition law framework, and the role of the Competition Commission of India (hereinafter CCI).

 

E-commerce in India has been a beacon of competition, not just from the retailing perspective, but also various other services that have been made possible. It is a visible sign of a thriving platform economy, and has significantly changed the conduct, and content of commerce.

 

The burgeoning nature of the e-commerce market in India can be witnessed from multiple projections all of which point to an upward trajectory, and hover around an expectation of a $200 billion size by 2025[1]. This growth must also be seen in the context of Covid-19 in India, where platforms contributed to a sense of resilience and normalcy during the peak of the pandemic.

 

However, digital markets have brought with them plenty of issues concerning the jurisprudence of competition law, not just in India, but in various other countries. Matters related to non-price aspects of competition, unique selling practices of e-commerce platforms, and the ambiguous understanding of “level playing field”[2] between traditional and online businesses, have significantly challenged the Competition Commission of India’s (CCI) oversight. These new challenges have also been formally acknowledged by CCI[3], in its January 2020 report on e-commerce in India. With most of the issues yet to see completion of detailed investigation, any interim legislation may end up hampering this investigation.

 

Flash sales, as defined in the proposed amendment[4] (along with the proviso), aim to reduce the advantage that e-commerce platforms may give to certain sellers, or groups of sellers. But what must be considered is that flash sales, through discounts, and reduced prices, have the effect of greater benefit for consumers (one of the objectives of competition law), and greater competition (particularly, interbrand competition among products) across platforms. Further, while such flash sales also involve an element of special distribution arrangements, the CCI has not yet pronounced on the legality of such arrangements.  These arrangements may in fact, create an efficient supply chain. These issues are currently being explored by the CCI as part of its investigation into non-horizontal agreements under Section 3(4) of the Competition Act, 2002. This would be complemented with a better understanding of appreciable adverse effects on competition, under Section 19(3) of the Act; in terms of flash sales being perceived as an aggravating or mitigating factor, for competition.

 

While these involve a more traditional understanding of competition in India, contemporary developments around data and privacy, are newer determinants of competition[5]. The proposed amendment recognise this, when it says no e-commerce entity shall engage in abuse of dominant position[6], as per Section 4 of the Competition Act. However, the Consumer Protection Act might be a misplaced legislative framework to talk about dominance of e-commerce platforms, and rather, must be addressed on a case-to-case basis by the CCI. Competition within, and between e-commerce platforms is based on efficiencies in the supply chain, with data about consumer preferences shaping production planning and distribution channels. By reiterating the need to not engage in “abuse of dominance” in a consumer protection framework, it prematurely shapes the jurisdiction of Consumer Protection Authority (CPA) in matters of data collection, sharing, preferential selling, search indexes and rankings, and cross-selling; leading to possible jurisdictional overlaps with CCI and other regulators therefore, giving opportunity for forum shopping. Similarly, under Section 6(6)(a) of the proposed amendment (liabilities of platforms), platforms need to ensure that it does not use any information collected through its platform for unfair advantage of its related parties and associated enterprises. This is an issue under platform neutrality, with CCI now taking cognizance of a gamut of such instances[7].

 

Finally, under Rule 7(1)(b) of the proposed amendment, it has been mandatory for e-commerce platforms to identify, and highlight the “country of origin” of goods, while adding the need for providing filtering options, and suggesting domestic alternatives. This, even though well intentioned in its idea of promoting Make in India and encouraging small Indian manufacturers, may end up distorting the notion of level playing field. It may discriminate against imports, and overlook the complex process of value addition or assembly that may happen in the destination country.

 


Conflicts beyond the Competition Law


The proposed amendment reiterate many provisions listed in the FDI policy for e-commerce, such as mandatory registration, scope of related parties, country of origin, etc. However, while the FDI norms do not make a mention of platform liability[8], the proposed amendment clearly enunciate the need for one.

 

Going further, the proposed amendment have a jurisdictional overlap between the proposed Data Protection Authority (DPA) (under the Personal Data Protection Bill, 2019), and the Consumer Protection Authority. Section 5, clause 14(a) of the proposed amendment venture into aspects of data sharing and processing (based on consent), whose nuances can best be dealt with only a DPA, and an overarching data protection law.

 

Lastly, the overlap with competition law explored above, also brings the CPA in conflict with CCI, possibly contributing to more “forum shopping” and delaying strategies.

 


Conclusion


Post feedback to the draft Rules, the expectations would consist of a softer regulatory touch for e-commerce until more important legislations are passed, and of CCI developing greater expertise in digital markets. Any focus on consumer protection must be exclusive, and consumer-centric. This may draw from the EU’s the New Deal for Consumers[9], a legislation on consumer protection in e-commerce. It focuses on transparency in marketplaces and advertisements, terminability of online contracts, robust grievance redressal and compensation, and uniformity in quality.

 

As for the regulation of e-commerce as a whole, relying on consumer protection alone takes a parochial view of supply side dynamics. Another EU model might serve as a reference for e-commerce regulation in this regard, with the proposed Digital Services Act package[10]. While the Digital Services Act regulates all online intermediaries and places strict obligations for large players, the Digital Markets Act emphasises on limiting the economic power of the major players, or “gatekeepers”. Thus, with 2 distinct laws, the package aims to empower consumers, foster greater transparency and accountability, and create equitable competition.


 

[1] Invest India, Retail and E-Commerce, available HERE .

See also Saritha Rai, P.R. Sanjai, Bhuma Shrivastava, 2020, “Asia’s Richest Man Takes on Amazon in India’s Booming Online Market” HERE (posted on 11-11-2020).

[2] Chawdhry, Mohit, 2021. Levelling the Playing Field between Traditional and Digital Businesses, Report Issue 009, New Delhi: Esya Centre. Available HERE.

[3] Competition Commission of India, 2020, Market Study on E-Commerce in India: Key Findings and Observations, New Delhi: Competition Commission of India. Available HERE .

[4] Cl. 3(1)(e), Consumer Protection (E-Commerce) Rules, 2020.

[5] Competition Commission of India, 2020, Market Study on the Telecom Sector in India: Key Findings and Observations, New Delhi: Competition Commission of India. Available HERE .

[6] Cl. 5(17), Consumer Protection (E-Commerce) Rules, 2020.

[7] The Hindu BusinessLine, 2021, “Anti-Competitive Practices: NRAI Files Plaint against Zomato, Swiggy” HERE .

[8] Consolidated FDI Policy, 2020, Chapter 5.2.15.2 E-Commerce Activities, Department for Promotion of Industry and Internal Trade.

[9] European Commission, 2019. Factsheet: New Deal for Consumers. Available HERE .

[10] Allen and Overy, 2020, “The Digital Services Act Package is Here”. Click HERE.

Hot Off The PressNews

Competition Commission of India (CCI): In its recent press release, Competition Commission of India, while giving benefit of reduction in penalty under the provisions of Section 46 of the Competition Act, 2002  of 100%, 40% and 20%   to AB InBev, United Breweries Ltd. (UBL) and  Carlsberg India Private Limited (CIPL), and all their individuals respectively besides passing a cease-and-desist order. a final order against three beer companies namely United Breweries Limited (‘UBL’), SABMiller India Limited (now renamed as Anheuser Busch InBev India Ltd. after being acquired by Anheuser Busch InBev SA/NV) (‘AB InBev’) and (‘CIPL’) for indulging in cartelisation in the sale and supply of beer in various States and Union Territories in India, including through the platform of All India Brewers’ Association (‘AIBA’). The period of cartel was held to be from 2009 to at least 10.10.2018 (the date on which the Director General (‘DG’) conducted search and seizure operations at the premises of the beer companies), with CIPL joining in from 2012 and AIBA serving as a platform for facilitating such cartelisation since 2013. All three beer companies were lesser penalty applicants before CCI.

Engaged in price co-ordination in contravention of the provisions of Section 3(3)(a) of the Competition Act, 2002 (the ‘Act’) in the States of Andhra Pradesh, Karnataka, Maharashtra, Odisha, Rajasthan, West Bengal, National Capital Territory of Delhi and the Union Territory of Puducherry, in collectively restricting supply of beer in the States of Maharashtra, Odisha and West Bengal in contravention of the provisions of Section 3(3)(b) of the Act, and in sharing of market in the State of Maharashtra as well as co-ordination with respect to supply of beer to premium institutions in the city of Bengaluru in contravention of the provisions of Section 3(3)(c) of the Act. CCI also found co-ordination amongst UBL and AB InBev with respect to purchase of second-hand bottles.


PR40-2021-22


Agatha Shukla, Editorial Assistant has reported this news.

Tribunals/Regulatory Bodies/Commissions Monthly Roundup

Here’s a run-through of all the significant decisions covered in the month of June, 2021 under the Section of Tribunals/Commission/Regulatory Bodies.


Armed Forces Tribunal

♦ AFT | Pension cannot be denied for disability being less than 20% where the disability is assessed at 15-19%“

The assessment of disability to the tune of 15-19% itself is a doubtful assessment and cannot be final for the simple reason that there is no barometer which can assess the disability percentage to the extent of 1% and therefore, the percentage of disability which has been assessed as 15-19% may be 20% also and there may be variation of at least two percent plus also. In case of doubt as the benefit should always be given to the applicant.”

https://wp.me/scenps-pension


Competition Commission of India

♦ CCI examines if airlines were involved in cartelization resulting in anti-competitive practice during Jat Agitation in 2016 || Synoptic view of Judgment

“…with the use of algorithms, there exists a high possibility of collusion with or without the need of human intervention or coordination between competitors.”

https://wp.me/pcenps-130u

♦ ABFI prohibits State Baseball Associations from joining unrecognised leagues, threatens disciplinary action | CCI to examine such conduct in light of provisions of Competition Act

“ABFI isued communication to its affiliated State Baseball Association requested them no to entertain unrecognized bodies and further by requesting them not to allow their respective State players to participate in any of the tournaments organized by such unrecognized bodies, has violated the provisions of Section 4(2)(c) of the Act as it resulted in denial of market access to other federations.”

https://wp.me/pcenps-130J

♦ CCI | Did Google leverage dominance in Play Store? Director-General to conduct investigation in complaint by smart phone/smart TV users

“..by making pre-installation of Google’s proprietary apps conditional upon signing of ACC for all android devices manufactured/distributed/marketed by device manufacturers, Google has reduced the ability and incentive of device manufacturers to develop and sell devices operating on alternative versions of Android and thereby limited technical or scientific development relating to goods or services to the prejudice of consumers in contravention of Section 4(2)(b) of the Act.”

https://wp.me/scenps-google

♦ Are Tourist Taxi Unions in State of Goa preventing entry of App-based Taxi Aggregator Companies in Goa? Read a detailed account of CCI’s decision

“..despite the opposition of taxi unions, the State of Goa does not appear to have acceded to or conceded to the demands of the OPs and the policy allowing entry of app based taxi aggregators was eventually notified.”

https://wp.me/pcenps-13au

♦ CCI | Co-location facility of National Stock Exchange is anti-competitive? Is the service an autocratic move against traders? Comprehensive Report

A robust exchange acts as a backbone of the financial system and the provision of co-location facility by exchanges help increase volumes of trades manifold and provides liquidity to investors. This augurs well for the market, the companies and the economy.

https://wp.me/pcenps-13aA


Customs, Excise and Services Tax Appellate Tribunal

♦ CESTAT | Assessable Value to include Advertising and Marketing Costs, if relatable to Imported Goods; Tribunal provides relief to Volvo Auto India

https://wp.me/pcenps-1312


Income Tax Appellate Tribunal

♦ ITAT | Whether DTAA protection in respect of taxation of dividend in source jurisdiction, can be extended to ‘dividend distribution tax’ under S. 115-O, Income Tax Act, in the hands of a domestic company? Matter referred to larger Bench

“Whether the protection granted by the tax treaties, under Section 90 of the Income Tax Act, 1961, in respect of taxation of dividend in the source jurisdiction, can be extended, even in the absence of a specific treaty provision to that effect, to the dividend distribution tax under Section 115-O in the hands of a domestic company?”

https://wp.me/scenps-taxation


National Consumer Disputes Redressal Commission

♦ NCDRC | In a case of death insurance claim, can police investigation be replaced by private agency investigation engaged by insurance company? Commission spells out

Inquest is conducted as mandated under the Cr.P.C., Post Mortem is conducted by the concerned government Medical Officer, Investigation is conducted by the Police (a private agency engaged by the Insurance Co. does not substitute for the Police).

https://wp.me/pcenps-12Zd

♦ NCDRC | Builder unilaterally, high-handedly cancels sale agreement on not handing over timely possession: Commission decides builder-buyer dispute, levies interest to be paid by builder

“According to Section 8 of the Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, if the builder is not able to hand over the possession over the building/flat within the time specified in the agreement then the builder is liable to pay interest to the purchaser of the flat for the period for which the possession has not been handed over.”

https://wp.me/pcenps-139u


National Company Law Appellate Tribunal

NCLAT | Can Banks debit amounts from Corporate Debtor Company after Moratorium Order? Is there an obligation of releasing ‘title deeds’ under Resolution Process? Read on

Banks cannot freeze accounts, nor can they prohibit the ‘Corporate Debtor’ from withdrawing the amount as available on the date of the moratorium for its day-to-day functioning.

https://wp.me/pcenps-12UG


Real Estate Regulatory Authorities

Rajasthan Real Estate Regulatory Authority, Jaipur

♦ Is S. 13 of RERA Act a mandatory requirement? Can promoter demand cost of plot more than 10% before registering sale agreement? | Raj RERA decides

https://wp.me/scenps-rera

Maharashtra Real Estate Regulatory Authority, Mumbai

♦ Can promoter/builder sell covered car parking by charging certain amount? Whether open parking has to be handed to society or can be sold in open market? MahaRERA decides

https://wp.me/pcenps-133Q


State Consumer Forums

State Consumer Disputes Redressal Commission, U.T. Chandigarh

♦ Consumer spending hefty amount has right to ask for record of expenditure. Can service provider evade liability? Read on

…every person who is shredding hefty amount from his pocket towards the services being provided to him, has the right to know as to how, where and in what manner, the same has been utilized.”

https://wp.me/pcenps-12OG

Consumer Disputes Redressal Commission Gujarat State, Ahmedabad

♦ Consumer Forum | Can complainant raise consumer dispute where excess electricity duty is charged? Is he overriding statutory remedy if he already approached the Collector? Read on

“Section 3 of Consumer Proetction Act cannot be said to be inconsistent with Rule 12 of the Electricity Duty Rules.”

https://wp.me/pcenps-12Ns

State Consumer Disputes Redressal Commission, Telangana

♦ Can insurance company repudiate claim if insured suppresses fact of suffering from ailment while taking policy? Telangana State Consumer Forum answers

“If the insurer can show that prior to the date of declaration of being healthy, the insured was suffering with ailment which was within her knowledge but was suppressed, then the insurance company is well within its right to repudiate the claim on the ground of suppression veri.”

https://wp.me/pcenps-134C


Securities Appellate Tribunal

♦ Oscillating Independent Director; SAT to determine independency of Pradip K. Khaitan, independent director of Dhunseri Ventures Ltd.

https://wp.me/pcenps-12PM

♦ SAT | SEBI exonerated preferential allottees, exit providers and LTP contributors from manipulation | SAT terms it ‘cryptic’

https://wp.me/pcenps-135j

♦ SAT | Franklin Templeton gets interim relief | Gives due consideration to the 2 decades’ reputation

https://wp.me/pcenps-138Y


Securities Exchange Board of India

♦ Infosys insider trading | While in possession of Unpublished Price Sensitive Information, 2 employees of Infosys & 6 other entities violated Insider Trading Regulations on Infosys Stock [Detailed Report]

“The liability of acting partners and non-acting partners (collectively known as firm) for the injury to the third party is an outcome of joint and several liability of such partners under IPA, irrespective of whether that the conduct (act of omission or commission of the firm) which gave rise to the loss/injury to the third party is also in violation of any provision under securities law.”

https://wp.me/scenps-infosys

♦ Decoded | SEBI bars Director of Franklin Templeton AMC,  wife from accessing securities markets for 1 yr: Can redemption of units by Director of a mutual fund AMC be titled as fair conduct?

Laws dealing with information asymmetries (PIT Regulations and PFUTP Regulations) essentially seek to address the issues arising out of disparities in access to material information, that is otherwise not legally available to general investors, and to prevent those persons having access to such superior information from exploiting the informational advantage, in order to protect the integrity of the market and maintain investor confidence.

https://wp.me/pcenps-12Vh

♦ SEBI | Not so “independent” Independent director and a concocted scheme with affinity and consanguinity |SEBI takes on each violation with mordant remarks

“…remuneration and qualification are two crucial criterions to evaluate and adjudge the significance of a position held by a person in an organisation and his importance and status in participating in the management of a company.”

https://wp.me/pcenps-133k

♦ SEBI | Kingfisher’s chopped wings and shrinked wingspan | United Breweries Acquisition | Heineken exempted from the obligation under Takeover Regulations with exceptions

https://wp.me/pcenps-135X

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) ordered an investigation by the Director-General against Google in view of prima facie contravention of provisions of Competition Act.

Informants filed the instant case under Section 19(1)(a) of the Competition Act against Google LLC, Google India Private Limited, Xiaomi Technology India Pvt. Ltd. & TCL India Holdings Pvt. Ltd. alleging contravention of various provisions of Sections 3 and 4 of the Act. OPs to be referred to as ‘Google’.

Informants stated that they were the consumers of Android-based smartphones, television devices and alleged that Google was guilty of anti-competitive practices which violate Section 4 with Section 32 of the Act.

It was alleged that Google imposed several restrictions, as summarized below, upon smart TV and smart mobile device OEMs by virtue of the agreements entered into with them which tantamount to abuse of its dominant position by Google, in terms of various provisions of Section 4 of the Act.

Analysis

It was noted that Google enters into two agreements with Android TV licensees i.e. Television App Distribution Agreement (TADA) and Android Compatibility Commitment (ACC).

Google makes AOSP available to any third parties under an open-source license, however, the Android Open Source Project license does not grant OEMs, the right to distribute Google’s proprietary apps such as Play Store, YouTube, etc. referred to as Google Applications in TADA. The AOSP license further does not grant Original Equipment Manufacturers (OEMs), the right to use the Android logo and other Android-related trademarks. In order to obtain those rights, Google requires OEMs to sign an optional, non-exclusive agreement, i.e. TADA. Further, TADA requires the OEMs to be in compliance with a valid and effective ACC.

Commission prima facie opined that by making pre-installation of Google’s proprietary apps conditional upon signing of ACC for all android devices manufactured/distributed/marketed by device manufacturers, Google has reduced the ability and incentive of device manufacturers to develop and sell devices operating on alternative versions of Android and thereby limited technical or scientific development relating to goods or services to the prejudice of consumers in contravention of Section 4(2)(b) of the Act.

ACC prevents OEMs from manufacturing/ distributing/ selling any other device which operates on a competing forked Android operating system.

Therefore, the dominance of Google in the relevant markets and pronounced network effects, by virtue of the stated restriction, developers of such forked Android operating system are denied market access resulting in violation of Section 4(2)(c) of the Act.

Further, Commission prima facie opined that obligations which appear to be applicable across all the devices manufactured by OEMs are akin to making a conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts and thus, violative of provisions of Section 4(2)(d) of the Act.

In relation to the mandatory preinstallation of all the Google Applications under TADA, it is observed that the device manufacturers who sign this agreement cannot pick and choose from the Google Applications for preinstallation. In essence, this entails compulsory tying of ‘must have’ Google apps, which is in contravention of Section 4(2)(a)(i) of the Act.

Elaborating more on the above aspect, Commission stated that Google prima facie leveraged dominance in Play Store in contravention of Section 4(2)(e) of the Act.

Commission directed the Director-General (‘DG’) to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act and the same to be completed within a period of 60 days.

As per the Coram, a case was made out for directing an investigation by the DG.[Kshitiz Arya v. Google LLC, 2021 SCC OnLine CCI 33, decided on 22-06-2021]

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) expressed that:

State of Uttarakhand formulated the Liquor Wholesale Order in a manner through which State officials were vested with exclusive powers which included discretion to dictate as to what brands of alcoholic beverages were to be procured and distributed to retailers and sold to end-consumers.

The instant case was by International Spirits and Wines Association of India (Informant) against Uttarakhand Agricultural Produce Marketing Board (OP – 1), Garhwal Mandal Vikas Nigam Ltd. (OP – 2) and Kumaun Mandal Vikas Nigam Ltd. (OP – 3) alleging contravention of the provisions of Section 4 of the Act.

Informant company is a representative body of International Spirits and Wines Companies which includes the following:

(a) Bacardi India Private Limited;

(b) Beam Global Spirits & Wine (India) Pvt. Ltd.;

(c) Brown Forman Worldwide LLC;

(d) Diageo India Private Limited;

(e) Edrington Marketing;

(f) Moet Hennessy India Private Limited;

(g) Pernod Ricard India Private Limited (‘Pernod’);

(h) United Spirits Limited (‘USL’); and

(i) William Grant and Sons Limited.

State of Uttarakhand issued an Excise Policy which provided that a new wholesale arrangement shall be brought into force within one month of the notification of such policy. OP-1 was appointed as the exclusive wholesale licensee for foreign liquor/beer/wine including Indian Made Foreign Liquor in the State of Uttarakhand. OP-2 and OP-3 were appointed as the exclusive sub-wholesalers of alcoholic beverages.

Monopoly

Allegation in respect to the above was, that the appointment of the above-stated caused monopoly vested in the OPs making them dominant in the relevant market.

Later, Uttarakhand Government issued a new excise policy in terms of which OP-2 and OP-3 ceased to operate as licensees. Hence, since 2016 Uttarakhand Government discharged OP-1 from all responsibilities of dealing with the procurement of alcoholic beverages in State of Uttarakhand.

How were the OPs taking advantage of their monopoly and abused their dominance? 

  • The OPs were placing orders with alcoholic beverage manufacturers for supply of IMFL in an arbitrary and discriminatory manner with no relation to the consumer demand, for certain brands of beverages in the market.
  • The OPs were not procuring alcoholic beverages of certain brands, despite demonstrably high consumer demand for such alcoholic beverages and thereby discriminating against manufacturers of these beverages. This resulted in the replacement of IMFL brands of certain members of the Informant with the brands of other alcoholic beverage manufacturers, for which there was significantly less demand when the Informant’s members were supplying in the ordinary course.
  • The OPs were not maintaining minimum stock levels and were not supplying IMFL brands in accordance with the retailers’ demand, despite express stipulation in Clauses 10 and 11 of the Liquor Wholesale Order.

Commission prima facie vide it’s order dated 19-07-2016 directed the DG to cause an investigation into the matter and submit the investigation report.

DG noted that OP-1 disregarded the mechanism of procurement of different brands of alcoholic beverages as per the Liquor Wholesale Order and order of Additional Commissioner of Excise. It was found that OP-1’s arbitrary approach in placing orders for alcoholic beverages resulted in gross decline in procurement of alcoholic beverages from USL and Pernod.

Hence, DG concluded that OP-1 contravened the provisions of Sections 4(2)(c) read with Section 4(2)(b)(i) of the Act.

Whereas OP-2 and 3’s acts were not found to be contravention of the provisions of the above-stated Sections, as both OP-2 and OP-3 were wholly dependent on OP-1.

OP-2 and OP-3 had no inter-se agreement, whatsoever, with the manufacturers/suppliers of alcoholic beverages and were not getting any direct supplies from them.

Whether there were complaints from retailers and consumers in respect of the non-availability of brands of IMFL?

DG found that OP-2 provided several copies of complaints made by retailers which were forwarded to OP-1, despite which OP-1 continued with arbitrary manner of procurement.

Further, DG noted that OP-1 did not follow the directions of the Additional Excise Commissioner (Licensing) in respect of procurement of alcoholic beverages.

DG’s Conclusion 

DG concluded that non-maintenance of minimum level of different brands at all times and carrying out the procurement of alcoholic beverages in a manner which was arbitrary and one-sided by OP-1 adversely affected competition and OP-1 abused its dominant position in the relevant market, which resulted in denial of market access to the products of USL and Pernod in the State of Uttarakhand.

It was also found that Clauses 7.1, 7.2, 7.3, 14, 4, 1.1, and 2.6 were one-sided, unfair, abusive and anti-competitive in terms of Section 4(2)(a)(i) of the Act.

Analysis, Law and Decision

After the final hearing held on 15-12-2020, Bench analysed the matter.

It was stated that the activities pertaining to procurement and distribution/supply were in the nature of ‘economic and commercial activities for which profit distribution had also been defined under the provisions of the Liquor Wholesale Order itself.

Commission reiterated that

if an entity is engaged in any activity, no matter with or without profit motive, it would be considered an enterprise as it interfaces with the market and hence, with other alternatives for the product or service in question. It is not ‘generation of profits’ rather the defining feature of an entity to be termed as an ‘enterprise’ under the Act is that the entity is engaged in some economic or commercial activity under Section 2(h) for the purposes of Section 4 of the Act.

Commission notes that the precedent is clear and well settled that in case of trade in liquor, the State has following three options:

(a) To completely prohibit the trade in liquor, or

(b) To create a monopoly for itself over manufacture, sale, possession or distribution of alcohol,

or

(c) To allow private individuals to trade in liquor.

Further, it was elaborated that, the grant of license for the trade of liquor is a statutory function, but in the present case, it is the Licensees, even though being wholly-owned Government entities, which are engaged in the economic activity of ‘procurement and distribution/supply of IMFL’ in the State of Uttarakhand.

Hence, it was held that OP-1, 2 and 3 were are ‘enterprises’ within the meaning of Section 2(h) of the Act.

Main Grievance

Unfair procurement of IMFL brands by OPs and the unfair nature of conditions imposed by OP-1 in the agreements it has entered into with IMFL manufacturers.

Commission observed that the competition assessment in respect of an alleged contravention of the provisions of Section 4 of the Act is different in scope and nature from a competition assessment of a proposed combination by way of merger notification under Section 6(2) of the Act.

Commission found that the OPs will remain dominant in any of the plausible relevant markets as each of the OPs had been granted exclusivity in its respective business and area of operation; and no other person could procure, supply or distribute alcoholic beverages in the State of Uttarakhand on account of the restrictions envisaged pursuant to the Liquor Wholesale Order.

Liquor Wholesale Order

 Provisions in the said Order were framed in a manner that entry to any competitor in the relevant market was denied and all the OPs were able to act exclusively and independently in their respective relevant markets during the relevant period.

Whether the dominant position is bestowed upon OP-1 owing to the Excise Policy and the provisions of the Liquor Wholesale Order and subsequently upon OP-2 and OP-3 in their relevant spheres of operation?

 In terms of the Liquor Wholesale Order, during the relevant period, OP-1 was the exclusive procurement agency and OP-2 and OP-2 were sole distributors of IMFL for their respective regions and no alternate access route to the market was available.

Commission expressed that, the provisions of the said order granted powers and discretion to OP-1  to decide the manner of carrying out business operations in the entire State.

OPs enjoyed 100% market share ensuring no competition to the OPs from any other entities. Such exclusion of competition virtually allowed OPs to enjoy monopoly.

Violation of Liquor Wholesale Order and Minimum Stock Requirement

As per the Liquor Wholesale Order, OP-1 was required to maintain minimum stocks of all brands of foreign liquor/beer/wine as fixed by the Additional Excise Commissioner (Licensing).

Commission further observed that it was imperative upon OP- 2 and OP-3 to regularly raise brand-wise indents/requisitions on OP-1 based on the demands of the retailer licensees of their concerned districts, in accordance with the requirements of the said order and no deviation was provided in the said order.

Bench expressed a very significant and crucial point that:

State of Uttarakhand, like other states in the country, has created monopolies by canalising liquor procurement. 

While reaching the conclusion, Commission agreed with the DG that OP-1 did not act in a manner that ensure availability of required brands to retailers and instead did not take concrete steps on the complaints, which also tends to show that OP-1 carried out procurement in a manner which adversely affected competition in the market and discriminated between different manufacturers and suppliers of IMFL.

Commission opined that OP-1 did not place any orders for many brands of Pernod and USL for many months during the 11 months period, that Liquor Wholesale Order was in effect, and the OPs were the only route to access the market for alcohol manufacturers on account of the sole rights of procurement and distribution vested under the Liquor Wholesale Order. Further, this conduct on the part of OP-1, despite existence of retailers’ demand for IMFL, indicates limiting or restricting wholesale procurement and distribution of IMFL in the State of Uttarakhand and denial of market access to producers of certain brands of IMFL in the State of Uttarakhand, in violation of Section 4(1) read with Section 4(2)(b)(i) and Section 4(2)(c) of the Act.

Commission placed reliance on its earlier decision in the matter of Surinder Singh Barmi case wherein it was held that it was immaterial whether the inclusion of clause had any anti-competitive effect, rather the unfairness of the clause needs to be seen which could only be imposed by a dominant entity.

Hence, in the present matter, OP-1 being the dominant entity was in a position to impose one-sided contractual obligations.

Commission directed OP-1 to desist from indulging in such anti-competitive conducts which have been found to be in contravention of the provisions of the Act.

In the present case the anti-competitive conduct on the part of OP-1 had not ceased of its own accord but on account of change in the policy of Government whereby earlier Liquor Wholesale Order ceased to have any effect and OPs were released from performance of the activity of procurement and distribution of liquor.

There was an abject failure in undertaking distribution based on demand, which in fact was the essence of the Liquor Wholesale Order rather than mere fulfilling of MGD obligations as has been countenanced by the said OP.

Hence, a penalty of Rs one crore on OP-1 under Section 27(b) of the Act was imposed. [International Spirits and Wines Association of India (ISWAI) v. Uttarakhand Agricultural Produce Marketing Board, 2021 SCC OnLine CCI 15, decided on 30-03-2021]

Op EdsOP. ED.

When a corporate entity is subject to insolvency proceedings, often as a part of the resolution plan, a competitor seeks to acquire the insolvent entity. This is a typical case witnessing an overlap between insolvency law and competition law, and such acquisitions under the Insolvency and Bankruptcy Code (IBC) are to be reported to the Competition Commission of India[1].

When the IBC first came into being, it provided for the resolution applicant to seek Competition Commission of India (CCI) approval regarding the resolution plan within the prescribed time-limit (which was 270 days); however, it did not mention whether this approval was to be obtained before the approval of the committee of creditors or whether it was to be obtained after their approval or simultaneously. This confusion was alleviated by the Amendment Act of 2018 whereby sub-section (4) was added to Section 31 and its proviso specified that the approval from CCI was to be obtained before seeking the approval of the committee of creditors.

In 2019, the Competition Law Committee suggested in their report that combinations which do not cause any adverse effect on competition may be permitted to obtain “green channel” approval from the CCI; this dispensation also extends to combinations driven by the IBC. The Committee based its report on the fact that there was a very high approval rate of CIRPs that were notified to the CCI.

Green channel approval is based on the concept of “failing firm defence”. It means that the anti-competitive effects of the failing firm (in this case, the insolvent firm) exiting the market are to be evaluated with respect to the anti-competitive effects of the firm being acquired by a competitor. If it is observed that the latter is not more than the former, the acquisition or merger is approved by the competition authorities.

This defence has also got statutory recognition[2], and it essentially consists of a three-stage test[3], viz. firstly, if the firm is about to exit the market due to financial distress, secondly, whether there exists any alternative which is less anti-competitive than the merger or acquisition in question, and thirdly if the firm would be forced to exit the market in absence of this combination.

If the answers to these questions are in the positive, the combination is permitted. The CCI has also recognised the failing firm defence, as was noted when Reliance Industries sought to acquire 37.7% stake in Alok Industries[4]. Keeping these in mind the green channel approval mechanism was proposed by the Competition Law Committee.

Advantages of Green Channel Approval

The Code mandates CIRPs to be completed within 330 days, but it has been observed that the time taken for completion of the process extends this time-limit. Since the time taken for obtaining approval from the CCI adds to the time taken for approval of the resolution plans as a whole, automatic approvals would accelerate the whole process, thereby furthering the very purpose of enactment of the IBC, that is, to provide for resolution of distressed firms in a “time-bound manner[5]”.

Green channeling will do away with the requirements of obtaining prior approval from CCI in case on combinations, and consequently it will reduce the burden of compliances as well on resolution applicants.

It must also be noted that the requirement of obtaining prior approval from CCI may result in multiple applications being filed for the same transaction. This was observed in the Patanjali and Adani Wilmar fiasco where both wanted to acquire Ruchi Soya[6] and when UltraTech and Dalmia Bharat both wanted to acquire Binani Cement[7]. Situations like these lead to unnecessary litigation which may be done away with if green channel approval could be afforded to resolution plans.

Overall, automatic approval of resolution plans will make the whole resolution process simpler, easier and more expedient for all the stakeholders but since the impact of a resolution extends to laws beyond the insolvency regime, the demerits of the proposition should also be taken into consideration.

Disadvantages of Green Channel Approval

If all resolution plans were approved automatically and later it was observed that it had anti-competitive effects, the concerned combination would have to be modified or prohibited, and since it would be modified after the completion of the merger or acquisition as the case may be, the inconvenience caused would be amplified. This is because creditors in a CIRP usually extend additional finances depending on the resolution plan and if such a plan would be prohibited after its completion, the interests of the creditors would be prejudiced. Thus, it is much better that resolution plans go through the scrutiny of the CCI before being approved.

The IBC currently provides for prior approval of resolution plans which involve combinations, thereby encouraging coordination between both the authorities—National Company Law Tribunal and the Competition Commission of India. Green channel approval of resolution plans will discourage resolution applicants from approaching the CCI for approval of their plans or for consultation on whether they may have any anti-competitive effects on the market. This increases the scope of disputes arising later on, as it might have adverse effects on the interests of consumers and businesses (both upstream and downstream).

Conclusion

There are arguments present both in favour of and against the proposition and thus before implementing the recommendations of the Committee, a thorough analysis should be done, keeping in mind the interests of all the stakeholders. If the scales are tilted more towards the implementation of green channel approval, then it may be integrated into the insolvency regime, however it must be noted that the current mechanism of coordination and cooperation between the NCLT and the CCI should be encouraged and sustained nevertheless. A fine balance among interest of diverse stakeholders and an effective implementation are the need of the hour.


Bhumesh Verma is Managing Partner at Corp Comm Legal and can be contacted at bhumesh.verma@corpcommlegal.in. Ishika Chattopadhyay, Student Researcher, Final year student Department of Law, University of Calcutta.

[1] S. 5, Competition Act, 2002.

[2]  S. 20(4)(k) of the Competition Act, 2002.

[3] Guidelines on the Assessment of Horizontal Mergers under the Council Regulation on the Control of Concentrations between Undertakings, (Ch. VIII), Official Journal of the European Union, <https://eurlex.europa.eu/legalcontent/EN/TXT/PDF/?uri=CELEX:52004XC0205(02)&from=EN#page=10>.

[4] “Complete Alok Industries takeover: SBI to RIL”, 3-1-2020, <https://www.ibcguide.com/complete-alok-industries-takeover-sbi-to-ril/>.

[5] Preamble to the IBC.

[6] “Patanjali moves NCLT Against Ruchi Soya Lenders Approving Adani Wilmar Bid”, The Economic Times, 24-8-2018 <https://cfo.economictimes.indiatimes.com/news/patanjali-moves-nclt-against-ruchi-soya-lenders-approving-adani-wilmar-bid/65532351>.

[7] “Nclat Approves UltraTech’s Revised Bid of Rs 7950 Crore for Binani Cement”, The Economic Times, 15-11-2018, <https://economictimes.indiatimes.com/industry/indl-goods/svs/cement/nclat-holds-ultratechs-bid-for-binani-cement-valid/articleshow/66615756.cms?from=mdr>.

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) dismissed the case of the informant who alleged that Google is abusing its dominant position by integrating Google Meet App into the Gmail App.

Allegations | Abuse of a Dominant Position

In the present matter, information was filed under Section 19(1)(a) of the Competition Act, 2002 by Informant against Google LLC (OP-1) and Google India Digital Services Private Limited (OP-2) alleging contravention of the provisions of Section 4(2)(e) of the Act.

Gmail is an App from Google, where the user gets all their emails, direct messages, etc., and that Gmail enjoys a ‘dominant position’ in the emailing and direct messaging market. Further, it was claimed that ‘Meet’ is a video-conferencing App from Google, where all kinds of virtual conferences and meetings happen.

Informant alleged that Google which is a dominant player has integrated the Meet App into the Gmail App which amounts to abuse of dominant position by Google.

Analysis, Law and Decision

Commission noted that users of Gmail are not forced to necessarily use Google Meet, and there does not appear to be any adverse consequences on the users of Gmail for not using Google Meet, such as withdrawal of Gmail or any of its functionalities or other services that are so far being provided by Google. A Gmail user at his/ her ‘free will’ can use any of the competing VC apps.

Further, it was added to the above observation that anyone with a Google Account could create an online meeting using Google Meet. For creating a Google account, the user need not be a user of Gmail. He/she can use email ID created on any other platform for creating a Google account.

Google Meet is available as an independent app outside the Gmail ecosystem also.

Therefore, users have the choice to use either of the Apps with all their functionalities without necessarily having to use the other. Even though Meet tab has been incorporated in the Gmail app, Gmail does not coerce users to use Meet exclusively as submitted by Google and the consumers are also at freewill to use either Meet or any other VC app for video conferencing.

Hence, no case was made out. [Baglekar Akash Kumar v. Google LLC, 2021 SCC OnLine CCI 2, decided on 29-01-2021]