Law School NewsLive Blogging

Hello Folks! Tamil Nadu National Law University welcomes all the participants to the 3rd edition of the National Moot Court Competition.

The Moot Court Competition is organised in collaboration with the Regulatory body – Competition Commission of India (CCI) and in association with EBC-SCC Online as our Knowledge and Research Partner.

Over the next three days, we will witness fierce competition among the teams participating from across the nation. So stay tuned for live updates!

Day 1

1430 to 1530 HRS: SCC-Online Training Session: A SCC Online training session was conducted for participants of the Moot Court Competition. In the one hour session various products & their features offered by EBC viz. SCC Online, EBC Reader, EBC Learning & Mercury were made known to the participants.

1748 HRS We have successfully completed with the registrations! The following are the teams which will be competing for the Winners Trophy!

1.Symbiosis Law School, Pune.

2. Pendakanti Law College, Hyderabad.

3. Symbiosis Law School, Hyderabad.

4. School of Law, SASTRA Deemed University.

5. National Law Institute University, Bhopal.

6. SVKMs NMIMS KIRIT P. MEHTA School of Law, Mumbai.

7. Institute of Law, Nirma University, Gujarat.

8. Rajiv Gandhi National University of Law, Patiala.

9. Chennai Dr. Ambedkar Government Law College, Pudupakkam.

10. School of Legal Studies, CUSAT, Kochi.

11. Dr. Ram Manohar Lohiya National Law University, Lucknow.

12. ILS Law College, Pune.

13. University Law College, Bangalore.

14. West Bengal National University of Juridical Sciences, Kolkata

15. School of Law, Christ (Deemed to be University), Bangalore.

16. National University of Advanced Legal Studies.

17. School of Law, Kashmir University, Srinagar.

18. KMCT Law College, Mamparara.

19. School of Excellence in Law, Tamil Nadu Dr. Ambedkar Law University, Chennai.

20. Symbiosis Law School, Noida.

21. Law Centre I, Faculty of Law, University of Delhi.

22. Maharashtra National Law University, Mumbai.

23. Hidayatullah National Law University, Raipur.

24. Gujarat National Law University, Gandhinagar.

Registrations now stand closed!

1800 HRS Memorials have now been exchanged! Participants are now bracing up for the preliminary rounds to be held tomorrow, while researchers test will be commencing by 1830 HRS.

1830 HRS Researcher’s Test has begun! A one hour test which is scheduled to conclude by 1930 HRS.

1930 HRS Researcher’s Test concludes.

2000 HRS It is Dinner time!

END OF DAY 1! See you tomorrow!

 

DAY 2

Welcome to Day 2 of the CCI – National Moot court Competition. On today’s schedule is preliminary & Quarter final rounds.

0600 HRS The fixtures for the Preliminary Rounds are:

Preliminary Round 1:

1000-1100 HRS: SESSION 1:

  1. Symbiosis Law School, Pune (T01) v School of Law, Kashmir University (T18).
  2. Symbiosis Law School, Hyderabad (T03) v Law Centre-1 Faculty of Law, University of Delhi (T22).
  3. School of Law, SASTRA Deemed University (T04) v NUALS, Kochi (T17).
  4. NLIU, Bhopal (T05) v ILNU, Gujarat (T07).
  5. SVKMs NMIMS Kirit P Mehta School of Law (T06) v University Law College, Bengaluru (T14).
  6. RGNUL (T08) v GNLU (T25).

1145-1245 HRS: SESSION 2:

  1. RMLNLU, Lucknow (T12) v Pendakanti Law College, Hyderabad (T02)
  2. ILS, Pune (T13) v WBNUJS, Kolkata (T15).
  3. SOL, Christ (T16) v SOLS, CUSAT (T11)
  4. SOEL, TN Dr Ambedkar Law University (T20) v Chennai Dr Ambedkar GLC Pudupakkam (T09)
  5. MNLU, Mumbai (T23) v KMCT Law College, Mamparara (T19).
  6. HNLU, Raipur (T24) v SLS, Noida (T21)

Preliminary Round 2:

1400-1500 HRS: Session 1 

  1. ILNU, Gujarat (T07) v MNLU, Mumbai (T23).
  2. NUALS, Kochi (T17) v SLS, Pune (T01).
  3. GNLU, Gandhinagar (T25) v SLS Hyderabad (T03).
  4. WBNUJS (T15) v SOL, Christ (Deemed to be) University (T16).
  5. Chennai Dr Ambedkar GLC Pudupakkam (T09) v HNLU, Raipur (T24).
  6. University Law College, Bengaluru (T14) v RMLNLU (T12).

1545-1645 HRS: Session 2

  1. Pendakanti Law College, Hyderabad (T02) v SVKM KPM School of Law, Mumbai (T06).
  2. SLS Noida (T21) v SOEL, Chennai (T20).
  3. School of Legal Studies, CUSAT (T11) v ILS, Pune (T13)
  4. Law Centre, Faculty of Law, University of Delhi (T22) vRGNUL (T08).
  5. School of Law Kashmir Univerity, Srinagar (T18) v School of Law, SASTRA, Thanjavur (T04)
  6. KMCT College, Manparara (T19) v NLIU, Bhopal (T05).

0800-0900 HRS: The participants are gearing up for the hectic day ahead!

0930 HRS: The judges have arrived!

1000 HRS: Preliminary Round 1 Session 1 commences!

1100 HRS: Preliminary Round 1 Session 1 Concludes!

1145 HRS: Preliminary Round 1 Session 2 Commences!

1245 HRS: Preliminary Round 1 Session 2 Concludes!

1817 HRS: Preliminary Round 2 Session 1 & 2 Concludes!

The participants are now eagerly waiting for the results – the teams qualifying to the Quarter Final rounds!

1847: The results are out! Following are the teams which have qualified for the quarterfinal rounds (in no particular order:

  1.  T16 : School of Law Christ University
  2.  T23 : MNLU, Mumbai
  3.  T03 : SLS, Hyderabad
  4.  T13 : ILS, Pune
  5.  T01 : SLS, Pune
  6.  T25 : GNLU, Gandhinagar
  7.  T08 : RGNUL
  8.  T20 : SOEL, TNDALU, Chennai

Congratulations to the teams which have made to the first stage of the Advanced Rounds!

2205: The teams qualifying for the semi-finals are:

  1. T01: SLS, Pune (The team qualified for the semis in the previous edition too!)
  2. T23: MNLU, Mumbai
  3. T16: School of Law, Christ University
  4. T03: SLS, Hyderabad

The fixtures for the semi-finals are:

T16 v T03: School of Law, Christ (Deemed to be) University v SLS, Hyderabad.

T23 v T01: MNLU, Mumbai v SLS, Pune.

The Memorial exchange is underway! Participants are excited about the competition to follow!

Day2: The Semi-Finals have now come to an end!

1400 HRS: The teams qualifying for the finals are School of Law, Christ (Deemed to be) University & MNLU, Mumbai.

Congratulations to the teams!

The finals will commence

The judges for the finals are: Shri Ved Prakash Mishra, Shri Dr. TS Somashekhar & Shri Rahul Goel.

Prof. Dr. TS Somashekhar is Director of Competition & Regulation at the prestigious National Law School of India University, Bengaluru.

Shri Rahul Goel practice focuses on Competition/ Anti-trust laws and Technology, Media & Telecommunication Laws and is a Partner at IndusLaw.

Waiting for the nail-biting finals to commence!

1630: Finals have concluded & it is now time for the results.

1730: The Results are Out!

Winners: MNLU, Mumbai – The team also bagged the Best Memorial Award.

Runners-Up: CHRIST (Deemed to be) University, Bengaluru.

 

SIGNING-OFF – ON BEHALF OF THE TNNLU NATIONAL MOOT COURT COMPETITION ORGANISING COMMITTEE & MOOT COURT COMMITTEE – UJJWAL JAIN, Student Ambassador, EBC-SCC ONLINE & TNNLU MCC Member!

Business NewsNews

The Competition Commission of India (CCI) approves the proposed combination between Yum Restaurants (India) Private Limited (YRIPL) and Devyani International Limited (DIL) involving acquisition of certain  equity shareholding and sale of certain KFC restaurants.

YRIPL is a private limited company incorporated in India and is a part of Yum! Brands Inc,-a USA based entity. It is stated that in India YRIPL runs restaurants under three Brands i.e. KFC, Pizza Hut and Taco Bell.

DIL is a public company incorporated in India. It is stated to be present in QSR segment in India and is one of the franchisees of YRIPL. Further, as a franchisee, it runs, maintains and operates KFC and Pizza Hut/Pizza Hut Delivery restaurants in certain territories of India.

The CCI approved the proposed combination under Section 31(1) of the Act.


Ministry of Corporate Affairs

[Press Release dt. 03-02-2020]

[Source: PIB]

OP. ED.

Economics has made a substantial contribution to our understanding of the law, but the law has also contributed to our understanding of economics.… The study of law gives economists an opportunity to improve the understanding of some of the concepts underlying economic theory.”

— David D. Friedman

Law and economics refer to the study of the application of the economic theories of law on the applications of law, was a brainchild of the Chicago School of Economics. The bringing together of the legal theory and economic reasoning brings out the psychological aspects of the changes that the new legal trends bring about and its impact on the rationality of the people. Law and economics albeit being new and recent, has been a development and a work in progress as we look at and the divergence of which cannot be fully explained and known presently. With the evolution of science and technology and the internet reaching its far heights, the value of consumer protection and more use of legally binding contracts and agreements are becoming increasingly at par with the ever-growing industries everywhere. With the advancement of the e-commerce industry, the business to business (B2B) and the business to customer (B2C) governing laws have turned out to be a major concern of this uprising front of the industry. The B2B laws govern the transactions between two or more businesses, whereas the B2C laws govern the laws and their contracts with the general public. Varied applications of the economic impacts of the law on the country and the people and vice versa is just a glimpse of what this developing study of law and economics pertains to.

Electronic commerce has been defined as the purchase and sale of commodities via the use of the internet. There can be sale of physical products as well for which money transfer takes place online. E-commerce takes into account different forms such as retail, wholesale, crowdfunding, subscription, physical products and services. The embellishment reasons of e-commerce are that with immense ease, it also cuts down on the cost of inventory management due to which it attracts new customers and bring them into the field of the online market. This enables a trader to stay open all the time and sell their products all across the nation.

E-commerce in India comprises the second largest user base in the world but the market is comparatively smaller than that of the United States or France. It is believed that e-commerce will grow at a very high rate in India touching $150 billion by 2020. Presently, Flipkart Pvt. Ltd. and Amazon.com Inc. are dominating the Indian markets but over time with an increase in the middle-class population, new entities will establish themselves. E-tail and e-travel will dominate the Indian market in the near future. India’s e-commerce industry is expected to contribute 4% of GDP by 2022 and match with China’s demands in 5-6 years.

Nevertheless, the major players in the Indian e-commerce sector underwent a jolt before the new year after the Department of Industrial Policy and Promotion tightened some of the Foreign Direct Investment rules through a Press Note which came as a huge setback for Amazon and Flipkart, the dominant players in the Indian e-commerce sector. This paper analyses the changes brought in by the Press Note 2 and how such changes are going to have an effect on the e-commerce sector in the upcoming times. Unfortunately, it seems the road ahead is full of obstacles.

Introduction

The last week of 2018 brought forth a new development with the new e-commerce policy being announced by the Government.  They went ahead and tightened some norms and regulations for the e-commerce players, a move that struck hard to the likes of Flipkart and Amazon, for now, they cannot sell products of companies in which they have stake.[1] The Department of Industrial Policy and Promotion (DIPP) in its Press Note 2 (Press Note) issued in December last year, made significant changes to Foreign Direct Investment (FDI) rules in the e-commerce sector in India.[2]

The big trigger which led to such changes was the increasing complaints being made to the Competition Commission of India (CCI) and All India Vendors Association (AIVA) from the small brick and mortar traders against Amazon and Flipkart, that they have been favouring their own subsidiaries on their platform to such an extent that the revenues of small scale traders are taking a hit. Some of these changes have been made in the backdrop of a lot of opposition and resistance from the trader’s association such as the Confederation of All India Traders (CAIT).[3] It is pertinent to note that the Press Note was released to acknowledge some of the major concerns raised by the trader’s association after the CCI approved the merger between Walmart and Flipkart where Walmart which happens to be the largest private employer in the USA purchased majority of the shares of Flipkart, the largest e-commerce company of India.[4]

The important point to take into consideration is that a small number of sellers in Flipkart’s online marketplace played a major contribution in its substantial shares. These small sellers were also the customers of Flipkart in the (B2B) segment as a result of which they were given preferential treatment by way of hefty discounts from both the B2B segment and online marketplaces.[5] However, even after taking note of such major concerns, the CCI decided not to address such competition concerns on the grounds that such concerns were not incidental to the impugned combination, thus playing a safe hand. The failure of CCI to address such issues led to the Government making major policy changes to provide relief to the small traders and sellers.

These changes aim to make the marketplaces far more genuine for there has always been complaints that the online marketplace as a channel offers regulatory arbitrage. The whole logic and the reasoning of a marketplace functioning is to have a genuine marketplace where there are only connecting sellers and buyers. This reasoning often used to get questioned. The FDI e-commerce policy clearly states that while FDI is allowed in the marketplace but it is not allowed in the inventory-led model.[6] The likes of Amazon and Flipkart hold major stakes in their online marketplace such as Cloudtail and RetailNet respectively which are big sellers on their respective platforms. This led to preferential treatment by way of providing hefty discounts to such marketplaces. With the new changes coming into place major players such as Amazon and Flipkart will have to make sure that they maintain fair play on the platform and maintain an arm’s length distance while providing discounts to such sellers.

While these changes are welcomed and the intention of the Government in bringing such changes might be to curb the unfair practices and ensure fair play in the marketplace, however, these changes are not entirely free from the lacunas and the Government will have to address such grey areas in the near future for proper functioning of the marketplace.

Business Models

In order to understand the changes brought in by policy, it becomes important to first understand the inventory-led model and which are the prevalent business models in the e-commerce sector.

Inventory Model: A brand while selling online on sites like Amazon and Flipkart is most likely to first sell to an intermediary alpha seller entity like Cloudtail or RetailNet and then these entities are selling to the end consumer on the e-commerce marketplaces like Amazon and Flipkart.

Marketplace Model: In this model, the brand directly sells to the end consumer via Flipkart or Amazon with e-commerce marketplaces. This can be done in two ways. First, one could ship the product form his own warehouse directly to the end customer which is said to be the pure marketplace model or, second, one could follow the Fulfilled by Amazon (FBA) model or Flipkart Advantage (FA) model where a brand could keep some of its stock in Amazon and Flipkart warehouses and then when the orders are received these stocks are shipped to the end consumers from those warehouses, the products being owned by the vendors while they use their warehousing services.

Changes

The DIPP issued guidelines and clarifications on rules pertaining to FDI in e-commerce. The highlights of the Press Note were the definitions of the marketplace and also the fact that the Press Note categorically states that FDI will be prohibited in inventory-led e-commerce models while 100% FDI through the automatic routes will be allowed in marketplace models.

Firstly, the policy mandates that 100% FDI is only allowed in the e-commerce marketplace model.[7] Secondly, no equity participation is allowed by the marketplace in the selling entity[8] thus prohibiting such marketplaces from selling products of entities related directly or indirectly on their platform. Thirdly, the marketplace cannot exercise control on the inventory. In fact, they have clarified this point further by saying that not more than 25% sales of the selling entity can come from one marketplace or a group[9] such as Flipkart, Myntra and Jabong which are one group. Fourthly, no exclusivity can be offered by the marketplace.[10] Fifthly, discounts and cashbacks cannot be influenced by the marketplace[11], although this rule has been in place for some time now but the word “cashback” has been added because people were circumventing in discounts in form of cashbacks. Sixthly, the contact details of the selling entity need to be clearly made visible on the marketplace to the customers.[12]

Implications

The no-equity participation rule and the 25% sales in one marketplace rule have direct ramifications for the marketplaces if they have been selling through the alpha sellers, for example, Cloudtail and RetailNet in cases Amazon and Flipkart respectively. The future of these models has now become unclear and now such brands need to think about alternative measures. Now, all the brands need to rethink about directly participating in the marketplace model. This could be done either through one’s own warehouse if they are equipped to handle single piece orders or through the models like Fulfilment by Amazon (FBA) model or the Flipkart Advantage (FA) model which are already in place.

The 25% sale in one marketplace rule and the exclusivity rule will have major ramifications for online brands and private labels of marketplaces because invariably they will end up having more than 25% of share in one marketplace. Further, the decline on the private label side can be expected which will provide an opportunity to homegrown Indian brands to go and capture the market.

If the 25% sale rule and exclusivity rule are coupled along with the curb on discounts and cashbacks rules, it becomes a great level playing field for traditional online as well as offline brands who were finding it difficult to compete due to the predatory pricing mechanism of these e-commerce marketplaces.

Furthermore, the contact details of the seller, being directly visible on the marketplace and the customer satisfaction being the responsibility of the seller would mean that brands will have to evolve their consumer relationship management (CRM) practices. Marketplace orders now need to flow into an integrated CRM where the call centre will be able to pop-up the Amazon order and answer any questions.

In the backdrop of elections as well as traders lobby putting a fair degree of pressure, the Government has made some significant changes in the policy. The few ones that merit significant attention is that though 100% FDI is permitted under the automatic route[13] it has been made applicable only to the marketplace model and not the inventory-based model of e-commerce. This provision albeit existing, was being openly flouted. However, the present Press Note went on to make this rule more stringent bringing in new regulation measures per which inventory-based model can appear only through ownership or control. A vendor is supposed to not only hold an ownership stake in the new product but also control that inventory. With the marketplace controlling that inventory, it becomes an inventory-driven marketplace in which FDI is prohibited.[14] This change in effect means that marketplace entities going forward cannot exercise any degree of control over the actual supply of the products. Further, they have also changed to the effect that insofar as any after-sales delivery and customer satisfaction is concerned, the product has to be solely handled by the sellers.[15] Both these changes are of immense implication for the ongoing marketplaces.

Other major changes that garners attention is that the Press Note imposes an embargo on the marketplaces by stating that if any of the group companies are selling more than 25% of what the vendor is selling on the marketplace, it will fail to qualify as a marketplace and will be seen as an inventory-driven FDI marketplace where FDI is prohibited.[16] According to these new regulations an entity can take up only 25% of the purchases from its subsidiary. Given the fact that entities such as Cloudtail contribute almost 40% to the business of Amazon and similarly RetailNet which contributing a fair share to Flipkart’s sales, this regulation going to have a huge impact on the big giants.

The impact of this rule can be broken down into two levels. Firstly, that the wholesale arms of these marketplaces cannot be selling more than 25% of what the vendor is purchasing. The important point to note here is that Amazon wholesale or Flipkart wholesale were supplying products in huge volumes and value to a number of vendors who were selling on these marketplaces. The new regulations have placed an embargo on such practice by restricting the vendors from purchasing more than 25% from group entities of the marketplace. Secondly, the other big restriction brought about by the new regulations is that the marketplace entity or any of the group companies of the marketplace entity cannot own a single percentage of equity in any company which is a vendor on the marketplace.[17] Such a regulation ties into the whole point of players such as Cloudtail and RetailNet or other marketplaces where there is indirect foreign investment. However, it remains to be seen whether no equity participation would also include indirect equity participation as in some of the marketplaces and seller entities the foreign investment is not there at the direct level but it is one layer above. The intent of the policymakers is clearly to keep the marketplace genuine where the scope or the relevance of the marketplace in driving sales has to be kept limited.

As a result of such regulations coming into place, Morgan Stanley warned that Walmart may exit the Indian e-commerce sector.[18] It is a major concern as Amazon decided to shut down its retail business in China after the Chinese Government imposed similar restrictions in the country.[19]

Before the new regulation coming into effect, Flipkart and Amazon could sell their own line of products such as AmazonBasics, Flipkart SmartBuy etc. which proved to be profitable for them as they could lower the costs and the supply chain process. As a result of these new restrictions marketplace such as Amazon reduced its stake in its group company Cloudtail from 49% to 24%.[20]

The Press Note also imposes a ban on the exclusive tie-ups with the sellers.[21] The intention behind this regulation is to create a level playing field and ensure uniformity in the market. This regulation seeks to take away the dominant position of some of the marketplace entities such as Flipkart and Amazon and exclusive sale of smartphone brands such as OPPO, VIVO, XIAOMI, etc. could be a thing of the past.[22] This rule restricts marketplace entities from giving preferential treatment to particular sellers and thus maintains an arm’s length basis.

Further, the Press Note mandates that cashbacks that are provided to the buyers by a group of companies of a marketplace entity should be fair and non-discriminatory.[23] This regulation has got its origin and background in the context of the fact that the earlier policy stated that the marketplace entity should not directly influence the price at which products are to be sold[24]. However, number of trader associations had raised grievances before the Government that the particular policy is not being followed in letter and spirit following which the Government went on to become extremely prescriptive to address the perceived abuse. The new regulation, however, does not change the overall nature of the restriction that was already present.

The issue of marketplaces influencing sale prices gained attention in April 2018 after the Income Tax Appellate Tribunal in Flipkart India (P) Ltd. v. CIT[25] noted that Flipkart is indulging in predatory pricing and that it has its nexus with certain specific retailers for increasing its profit. Thus, the Government vide Press Note has made efforts to curb the issue of predatory pricing and preferential treatment by clearly stating that the group companies can provide only fair and non-discriminatory cashbacks and prohibiting the marketplaces from giving preferential treatment to specific vendors. This restriction has come as great relief to brick and mortar retailers and small e-commerce players with Snapdeal’s CEO Kunal Bahl welcoming the new regulations.[26]

Plugging the Loopholes

The Government released the Press Note to establish a level playing field in the Indian e-commerce sector and making the sector fair and just for all. However, the Government in its pursuit to address the concerns of the e-commerce sector have left some grey areas which may merit re-evaluation in the future.

The timeline provided to marketplaces to implement changes was fairly short given the fact that significant changes were brought in by the Press Note and that would have required a significant amount of restructuring by the existing marketplaces as the regulations has a significant amount of ramifications for the current business model on which the current marketplaces are running. Flipkart’s Chief Executive, Kalyan Krishnamurthy in his letter to India’s industry department requested the Government for extension of time for implementing the new rules as he feared that the new regulations could cause significant customer disruption in the case of non-extension of the deadline for implementation of new rules.[27]

The new norms have also banned the exclusive tie-ups which will have big implications on a lot of brands that have been looking at specific tie-ups with either Flipkart or Amazon. The Government here has gone a little overboard in its measure to check the anti-competitive practices. In order to ensure and streamline the process of a genuine marketplace, the Government has taken away the party autonomy that comes with any business model. If a brand intends to tie-up with particular marketplace for it offers better commercial value to them then they should be allowed to do so. Such a condition restricting a vendor to tie-up exclusively with one particular marketplace does not even serves the objective the Press Note seeks to achieve which as a matter of fact has not been laid down clearly in black and white. This regulation has taken away the party autonomy and is not in line with any intent that one could have deciphered from the policy announcement.

Further, the new regulations have severely hit the marketplaces such as Flipkart and Amazon while excluding the domestic marketplace entities such as Patym Mall, Snapdeal, etc.[28] The prime intention of the Government in bringing new regulations was to create a level playing field in the Indian e-commerce sector and ensure fairness and justice. However, the new regulations failed to take the domestic entities within its ambit thus giving rise to the possibility of such domestic entities indulging in unethical business practices which would further raise competition concerns in the sector as this will give a clear advantage to these domestic players thus defeating the objective of the Government behind introducing the Press Note. While on one hand, the FDI marketplace is finding it tough to adhere to the new norms and regulations, on the other hand, these regulations provide an opportunity for the domestic players to take undue advantage.

The Press Note has also banned the marketplaces from providing hefty discounts and cashbacks. However, since the Government did not appoint any agency to ensure proper compliance of the rules, these marketplaces are likely to come up with innovative methods of providing discounts.[29] Also, there is a threat that such a restriction will have a negative impact on the customers at large as deep discounts and cashbacks are the primary incentive for most of the people in India behind shopping online. Further, these regulations do not take offline retailers within its ambit neither the same is clear from any provision which gives the offline retailers undue advantage. Further, although the Press Note talks about cashbacks provided by the group companies it is silent on the point of cashbacks provided by the marketplace entities. Marketplace entities can provide deep discounts and hefty cashbacks that could result in unfair and discriminatory pricing.

Furthermore, the Press Note failed to take into consideration the problems of implementation of some regulations. The Press Note does not even mentions any criteria to assess whether 25% purchases of a vendor are from the marketplace entity or its group companies considering the fact these marketplace entities do not even have the access to the accounts book of most of its vendor.

The new regulations also prohibit preferential treatment to any vendor in similar circumstances without providing any proper interpretation of the term “similar circumstances” thus giving uncontrolled discretionary power to the regulatory bodies.

Conclusion

The new policy brought in by DIPP should be welcomed as in the long run it has the potential of creating a level playing field. In the short run, entities might face some operational challenges of moving from the alpha seller model to the marketplace model directly. However, no matter how good the intention of the Government might be behind bringing the changes, they need to open their eyes soon and take step towards curbing the loopholes in the new policy as it clearly discriminates between foreign and domestic companies giving a clear-cut advantage to the latter. If these problems are not solved soon then the whole objective of the Government will face a major setback. In fact, as stated earlier there is a threat that major marketplace like Flipkart might end their operation in India. Such a possibility cannot be ruled out given the fact that Amazon decided to take an exit from the Chinese e-commerce sector in light of similar restrictions. Therefore, to prevent such extreme measure the Government should look forward to work in collaboration with these big entities and come up with rules, that is beneficial for all.


†  3rd year student, NUSRL, Ranchi.

[1] Govt. Tightens Norms for Etailers, Bars Exclusive Deals, The Economic Times (27-12-2018, 11.57 a.m.) <https://economictimes.indiatimes.com/news/economy/policy/government-tighten-norms-for-e-commerce-companies-for-sale-of-products/articleshow/67258251.cms>.

[2]  Press Note 2, Department of Industrial Policy and Promotion <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[3]  War Against Flipkart! Traders Association CAIT Complains to ED; Alleges Violation of Trade Rules, Financial Express (1-6-2018, 3.23 p.m.) <https://www.financialexpress. com/industry/war-against-flipkart-traders-association-cait-complains-to-ed-alleges-violation-of-trade-rules/1189833/>

[4]  Walmart International Holdings, In re, 2018 SCC OnLine CCI 103.

[5]  Walmart International Holdings, In re, 2018 SCC OnLine CCI 103, (para 13).

[6] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.3(ii)  <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[7] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.3(i) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[8] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(v)  <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[9] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(iv) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[10] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(xi) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[11] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(ix) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[12] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(vi) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[13] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.3(i) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[14] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(iv) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[15] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(vi) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[16] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(iv) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[17] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(v) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[18]  Nishanth Vasudevan and Samidha Sharma, Morgan Stanley Warns Walmart may Exit Flipkart Post New FDI Rules, The Economic Times (5-2-2019, 4.27 p.m.) <https://economictimes.indiatimes.com/industry/services/retail/morgan-stanley-warns-walmart-may-exit-flipkart-post-new-fdi-rules/articleshow/67843595.cms>.

[19]  Amazon Plans to Shut Online Store in China, BBC (18-4-2019) <https://www.bbc.com/news/business-47972634>.

[20]  Shambhavi Anand and Chaitali Chakravarty, Key Amazon Seller Cloudtail Returns in a New Avatar, The Economic Times (7-2-2019, 11.29 a.m.) <https://economictimes.indiatimes .com/industry/services/retail/key-amazon-seller-cloudtail-returns-in-a-new-avatar/articleshow/67877172.cms>.

[21] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(xi) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[22]  Subhayan Chakraborty and Karan Choudhury, New Govt. Norms may End Amazon, Flipkart Flash Sales and Discounts, Business Standard (27-12-2018, 4.22 a.m.) <https://www.business-standard.com/article/economy-policy/amazon-flipkart-may-feel-the-pinch-after-govt-bars-exclusive-deals-118122600873_1.html>.

[23] Press Note 2, Department of Industrial Policy and Promotion, Para 5.2.15.2.4(ix) <https://dipp.gov.in/sites/default/files/pn2_2018.pdf>.

[24] Press Note 3 (2016 Series), Department of Industrial Policy and Promotion, Para 2.3(ix) <http://dipp.nic.in/sites/default/files/pn3_2016_0.pdf>.

[25]  ITA No. 693. Bang/2018 (Asst. Year – 2015-16) <https://taxguru.in/wp-content/uploads/2018/08/Flipkart-India-P-Ltd.-Vs-Asstt.-CIT-ITAT-Bangalore.pdf>.

[26] Govt. Tightens Norms for Etailers, Bars Exclusive Deals, The Economic Times (27-12-2018, 11.57 a.m.) <https://economictimes.indiatimes.com/news/economy/policy/government-tighten-norms-for-e-commerce-companies-for-sale-of-products/articleshow/67258251.cms>.

[27] New E-Commerce Rules: Flipkart Warns of Major Customer Disruption, Livemint (29-1-2019) <https://www.livemint.com/industry/retail/flipkart-amazon-new-e-commerce-rules-1548756549308.html>.

[28]  E-Commerce FDI Norms Should be Applied on Domestic Players Also: CAIT, Business Standard (1-1-2019, 1.23 a.m.) <https://www.business-standard.com/article/companies/e-commerce-fdi-norms-should-be-applied-on-domestic-players-also-cait-118123100412_1.html>.

[29] E-Commerce Discounts May Continue, But in Innovative Ways, Livemint (28-12-2018, 12.39 p.m.) <https://www.livemint.com/Industry/QCRLPPX16uWwsTfFX07V0M/Ecommerce-discounts-may-continue-but-in-innovative-ways.html>.

Cyril Amarchand MangaldasExperts Corner

Introduction

Section 26(1) of the Competition Act, 2002 (as amended) (Act) is an important provision under the Act and empowers the Competition Commission of India (CCI) to order an investigation by the Director-General (DG) if it forms an opinion that there exists a prima facie case (PF order) in respect of an information. Post the PF order, the DG initiates his investigation into the alleged anti-competitive conduct of the parties. 

The scope of the DG’s investigative powers and the manner in which the DG can exercise such powers has been a contentious issue since the introduction of the Act. Parties to a matter often challenge the reports submitted by a DG (DG reports) by questioning either the scope of the investigation or the jurisdiction of the DG.

Over the years, the Supreme Court of India (SC) and certain High Courts have laid down precedent and partially clarified the scope of the DG’s powers. These precedents have touched upon fundamental questions such as—can the DG include any additional information, implead other parties, increase the scope of the investigation, etc. in the absence of a specific direction from the CCI or otherwise.

Can the DG Investigate Facts not Considered by the CCI in their PF Order

In May 2017, the SC in Excel Crop Care Ltd. v. Competition Commission of India[1](Excel Crop) held that the DG would be well within its powers to investigate and analyse additional facts during its investigation subject to certain conditions. The SC decision was in respect of an order of the CCI wherein the information was received in the form of a letter from the Food Corporation of India (FCI) and a DG investigation was ordered to see whether there existed an agreement between manufacturers of a certain food element. The DG in its investigation also took into account a letter written to them separately by the FCI. 

The SC clarified that the purpose behind a DG investigation is to inquire into anti-competitive practices and this includes that the DG considers all necessary facts and evidence. The SC stated that if during an investigation, other facts pertaining to the case were brought to light; the DG would be within their powers to bring them to the forefront in their report. However, the starting point of the inquiry would be the allegations, which are contained in the information. The SC reasoned that at the initial stage, the CCI could not foresee and predict whether any violation of the Act would be found upon the investigation and the nature of violations that would become known.

It is pertinent to point out that the order of the SC did not lay down any general guiding principles in respect of the powers of the DG and thus, different aspects of this issue have been analysed and decided upon by various High Courts in subsequent decisions. 

Addition of Third Parties to the DG Report

In July 2018, the High Court of Madras (Madras HC), in Hyundai Motor India Ltd. v. Competition Commission of India [2]heard an appeal challenging the order of the CCI through which it expanded the scope of the investigation over and above the three-car manufacturing companies to cover other manufacturers who were not specifically mentioned in the complaint. In this case, the DG had found some information against certain car manufacturers who were not named in the original complaint following which he sought permission from the CCI to expand the scope of investigation. The Madras HC noted that the DG did not initiate an investigation suo motu, and sought permission of the CCI. The Madras HC also reiterated the position adopted by the SC in Excel Crop[3] by stating that the scope of DG’s investigation is not limited to the allegations contained in the original complaint and he is empowered to investigate other facts that get revealed while the investigation is carried out.

The Madras HC also made a reference to the proviso to Section 26(1) of the Act stating that if the subject-matter of information received is substantially the same as, or has been covered by any previous information received, then the new information may be clubbed with the previous information. In the present case, the information placed before the CCI was already available in the complaint, and the CCI had already formed a prima facie opinion regarding the information and no further recording of subjective satisfaction was required.

Therefore, the Madras HC found that expanding the scope of the investigation to car manufacturers who were not expressly mentioned in the complaint was well within the DG’s jurisdiction. 

Similarly, the Division Bench of the High Court of Delhi (Delhi HC) in September 2019 in  Cadila Healthcare Ltd. v. Competition Commission of India [4]delved into the issue of whether the DG could have proceeded against Cadila Healthcare Limited (Cadila) without a separate order under Section 26(1) authorising investigation against it. In the present case, Cadila was added as a party based on a DG report. It was argued by Cadila that the DG could not have proceeded against it on the strength of a previous order, which was not based on any material or allegation with respect to complicity of Cadila and consequently, the investigation and report against it was a nullity.

Further, Cadila tried to distinguish the Excel Crop case [5] by arguing that an initial order covering a few issues relating to anti-competitive practices of a particular period against one party can lead to a valid investigation into similar, later actions against the same party. However, there was no legal sanction for investigation into acts or omissions of another party by the DG, in the absence of express authorisation regarding its role by the CCI, in a separate and subsequent PF order under Section 26(1).

The Delhi HC rejected this argument observing that the scope of an inquiry at Section 26(1) stage is to investigate the market behaviour frowned upon under Sections 3 and 4 of the Act and not to look at specifically mentioned individuals. The Court also stated that a specific order by CCI applying its mind into the role played by Cadila was not essential before the DG could have proceeded with the inquiry.

Subject-Matter of Investigation

Recently in September 2019, a Division Bench of the Delhi HC decided upon the scope of investigation by the DG in Competition Commission of India v. Grasim Industries Ltd.[6](Grasim). The decision arose out of a letter patent appeal filed against the order of the Single Judge in Grasim Industries Ltd. v. Competition Commission of India (impugned order)[7]. The Single Judge Bench of the Delhi HC had held that a direction issued by the CCI to the DG to investigate violations of Section 3(3) of the Act did not empower the DG to conduct an investigation of any potential violation of Section 4 of the Act. The impugned order stated that the CCI would be entitled to treat the aforesaid part of the report of the DG as a separate “information” under Section 19 of the Act requiring the CCI to proceed differently if it was of the opinion that there existed a prima facie case of contravention of Section 4 of the Act.

The Division Bench of the Delhi HC overturned the decision of the Single Judge, referring to Competition Commission of India v. SAIL[8](SAIL case) and stating that the opinion formed by the CCI at the stage of issuing directions to the DG under Section 26(1) of the Act is not intended to restrict the opinion that may be formed by the DG upon such investigation. The Court observed that an order of the CCI under Section 26(1) of the Act only “triggers” an investigation by the DG, and that the powers of the DG are not necessarily circumscribed to examine only the subject-matter of the original complaint.

The Delhi HC made a reference to Regulations 18(1) and 20(4) of the CCI (General) Regulations, 2009 (CCI Regulations) emphasising that the DG is required to comprehensively investigate a matter and the DG cannot be constrained from examining additional facts and violations of competition law merely because the information before the CCI does not pertain to additional facts. 

Applying the principle of the SC in Excel Crop.[9], the Delhi HC held that the language of the CCI order was broad enough for the DG to investigate a violation under Section 4 of the Act. It was also clarified that the scope of investigation by the DG is not limited to the PF order by CCI under Section 26 of the Act and the DG may also examine other violations that may have come to his notice while undertaking the investigation pursuant to CCI’s PF order.

Conclusion 

The SC’s ruling in Excel Crop [10] along with all the decisions of the Delhi HC and Madras HC has increased the scope of the DG’s investigative powers. However, the powers of the DG emanate from the CCI’s PF order only. It is important to note that the courts have emphasised that a restrictive interpretation of the DG’s powers would negate the purpose of investigation. The trend is moving towards achieving the goals of competition by bringing to light any information that arouses suspicion of an anti-competitive practice and investigate such conduct. 

This approach of the courts is in line with the SAIL case [11] and ensures that issues that could not be identified by the CCI at the PF order stage are identified and investigated by the DG instead. 

However, the powers of the DG are still restricted by the language in which the CCI directs such an investigation and ensures that the DG does not have unfettered powers to carry out roving inquiries against unrelated parties. 


*Dhruv Rajain, Principle Associate, can be contacted at dhruv.rajain@cyrilshroff.com. Siddhant Khetawat, Associate can be contacted at siddhant.khetawat@cyrilshroff.com, Shreya Joshi, Associate can be contacted at shreya.joshi@cyrilshroff.com and with the Competition Law Practice at Cyril Amarchand Mangaldas.

[1] (2017) 8 SCC 47

[2] Competition Appeal (AT) No. 6 of 2017, decided on 19-9-2018.

[3] (2017) 8 SCC 47

[4] 2018 SCC OnLine Del 11229

[5] (2017) 8 SCC 47

[6] 2019 SCC OnLine Del 10017

[7] 2013 SCC OnLine Del 5109

[8] (2010) 10 SCC 744

[9] (2017) 8 SCC 47

[10] Ibid.

[11] (2010) 10 SCC 744

Business NewsNews

The Competition Commission of India (CCI) approves acquisition of shares in My Home Industries Private Limited by My Home Constructions Private Limited and its affiliates.

The proposed combination envisages acquisition of 50% of the shareholding of My Home Industries Private Limited (My Home Industries) by My Home Constructions Private Limited (MHCPL), Jupally Real Estate Developers Private Limited (JREDPL) and Dr Rameswar Rao Jupally.

MHCPL and JREDPL are part of My Home Group based out of Hyderabad, Telangana.  Dr Rameswar Rao Jupally is the promoter of My Home Group, which has interests in construction and real estate development, manufacturing and supply of grey cement, power consultancy, power generation, power trading, transportation and logistics, media and broadcasting, pharmaceutical and education.

My Home Industries is a 50:50 joint venture between CRH India Investments B.V. and the Acquirers. It is engaged in the manufacturing and supply of grey cement under the brand name “Maha Cement” in India. It is present in the states of Andhra Pradesh, Tamil Nadu, Union Territory of Puducherry, Telangana, Kerala, Karnataka, Odisha, West Bengal, Bihar, Maharashtra, Jharkhand and Chhattisgarh. It is also engaged in power generation activities from waste heat and solar power sources for the purposes of captive consumption.


Ministry of Corporate Affairs

[Source: PIB]

[Press Release dt. 27-12-2019]

Business NewsNews

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

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

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

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

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

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

Summary of the Proposed Combination is available at

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

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

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

Summary of the Proposed Combination is available at

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

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

CCI Green Channel

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


Ministry of Corporate Affairs

[Press Release dt. 20-12-2019]

[Source: PIB]

Appointments & TransfersNews

S.O. 3121(E)— In exercise of the powers conferred by sub-section (1) of Section 8 read with sub-section (1) of Section 10 of the Competition Act, 2002 (12 of 2003), the Central Government, vide office order No. Comp-05/9/2018- Comp-MCA dated the 11th July, 2019, appointed Shri Bhagwant Singh Bishnoi (IFS:1983) as Member of the Competition Commission of India, with effect from the 17th July, 2019 (forenoon) for a period of five years, or till he attains the age of 65 years, or until further orders, whichever is earlier.

2. The terms and conditions of his service shall be governed by the Competition Commission of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and other Members) Rules, 2003.


Ministry of Corporate Affairs

[F. No. 05/9/2018-Comp-MCA]

[Notification dt. 28-08-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Appellate Tribunal: A Bench of Justice S.J. Mukhopadhaya, Chairperson and Justice A.I.S Cheema, Member (Judicial) and Kanthi Narahari, Member (Technical) admitted the appeal filed by the All India Online Vendors Association (“AIOVA”) against the order of the Competition Commission of India, dated 6-11-2018, whereby it held that no case of contravention of the provisions of Section 4 (abuse of dominant position) of the Competition Act, 2002 was made out against Flipkart and Amazon.

AIOVA’s case

AIOVA — company registered under the Companies Act, 2013 — is a group of more than 2000 sellers, selling on e-commerce marketplaces such as Flipkart, Amazon, Snapdeal, etc. It informed the CCI regarding abuse of dominant position by Flipkart alleging that small vendors have become allies of the big vendors and suppliers to leading sellers such as Cloudtail., WS Retail, etc. on the Flipkart and Amazon platforms, rather than selling directly to consumers through the online e-commerce marketplace sites. Further, it was apprehended that unfair trade practices were being carried and corporate veil on it was required to be lifted to assess the economic nexus and the wrongdoings being committed.

CCI’s Order

The Commission vide its order dated 6-11-2018, found no contravention of the provisions of Section 4 by Flipkart. Holding that the relevant market in the instant case may be defined as “services provided by online marketplace platforms for selling goods in India”, the Commission further held that “looking at the present market construct and structure of online marketplace platforms market in India, it does not appear that any one player in the market is commanding any dominant position at this stage of evolution of market.”

Finding that Flipkart was not a dominant player in the “relevant market”, it was held that the question of abuse of dominant position did not arise. Furthermore, it was held that the information provided by AIOVA was not sufficient to substantiate the allegations against Flipkart. Though the information was filed against Flipkart, the Commission held a conference with Amazon as well as it is also a key player in the relevant market. On the same reasoning, the Commission held that no contravention of the provisions of Section 4 could be said to be made out against either Flipkart or Amazon.

Appeal before NCLAT

Aggrieved by the decision passed by the CCI, filed a company appeal before the NCLAT challenging the same. Chanakya Basa along with Nidhi Khanna, Advocates, appearing for AIOVA argued on the errors in the impugned order. Per contra, Senior Advocate Amit Sibal is representing the opposite party along with Rajshekhar Rao, Yaman Verma, Sonali Charak and Neetu Ahlawat, Advocates.

The Appellate Tribunal has admitted the appeal for hearing. The respondents have been given 10-days time to file an affidavit in reply. The appeal is further posted for hearing on 30-07-2019.[All India Online Vendors Assn. v. CCI, Company Appeal (AT) No. 16 of 2019, decided on 15-05-2019]

Appointments & TransfersNews

S.O. 1382(E)— In exercise of the powers conferred by sub-section (1) of Section 8 read with sub section (1) of Section 10 of the Competition Act, 2002 (12 of 2003), the Central Government, vide office order No. Comp-05/9/2018-Comp-MCA dated the 11th December, 2018, appointed Ms Sangeeta Verma as Member of the Competition Commission of India, with effect from the 24th December, 2018 (Afternoon) for a period of five years or till 65 years of age, or until further orders, whichever is the earliest.

2. The terms and conditions of her service shall be governed by the Competition Commission of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and other Members) Rules, 2003.

[F. No. 05/9/2018-Comp-MCA]

[Notification dt. 15-03-2019]

Ministry of Corporate Affairs

Law School NewsLive Blogging

Day 1 – Inaugural Ceremony & Preliminary Rounds

The Tenth NLU Antitrust Law Moot Court Competition 2019 has been inaugurated in the honorable presence of Dean Dr. I.P. Massey and the Registrar. The registrations and exchange of memorials between the teams is underway in the auditorium, while the Researchers have begun with the Researcher’s Test!

4.30 PM – Preliminary Round 1 Begins

The judges have been briefed and they are really excited to witness the competition this time. The first Preliminary Rounds are about to begin and we wish all the participants good luck!

6 PM – Preliminary Round 1 ends

The first set of preliminary rounds have ended. The participants are tired after passionately arguing their sides, yet are enthusiastic for the next set. The second set of preliminary rounds will start soon, which will be followed by the reverse prelims.

 

 

8 PM – Preliminary Round 2 ends

The two sets of reverse prelims will begin soon, followed by declaration of the teams advancing to the Octa-finals, to be held tomorrow.

9 PMReverse Prelims begin

The the reverse prelims have begun. This is to ensure each team has an equal chance to argue both sides, and thus maintain a balance in scores. The participants are tired, yet are positive as ever!

11.30 PM Reverse prelims end, results announced

The reverse prelims have been concluded, and due to the brilliant organizers in the tabulation team, we were able to receive the results quickly. Following are the teams qualifying to the Octa-Finals (in no particular order) :

  1. Institute of Law, Nirma University.
  2. Symbiosis Law School, Noida.
  3. National University of Advanced Legal Studies, Kochi.
  4. Gujarat National Law University.
  5. National Law University, Odisha.
  6. ILS Law College, Pune.
  7. Amity Law School, IP.
  8. Rajiv Gandhi National University of Law.
  9. Hidayatullah National Law University.
  10. Symbiosis Law School, Pune.
  11. Government Law College, Mumbai.
  12. School of Law, Christ University.
  13. Faculty of Law, Aligarh Muslim University.
  14. SVKM’S NMIMS KIRIT P Mehta School of Law.
  15. Vivekananda Institute of Professional Studies.
  16. Chanakya National Law University.

Memorials have been exchanged according to the match-ups, and the days events have come to an end. We congratulate the Octa-Finalists!

Day 2 – Octa Finals, Panel Discussion and Quarter Finals

The second day of the Tenth NLU Antitrust Moot Court Competition is successfully underway!

9.30 AM – Octa Finals commence

The judges have been briefed and the Octa Finals have commenced in the respective courtrooms. The participants look fresh and well rested even though they might have been ripping apart their opponent’s memorials all through the night! Wishing them all the best!

Judges scrutinizing the arguments.

1 PM – 4th Antitrust Panel Discussion on Competition Law’s Interface with IBC commences

With the first set of Octa Final rounds over, preparations are in full swing for the reverse Octa Final Rounds. Meanwhile, participants attended the 4th Antitrust Panel Discussion, 2019. The topic for this year’s panel discussion pertains to Interface of Competition Law with the Indian Bankruptcy Code. Our esteemed panelists for this discussion are:

  • Ms. Anubhuti Mishra – An alumnus of King’s College, London and Hidayatullah National Law University, Raipur, she is currently working with the Competition Law team at P&A Law Offices, New Delhi. She has advised on several antitrust enforcement as well as merger review matters.
  • Mr. Shashank Sharma – Graduated from National Law School of India University in 2013. Thereafter, he went on to complete his European Master in Law and Economics in 2017. Since then he has been working with AZB & Partners, where his primary focus is Competition Law, with specific focus on Behavioural & Merger Control.
  • Mr. Toshit Shandilya – Graduated from National Law University, Delhi in 2013, he is currently an associate in the Competition Law team of Talwar Thakore & Associates. He has been involved in various critical enforcement and merger control cases before the CCI, as well as the COMPAT. He has been a law clerk with Justice V.S. Sirpurkar, former chairman, COMPAT where he assisted on a number of important cartel and Abuse of Dominance cases.
Our esteemed Panelists engaging with the participants.

The participants of the panel discussion posed certain interesting questions to our Panelists. The questions ranged from procedural to policy issues, arising from the requirement of taking CCI’s approval for insolvency resolution plans that include combinations. The participants and the Panelists engaged on concepts, such as, the failing firm defence, composite combination transactions, inter-connected transactions, and so on, to name a few. The Panelists also threw some light on their practical experience as Competition Lawyers while dealing with complicated transactions that fall within the regime of the IBC. The interactive session provided the participants an insight into the complex interface between the IBC and Competition Law.

5 PM – Octa’s concluded, results announced

The Octa Finals and the Reverse Octa Finals have been concluded. While the participants argued commendably, our Judges had a tough time reaching consensus. The following are the teams progressing towards the Quater Finals (in no particular order):

  1. National Law University, Odisha.
  2. ILS Law College, Pune.
  3. Symbiosis Law School, Pune.
  4. Institute of Law, Nirma University.
  5. National University of Advanced Legal Studies, Kochi.
  6. SVKM’S NMIMS Kirit P. Mehta School of Law.
  7. Gujarat National Law University, Gandhinagar.
  8. Symbiosis Law School, Noida.

We congratulate the qualifying teams. The exchange of memorials for the Quarter Finals shall be taking place soon at the Registration desk.

A glance into the Quarter Finals.

 

Participant engrossed in the opponent’s arguments.

 

7.30 PM – Quarter Finals concluded, results announced.

The Quarter Finals of the Tenth NLU Antitrust Law Moot Court Competition have come to an end. Here are the teams that have qualified to the Semi Finals.

  1. Symbiosis Law School, Pune.
  2. Gujarat National Law University.
  3. National Law University, Odisha.
  4. National University of Advanced Legal Studies, Kochi.

A hearty congratulations to all the Semi Finalists!

8 PM – Semi Finals Underway

The Semi Finals are currently underway. The teams are engaged in fierce argumentation before an eminent panel of judges in both court rooms. Here, take a glimpse at the rounds.

Judges Vijay Pratap Chouhan (Associate, Platinum Partners), Anand Vikas Mishra (Deputy Director, Competition Commission of India) and Anisha Chand (Principal Associate, Khaitan & Co).

 

Judge Anand Vikas Mishra testing the participant’s understanding of the law.

 

Judges Anand Kumar Singh (Assistant Professor, National Law University Jodhpur, specialising in Competition Law), Rahul Satyan (Senior Partner, Competition and Antitrust team at AZB & Partners) and Toshit Chandilya (Associate, Competition Law team at Talwar Thakore & Associates) in Court Room 2.

 

Participants observing the arguments of their opponent team.

10.15 PM – Semi Finals concluded

After establishing their ‘dominant position’ in this relevant mooting market, the following two teams will battle it out in the Finale of the Tenth NLU Antitrust Law Moot Court Competition 2019:

  1. Symbiosis Law School, Pune.
  2. Gujarat National Law University.

The Memorials will be exchanged between the finalists soon. May the best market player win the battle.

Day 3 – Finals and Valedictory Ceremony

9.30 AM The audience and judges are seated in the auditorium and the Final rounds of the Tenth NLU Antitrust Moot Court Competition will begin shortly.

9.40 AM – The first speaker from the Applicant’s side, begins his speech. He is calm and is responding well to the judges, who waste no opportunity in grilling him on the law and facts. The bench is fairly active, and all the three judges are participating equally.

Dr. K.D.Singh (Joint Director (Law), Competition Commission of India) and Mr. Rahul Singh (Partner, Khaitan & Co.), having a look at the proposition.

 

Mr. Manas Kumar Chaudhuri (Partner, Khaitan & Co.) indulgent in the oral rounds during the Finals.

10.20 AM – Speaker 2 from the Applicant’s side has now taken over. She begins her submission by trying to prove that DOPE is not an enterprise, as per the statutory definition under Sections 2(h) read with Section 3(3) of the Competition Act, 2002. She relies on the lack of an economic function, to prove so. However, the judges seem unconvinced, and asks the counsel to clarify the origin of this requirement. Mr. Rahul Singh (Partner, Khaitan & Co.) questions the counsel on the intricacies involved while relying on Section 3(3) along with Section 2(h). The counsel further cites the Coordination Committee case, to prove her point.

Respondent’s gearing up for their turn.

10.35 AM – The judges inquire about the ratio of the LPG Gas Cylinder case, and its relevance to the current argument. With only 2 mins left on the clock, the counsel moves to her second issue, regarding cartelisation. She seeks an extension of time, which is granted. Towards the end of her submissions, one of the judges pose a question regarding the lack of any arguments on mitigation of penalty. The counsel confidently replies that her party is not in violation of any competition or antitrust rules, and thereby need not argue on penalty. This creates a good impression upon the judges.

10.46 AM – The first speaker from the Respondent side, takes the podium. He appears immensely composed, and requests 30 seconds to arrange his documents on the podium. His speech is structured and brief, and the judges seem to be nodding in appreciation. He begins his first submission, on the maintainability of Jeevan Pharma’s admission. Mr. Rahul Singh and Dr K.D Singh (Joint Director (Law), Competition Commission of India) question the counsel on the distinction between the ability of the bench to hear the petition, and their power to grant compensation. The Counsel calmly tries to clarify his position, with reliance on the facts and clarifications, citing the relevant paragraphs, perfectly.

The Appellants discussing their strategy during the Finals.

11.00 AM – The counsel then moves to his second submission, regarding Jeevan Pharma’s abuse of its dominant position, and lays down the three tests required to show the same. The judges don’t seem satisfied with increased reliance on foreign cases, in light of extensive Indian jurisprudence in the area, but the counsel responds adequately. He then seeks an extension, which is happily granted by the judges. As the counsel ends his submissions and thanks the bench, the panel of judges apologise for their repeated probe into every submission of his. This lightens the atmosphere. The judges appeared quite pleased with his set of submissions.

11.24 AM – Speaker 2 now arrives at the podium, to continue her fellow counsel’s submissions. She begins her submission by laying out a roadmap, upon the judges seeking a clarification. Her issues pertain to the ability of the DG and CCR to proceed against DOPE, and DOPE’s violation of Section 3(3). The rain of questions continue, as was the case for the previous speakers. The judges question the line of argument, that the cryptic order of DG can be used against anyone. The counsel tries to clarify her position and does not lose hope.

11.35 AM – The counsel moves to her second submission and focuses on the agreement between the manufacturers, as well as between the manufacturers and the DOPE. She informally quotes Lord Denning and then the statutory definition. There is a good level of engagement between the counsel and the judges. After this speech, the judges decide against rebuttals and surrebuttals, However, they give into the finalists’ request. Speaker 1 from the respondent gives a brilliant rebuttal which leaves the audience as well as the judges in awe.

11.40 AM – The rounds have been concluded, and the finalists wait for the results.

12.15 – Valedictory ceremony commenced

Vice Chancellor, Ms. Poonam Pradhan Saxena and the Dean, Dr. I.P. Massey, with other esteemed faculty members and the judges have taken their seats in the auditorium. Senior Member of the Moot Court Committee opened the ceremony with a heart warming speech and addressed the participants waiting eagerly for the results.

12.30 – Vice Chancellor felicitates the gathering
The Vice Chancellor thanked Khaitan & Co. for their valuable partnership in organising this year’s Competition. She further stressed upon the importance of Competition Law as an emerging field. She also encouraged the participants to take part in more moot court competitions, as it helps to further one’s advocacy skills and analytical abilities.

12.35 – Dr. K.D. Singh addressed the crowd and informed the audience about CCI’s endeavours and how CCI has been happy to host the moot in association with NLU Jodhpur, for the past 10 years, and expressed his desire to continue the same for the coming years.

12.37 – Vice Chancellor presents the token of appreciation to Dr. K.D. Singh

12.38 – Mr. Manas Kumar Chaudhuri (Partner, Khaitan & Co) thanked Ms. Poonam Saxena and shared his experience as a corporate lawyer and left a very interesting question for the participants sitting in the audience, whether they are administering “justice” by being the extended arm

12.40 – Declaration of results

Mr. Rohan C. Thomas, Faculty Advisor of the Moot Court Committee, announces the results :

Second Best Student Advocate Anshika Jain (Gujarat National Law University)

Best Student Advocate – Juhi Hirani (Institute of Law, Nirma University) and Darshan H. Patankar (Gujarat National Law University)

Best Researcher – Eesha H. Sheth (SVKM’S NMIMS Kirit P Mehta School of Law)

Best Memorial – Faculty of Law, Jamia Millia Islamia.

Best Student Advocate for the Finals – Darshan H. Patankar (GNLU)

RUNNERS UP TEAM – Symbiosis Law School, Pune.

WINNING TEAM – Gujarat National Law University.

Winning Team of the Tenth NLU Antitrust Law Moot Court Competition – Gujarat National Law University

 

Runners Up Team of Tenth NLU Antitrust Law Moot Court Competition – Symbiosis Law School, Pune

12.45 – Closing Speech by the Co-Convener of the Moot Court Committee
Ms. Mansi Srivastava (Co-Convener, Moot Court Committee) shared her experience of being part of the organising committee for the past five years and how it feels surreal to be a part of it for one last time. She thanked the administration, the support staff, the volunteers and all the other Moot Court Committee Members for their support and contribution. She specially thanked Ms. Abhilasha Gupta and Ms. Subarna Saha (Advisors, Moot Court Committee) and Mr. Rahul Mantri (Co-Convener, Moot Court Committee) for being her pillars of strength throughout the competition and providing all the answers when she herself couldn’t find them. Lastly, she thanked Khaitan & Co. for their partnership and the Knowledge partner, SCC Online and Eastern Book Company (EBC) for providing the students with access to SCC Online that helped them in the preparation for their rounds.

 

12.48 – Certificate of participation given out to the participants.

The Tenth NLU Antitrust Law Moot Court Competition has thus been concluded.

Law School NewsMoot Court Announcements

About TNNLU

The Tamil Nadu National Law University (TNNLU) was established by the Government of Tamil Nadu by an Act of State Legislature (Tamil Nadu Act No. 9 of 2012) with the laudable objectives of advancing and disseminating knowledge of law and legal processes and their role in national development. It also aims to instil a sense of responsibility in students and researchers to serve society in the field of law by developing skills with regard to advocacy, legal services, legislation and law reforms. TNNLU has organized innumerable lectures, seminars, symposia and conferences (including a recent international conference on Affirmative Action and the Sustainable Development Goal of Gender Equality), to promote legal knowledge and to make law and legal processes as efficient instruments of social development.

About CCI

TNNLU has been empanelled by the CCI on September 7, 2017 under the CCI (Competition Assessment of Economic Legislations andPolicies) Guidelines, 2017 to be an Empanelled Institution (EI) to carry out Competition Assessment (CA) of the economic legislations, bills and policies. TNNLU was one among the four Universities across India to beempanelled by CCI for this prestigious work. The Centre for Competition Law (CCL), TNNLU was setup in February 2018 to create awareness among the general public about the implications of Competition Law and to carry out focused research in the field of Competition and Commercial Laws. With a view to disseminate information on promoting competition in the market, the Centre intends to conduct workshops, training programmes, publish newsletters/case summaries etc. in the domain of Competition Law.

About Competition

The Competition Commission of India (CCI) at New Delhi is a regulatory body established by the Government of India. The duty of the Commission is to carry out the objectives enumerated under the Competition Act, 2002, i.e., to prohibit anti-competitive agreements, abuse of dominant position by enterprises and regulate combinations (acquisition, acquiring of control and M&A), which cause or are likely to cause an appreciable adverse effect on competition within India. The broad objective is to create and sustain fair competition in the economy that will provide a level playing field to the producers and make the markets work for the welfare of the consumers.

In 2018, MCC collaborated with CCI for the first time to organise the 1stTNNLU-CCI National Moot Court Competition from 2nd to 4th February 2018 which saw large participation from law students all over India. This year MCCis equally thrilled about collaborating with CCI once again to organise the 2ndTNNLU-CCI National Moot Court Competition, 2019.

Release of Moot Problem 30th December (Sunday) 2018
Last date for Provisional Registration 12th January (Saturday) 2019
Last date for submission of the soft copy of the Registration Form 21st January (Monday) 2019
Last date for submission of the hard copy of the Registration Form 26th January (Saturday) 2019
Last date for submission of soft copy of Memorials 20th February (Wednesday) 2019
Last Date for submission of hard copy of Memorials 24th February (Sunday) 2019
Oral Rounds 1st March (Friday) 2019 to 3rd March (Sunday) 2019
Email address: nmcc@tnnlu.ac.in
Phone:
Mr. Ajinkya Nikam [+91 9003371012]
Ms. Ananya Khandelwal [+91 9566158539]
Ms. Mrinalini Natarajan [+91 9840923698]
Mr. Sandeep [+91 9176945808]

For brochure, click HERE

For Registration Form, click HERE

Case BriefsSupreme Court

Supreme Court: A Bench comprising of A.K. Sikri and Ashok Bhushan, JJ. dismissed an appeal filed against the judgment of Bombay High Court whereby it held that Competition Commission of India had no jurisdiction to pass order in the instant matter as the issues were covered by Indian Telegraph Act, 1885 and Telecom Regulatory Authority Act, 1997 and the appropriate forum was the Telecom Dispute Settlement and Appellate Tribunal (TDSAT).

In the present matter, the Court was faced with determining the width and scope of the powers of the CCI under the Competition Act, 2002 pertaining to telecom sector vis-a-vis the scope of the powers of TRAI under the TRAI Act, 1997.

Factual Matrix

On 21-10-2013, Reliance Jio Infocomm Ltd. was granted a licence under Section 4 of the Telegraph Act by the Department of Telecom (DoT) for providing telecommunication services in all 22 circles in India. Soon thereafter, RJIL executed interconnection agreements with existing telecom operators including Airtel, Idea and Vodafone. RJIL  requested these companies to augment Point of Interconnection (POIs) for access as the capacity already provided to it was causing huge POI congestion, resulting in call failures on its network. According to RJIL, these companies intentionally ignored the aforesaid request.

Subsequently, in November 2016, RJIL filed information under Section 19 of the Competition Act before the CCI, As per RJIL, the respondent service providers, along with Cellular Operators Association of India, formed a cartel and acted in an anti-competitive manner which is prohibited by the Act. The CCI passed order dated 21-4-2017 under Section 26(1) as per which it came to a prima facie conclusion that case for investigation was made out and directed the Director-General to cause investigation in the case. Aggrieved thereby, respondents filed writ petitions before the High Court which quashed the order of CCI on the ground that CCI lacked jurisdiction to entertain such complaints/information filed under Section 19 as such matter falls within the exclusive jurisdiction of another regulatory authority, namely, TRAI.

Challenging this order passed by the High Court, the appellants were before the Supreme Court.

The Supreme Court considered the matter on following points:

(a) Jurisdiction of CCI

After noting salient features of Competition Act and TRAI Act, the Court concluded that as TRAI is constituted as an expert regulatory body which specifically governs the telecom sector, the aforesaid aspects of the disputes were to be decided by TRAI in the first instance. These were jurisdictional aspects. The High Court was right in concluding that the concepts of “subscriber”, “test period”, “reasonable demand”, etc, arising out of TRAI Act and the policy so declared, are the matters within the jurisdiction of TDSAT under the TRAI Act. Only when the jurisdictional facts in the present matter were determined by the TRAI against the respondents, the next question would arise as to whether it was a result of any concerted agreement between the respondents. It would be at that stage the CCI can go into the question as to whether violation of the provisions of TRAI Act amounts to ‘abuse of dominance’ or ‘anti-competitive agreements’.

(b) Whether TRAI has the exclusive jurisdiction to deal with matters involving anti-competitive practices to the exclusion of CCI altogether?

The function that is assigned to CCI is distinct from the function of TRAI. It is within the exhaustive domain of CCI to find out as to whether a particular agreement will have an appreciable adverse effect on competition within the relevant market in India. Such functions not only come within the domain of CCI, but TRAI is not at all equipped to deal with the same.

The Court, thus, did not agree with the appellants that CCI could have dealt with this matter without availing the inquiry by TRAI. It also did not agree with the respondents that insofar as the telecom sector is concerned, the jurisdiction of the CCI under the Competition Act is totally ousted.

In incidental issues, the Court decided that the petitions field by other companies before the Bombay High court were maintainable. When such jurisdictional issues arise, the writ petition would clearly be maintainable. In view of the above discussion, the Court dismissed the appeal while upholding the decision of the High Court. [CCI v. Bharti Airtel Ltd., 2018 SCC OnLine SC 2678, decided on 05-12-2018]

Law School NewsMoot Court Announcements

The Competition Commission of India (CCI), in collaboration with National Law University, Delhi (NLUD) will organise the 2nd edition of the CCI-NLUD Competition Law Moot in March, 2019 at National Law University, Delhi.

The Organisers-Competition Commission of India is a regulatory body established by the Government of India with effect from 14 October 2003. The duty of the Commission is to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India. The Commission is also required to undertake competition advocacy, create public awareness and impart training on competition issues. National Law University, Delhi is a premier law university in India established by the National Law University Act 2007 (Delhi Act No. 1 of 2008). The University has successfully organised several moots in the past, including South-Asia Rounds Oxford Price Media Law Moot Court Competition, India Rounds of ICC Trial Moot Court Competition, Vis Pre-Moot. The University has now gained a reputation for its impeccable quality in organisation of moots. The venue of the Rounds of the Moot shall be the premises of National Law University, Delhi.

Format of the Moot-The Moot shall be based on the memorial elimination format. The top twenty (20) teams shall be selected to plead before eminent judges from the bar, bench, regulatory authorities, academia and industry in March 8-10.

The Moot Schedule-The Schedule for the Moot is as follows:

  • Opening of Registration: November 1, 2018
  • Release of the Moot Problem: November 1, 2018
  • Last date of Submission of Memorials: January 14, 2019
  • Oral Rounds: March 9-10, 2019

Eligibility-All participants must be full-time candidates presently enrolled in an undergraduate degree programme in law in India.

Contact Queries may be addressed to Prof. (Dr.) Harpreet Kaur (Faculty Coordinator) at ccinludmoot@nludelhi.ac.in

 

Cyril Amarchand MangaldasExperts Corner

 


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

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

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

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

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

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

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

 

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

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

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

 

Cyril Amarchand MangaldasExperts Corner


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

OP. ED.

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

Extraterritorial jurisdiction: To infinity and beyond

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

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

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

Penalising the guilt: The is and the ought

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

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

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

Appeals of CCI orders: Hear Hear

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

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

Case closed or not

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

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

Lag due to the lack: Recommendation for way ahead

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

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

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

————-

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

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

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

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

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

[5]  Competition Act, 2002, S. 27.

[6]  Competition Act, 2002, S. 47.

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

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

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

[10]  (2005) 2 SCC 145.

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

[12]  (2010) 7 SCC 751.

[13]  (1998) 4 SCC 90.

[14]  CCI, (n. 8)

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

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

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

Law School NewsOthers

A One Day English-Tamil-English Translation Workshop is to be organised by the Centre for Competition Law (CCL), Tamil Nadu National Law School (TNNLS) University, Tiruchirappalli on 28th July 2018. The workshop shall be on translation of Legal Documents from English to Tamil with Specific Reference to Competition Law. The workshop is restricted to 2nd, 3rd and 4th-year TNNLS students. Registration closes on July 21 (Saturday), 2018 (11:59 pm IST). Selection to the workshop will be based on a two stage process. The first stage involves application before the prescribed deadline and next stage will require the students to translate a page long selective content from the Competition Advocacy Booklet from English to Tamil, following which, the same will be scrutinised by the CCL members, TNNLS.
Topic: Translation of Legal Documents from English to Tamil with Specific Reference to Competition Law

Content Type: Classroom

Workshop Facilitators:

Hon’ble Justice Prabha Sridevan, (Retd.) Madras High Court;
Representative from the Law Department, Government of Tamil Nadu;
Professor Palaniarangasamy (Retd.), Tamil University, Thanjavur;
Two Representatives from the Competition Commission of India (CCI), New Delhi

Duration: 6 hoursTime/Venue: 10.00 am to 04.30 pm on Saturday July 28, 2018 at the Seminar Hall, UG Block, TNNLS

Target Audience: Those who need to learn and apply English-Tamil-English translation skills in your work.

For further details, please contact:  Mr. S. Mohammed Azaad, Workshop Coordinator & Assistant Professor of Law, +91 – 98404 81219

Mr. C.R. Shriram, Workshop Coordinator & Assistant Professor of Law, +91 – 97907 98081

For further details, click HERE.

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): CCI received information from 4 chess players who were subjected to disciplinary action by All India Chess Federation (AICF) for participation in a chess event not authorised by it. The case concerned several stipulations of AICF on chess players, organisation of chess tournaments, discretionary nomination of players, etc.

After a detailed investigation by the Director General, CCI conducted further inquiry in the matter and found AICF to enjoy dominant position in the markets for organization of professional chess tournaments/events in India and services of chess players in India. In its order under Section 27 of the Act, CCI observed that AICF’s restriction on chess players to participate in unauthorised events and attendant punitive consequences restricted the movement of chess players and placed them and potential organisers of chess tournaments in a disproportional disadvantage. Hence, such stipulation was held as an unreasonable restriction on chess players and denial of market access to organisers of chess events/tournaments, in contravention of the provisions of Section 4(1) read with Section 4(2)(b)(1) and Section 4(2)(c) of the Act. The restrictions on chess players was further held to be in the nature of exclusive distribution and refusal to deal, in contravention of Section 3(4)(c) and Section 3(4)(d) of the Act.

Accordingly, CCI directed that:

(a) AICF shall cease and desist from the conducts that is found anti-competitive;

(b) AICF shall lay down the process and parameters governing authorisation/sanctioning of chess tournaments. In doing so, AICF will ensure that they are necessary to serve the interest of the sport changes and shall be applied in a fair, transparent and equitable manner. Besides, AICF shall take all possible measure(s) to ensure that competition is not impeded while preserving the objective of development of chess in the country;

(c) AICF shall establish prejudice caused by a chess player before taking any disciplinary action against him. Needless to say, the disciplinary actions taken shall be proportional, fair and transparent. The disciplinary actions against the Informant and other similar players shall be reviewed by AICF on these lines;

(d) AICF shall file a report to the Commission on the compliance of the aforesaid directions from (a) to (c) within a period of 60 days from the receipt of this order.

A penalty of Rs 6.92 lakhs was imposed on AICF for indulging in anti-competitive conduct. [Hemant Sharma v. All India Chess Federation (AICF),  2018 SCC OnLine CCI 53, order dated 12-7-2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): CCI took up the case  suo motu under Section 19 of the Competition Act, 2002 (‘the Act’) based on the disclosure by Globecast India Private Limited and Globecast Asia Private Limited (collectively referred to as ‘Globecast’) under Section 46 of the Act read with the Competition Commission of India (Lesser Penalty) Regulations, 2009 (‘Lesser Penalty Regulations’). Essel Shyam Communication Limited (ESCL), now Planetcast Media Services Limited, subsequently also approached CCI as lesser penalty applicant during investigation.

CCI imposed penalty on Globecast, a subsidiary of the Orange Group (earlier France Telecom Group), a global service provider of broadcasting services and ESCL, a technology service provider in India since 1998 with specialisation in media broadcasting, for indulging in bid-rigging in tenders floated by sports broadcasters for procurement of  end-to-end broadcasting services i.e. ground segment services as well as satellite bandwidth services, for various sporting events during the period July 2011- May 2012 including Indian Premier League 2012 (IPL-2012).

On the basis of the evidence collected in the case, CCI found that ESCL and Globecast operated a cartel amongst them in the various sporting events held during the years 2011-12 including IPL-2012. While submitting bids for the tender floated by various broadcasters during the period July 2011-May 2012 for provision of end-to-end broadcasting services, they exchanged information and quoted bid prices as per the arrangements arrived at amongst them. As a result, they committed an infringement of the provisions of Section 3(3)(d) read with Section 3(1) of the Act during this period.

Considering contravention of provisions of the Act by Globecast and ESCL, an amount of INR 31.94 Crores and INR 1.33 Crores was computed as leviable penalty on ESCL and Globecast, respectively, in terms of the proviso to Section 27(b) of the Act. While computing leviable penalty, CCI took into consideration all relevant factors including duration of cartel, mitigating factors, etc. and decided to levy penalty at the rate of 1.5 times of their profit for the period July 2011–May 2012. Additionally, considering totality of facts and circumstances of the case, penalty leviable on individual officials of Globecast and ESCL was computed at the rate of 10 per cent of the average of their income for preceding three years.

Keeping in view the stage at which the lesser penalty application was filed, co-operation extended in conjunction with the value addition provided by the evidences furnished by the lesser penalty applicants in establishing the existence of cartel, CCI granted Globecast and its individuals 100 percent reduction in the penalty and 30 percent reduction in penalty to ESCL and its individuals. Pursuant to reduction, penalty imposed on ESCL was INR 22.36 Crores. No penalty was imposed on Globecast. [In re, Cartelisation by broadcasting service providers by rigging the bids submitted in response to the tenders floated by Sports Broadcasters, Suo Motu Case No. 02 of 2013, decided on 11-07-2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): The case primarily concerned access to upstream LPG terminalling infrastructure at Vishakhapatnam Port, which comprises several components viz. unloading arms at the jetty, blender, heat exchanger and cavern (storage facility). This infrastructure, being operated by SALPG, is used for handling imports of propane and butane and their blending into LPG.

East India Petroleum Pvt. Ltd. (EIPL) filed an information with CCI under Section 19(1)(a) of the Competition Act, 2002 alleging that while allowing it to use the blender, SALPG has been insisting on the mandatory use of cavern. This resulted in paying significant charges to SALPG. The OMCs were thus not finding the LPG terminalling services offered by EIPL economically viable and were constrained to avail the terminalling services offered by SALPG only. To address this, EIPL first proposed to use the blender of SALPG and thereafter, take the output directly to the cross-country pipeline, bypassing the cavern. Since this was not agreeable to SALPG which allowed bypass of the cavern to the extent of 25 percent only,  EIPL proposed to install its own blender and sought a tap-out and tap-in from the propane and butane lines to discharge blended LPG, bypassing the cavern. This was also not acceptable to SALPG. Another proposal seeking tap-out from the propane and butane lines at the jetty to EIPL own blender and construction of its own infrastructure between the blender and storage facility was also refused by SALPG. All this was alleged to be an abuse of dominant position by SALPG.

After a detailed investigation by the Director-General, CCI conducted a further inquiry into the matter and found SALPG enjoys a dominant position in the market for upstream terminalling services at Visakhapatnam Port. SALPG sought to justify its conduct on the grounds of safety as well as efficiency and business justification. However, after a detailed examination of claims made and hearing the parties, the Commission held the impugned conduct of SALPG to be in contravention of the provisions of Section 4 of the Act. Accordingly, CCI directed that:

  • (a) SALPG shall not insist mandatory use of its cavern and shall allow bypass of cavern for both pre-mixed and blended LPG, without any restrictions; and/or
  • (b) SALPG shall allow access to its competitors, potential as well as existing, to the terminalling infrastructure at Visakhapatnam Port, subject to compliance with all safety integrity and other requirements under applicable laws and regulations framed thereunder. Such an access should avoid additional cost burden on SALPG, and the entity seeking access shall bear the cost, if any, towards necessary changes to the existing infrastructure. Under this option also, SALPG shall not insist on the mandatory use of cavern and it shall allow bypass of the cavern, without any restriction. SALPG shall extend full cooperation for the study/audit undertaken by VPT in relation to the remedies ordered herein. Needless to say, SALPG shall not do anything raising rival’s cost.

A penalty of INR 19.07 crore has also been imposed on SALPG for indulging into the anticompetitive conduct. [East India Petroleum Pvt. Ltd. (EIPL) v. South Asia LPG Company Pvt. Ltd. (SALPG), Case No. 76/2011, order dated 11-07-2018]