India: Competition Law

Last Updated: 6 February 2019
Article by Competition Team Khaitan & Co

Most Read Contributor in India, August 2019
  1. Competition Commission of India v Bharti Airtel Limited and Others (Civil Appeal No 11843 of 2018)

The Supreme Court dismissed an appeal by the CCI challenging an order of the High Court of Bombay (High Court) in a matter alleging cartelisation by telecom companies Bharti Airtel Limited, Vodafone India and Idea Cellular Limited (collectively, IDOs). The IDOs and the Cellular Operators Association of India (COAI) had filed writ petitions before the High Court, praying for quashing of the order of investigation against them, on grounds that the CCI did not have jurisdiction, considering that the TRAI was already seized of the matter.

The Supreme Court noted that while the CCI has exclusive jurisdiction to adjudicate upon issues governed by the Competition Act, 2002 (Competition Act) the issue of denial of points of inter-connects is a technical issue pending before the TRAI, which is the more appropriate authority and best suited to consider these issues. Further, it held that only when the jurisdictional facts are determined by the TRAI against the IDOs, would the issue of any concerted agreement between the IDOs and COAI arise. Separately, the Supreme Court also held that the Competition Act is a special statute and if there is anti-competitive conduct it is within the exclusive domain of the CCI to rule upon it. Therefore, even if TRAI finds anti-competitive conduct, its powers would be limited to the action under the TRAI Act alone. As such, the jurisdiction of the CCI is not barred, but simply pushed to a later stage.

Accordingly, the CCI dismissed the appeal.

Click Here to access the order passed by the Supreme Court.

  1. Competition Commission of India v JCB India Limited & Others (CRA Nos 76 and 77 of 2019)

The Supreme Court allowed an appeal challenging the order of the High Court of Delhi (High Court) which restrained the DG from utilising evidence seized during investigation into an alleged abuse of dominant position by JCB India Limited (JCB). The order of the High Court had held that Chief Metropolitan Magistrate (Magistrate) had merely authorised the DG to search the premises of JCB and not specifically to seize any material during the search operation. Accordingly, the seizure of material by the DG in absence of explicit authorisation by the Magistrate was beyond the powers of the DG, and the DG was restrained from utilising any of the seized material. The CCI filed an appeal against this order before the Supreme Court. The Supreme Court observed that the provisions of the Companies Act, 2013 which enabled the DG to conduct investigation were designed to authorise the DG to conduct both, searches and seizures. It was further observed that unless a seizure was authorised, a mere search would not be sufficient for the purposes of investigation in terms of the Competition Act. Therefore, any interpretation imposing a restraint on seizure where the Magistrate had already granted a warrant for searches would be inappropriate. In view of the above, the Supreme Court held that the High Court should be circumspect when imposing restraints on investigative powers and the matter was remitted back to the High Court for determination of the other outstanding issues.

Click Here to access the order passed by the Supreme Court.

  1. Mahyco Monsanto Biotech (India) Private Limited and Another v Competition Commission of India and Others (CM Nos 47926 of 2018 and 47927 of 2018)

The High Court of Delhi (High Court) set aside a petition filed by Mahyco Monsanto Biotech (India) Private Limited (Mahyco Monsanto) where the decision of the CCI ordering an investigation was challenged. The CCI had directed the DG to investigate inter alia, the alleged abuse of dominant position by Mahyco Monsanto, Monsanto Incorporated USA, Maharashtra Hybrid Seeds Company and Monsanto Holdings Private Limited (collectively - the Monsanto Group) in the relevant market of "provision for Bt cotton technology in India". Further, the CCI also directed the DG to investigate persons who at the time of the alleged contravention were in-charge of and responsible for the conduct of the companies comprising the Monsanto Group.

The High Court decided predominantly on two issues, that is, whether directors and persons in-charge of a company could be investigated before the company had been found liable for contravention of the Competition Act; and whether vicarious liability (and penalties) on the persons in-charge and responsible for the conduct of a company could be imposed for entering into anti-competitive agreements and abuse of dominance.

On the first issue, the High Court held that the conduct of the directors and persons in-charge of a company could be investigated in parallel with the investigation of the conduct of the company, since two separate proceedings would be inefficacious and inexpedient. With regards to the second issue, the High Court observed that the penal provision of the Competition Act uses the words "persons" which includes the persons responsible for the company.  Further, the High Court relied upon another provision which states that the person in-charge and responsible for the conduct of the company, would be held liable for contravention of "any of the provisions of the Act" to hold that such persons could be held liable for engaging in anti-competitive conduct. Accordingly, the High Court set aside the petition.

Click Here to access the order passed by the Delhi High Court.

  1. In Re: Alleged Cartelisation in Flashlights Market in India (Suo Motu Case No 01 of 2017)

Eveready Industries India Limited (Eveready) had filed a leniency application stating that Eveready along with its competitors, Panasonic Energy India Co. Limited, Indo National Limited and Geep Industries (India) Private Limited had participated in a cartel facilitated by the Association of Indian Dry Cell Manufacturers. The cartel was established for the exchange of information pertaining to "the sale and production of flashlights" in India. However, the CCI closed the matter, observing that while the leniency application evidenced the exchange of price sensitive information between Eveready and its competitors, there was not enough evidence to suggest that the cartel was finally implemented by the members of the cartel. Further, the CCI did not find definitive evidence to show that there was any increase in the prices of flashlights due to the alleged cartel.

Khaitan & Co Competition/Antitrust Team represented Eveready Industries India Limited before the CCI.

Click Here to access the order passed by the CCI.

  1. Rico Auto Industries Limited and Others v GAIL (India) Limited (Case Nos 16 to 20 and 45 of 2016; 02, 59, 62 and 63 of 2017)

The CCI passed a common order to dispose of 10 (ten) sets of Information (Under Section 19 of the Competition Act, the CCI may initiate an inquiry into an alleged contravention upon the receipt of a complaint or 'Information'. In terms of the Competition Act, the person filing the Information is referred to as an 'Informant'.) filed against GAIL (India) Limited (GAIL) by buyers of liquified natural gas (Informants (Supra note 1)). The CCI exonerated GAIL from allegations that it had abused its position of dominance in the relevant market for "supply and distribution of natural gas to industrial consumers". The allegations broadly pertained to (i) the terms of the Long-Term Gas Supply Agreement (GSA) entered into between GAIL and the Informants, and (ii) the manner in which the GAIL had performed its obligations under the GSA.

With respect to the terms of the GSA, it was averred that the duration of 20 (twenty) years resulted in the foreclosure of the relevant market. The CCI held that the duration was justified to guarantee GAIL a steady stream of revenue, necessary to sustain the significant and continuous up-front investments made by sellers of energy. In any case, the CCI observed that the clause had not resulted in the denial of market access since competitors such as Indian Oil Corporation Limited and Bharat Petroleum Corporation Limited were active in the market. However, the CCI also directed GAIL to facilitate informed choices by apprising customers of all available alternatives.

Thereafter, the CCI assessed the "Take or Pay" liability on the Informant which is an obligation on buyers to pay for the contracted quantity of gas, irrespective of the actual offtake. The GSA required parties to make certain "nominations" to assist in the calculation of "Take or Pay" liability, however, neither party had made such nomination. The CCI held that when determining abuse arising out of a contract, the conduct of the party raising the concern was to be examined. Since neither GAIL nor the Informants had made the requisite nominations, no abuse could be attributed to GAIL. 

The CCI adopted a similar line of reasoning with respect to the remaining issues. For these reasons, the CCI held that no case of contravention of the Competition Act could be made against GAIL.

Khaitan & Co Competition/Antitrust Team represented GAIL (India) Limited before the CCI.

Click Here to access the order passed by the CCI.

  1. Velankani Electronics Private Limited v Intel Corporation (Case No 16 of 2018)

The CCI initiated an investigation against Intel Corporation (Intel) pursuant to allegations that Intel had abused its position of dominance in the market for "processors for servers". Velankani Electronics Private Limited (Velankani), a manufacturer of servers, stated that manufacturing of servers required assembling various components such as, processors, server-boards and chassis.

It was averred that for manufacturing servers, the processors of Intel were essential as they were the industry standard. In effect, there could be no marketable server unless the server-board and chassis of the Velankani were compatible with the processors of Intel. However, Intel had refused to provide Velankani with access to reference design files of their processor. This allegedly inhibited the ability of Velankani to design server-boards compatible with the processors of Intel.

In its prima facie assessment, the CCI found that the relevant market would be the market for "processors for servers in India". The CCI relied on a previous order (SYS Information Technologies Private Limited v. Intel Corporation and Others, Case No. 48 of 2011.) wherein it was prima facie found that Intel was dominant in the market for micro-processors. With respect to abuse, it was observed that the denial of access to reference files prima facie, limited and restricted the production of servers. Accordingly, the CCI directed the DG to further investigate the allegations against Intel.

Click Here to access the order passed by the CCI.

  1. All IndiaOnline Vendors Association v Flipkart India Private Limited and Another (Case No. 20 of 2018)

The CCI disposed of an Information (Supra note 1) which alleged that Flipkart India Private Limited (Flipkart India) and Flipkart Internet Private Limited (Flipkart Internet) had abused their position of dominance.

The allegations pertained to the sale of goods by Flipkart Internet at discounted rates. It was stated that the practice resulted in the denial of market access to individual sellers and amounted to the imposition of discriminatory or unfair pricing on goods. Separately, it was averred that Flipkart Internet had leveraged its dominance in the market for "services provided by online marketplaces for selling of goods in India" to enter into another market for "manufacture of products under private labels".

In its assessment, the CCI defined the relevant market as "services provided by online marketplaces for selling of goods in India" and found that Flipkart Internet was not dominant in the relevant market owing to the presence of several competing players in the market. The CCI also observed that marketplace-based e-commerce models were still in their nascent stage, therefore, intervention in such markets ought to be carefully crafted to avoid stifling innovation.

Click Here to access the order passed by the CCI.

  1. Northern TK Venture Pte Limited and Fortis Healthcare Limited (Combination Registration No. C-2018/09/601)

The CCI approved the acquisition of Fortis Healthcare Limited (FHL), a company which operates multi-specialty, super-specialty and diagnostic centers in India, by Northern TK Venture Pte Limited (NTK/Acquirer). NTK is an investment holding company and an indirect wholly-owned subsidiary of IHH Healthcare Berhad (IHH). NTK belongs to the IHH group which is a global provider of integrated healthcare services. IHH is present in India in major cities such as Bangalore, Chennai, Mumbai, Hyderabad and Kolkata through multi-specialty tertiary hospitals and feeder centres.

NTK had submitted that the hospitals operated and/or owned by FHL and itself, were active in the market for "private tertiary hospitals" and provided primary, secondary, tertiary and quaternary services. The CCI assessed market power on the basis of the number of hospitals, operational beds, and volume of procedures for secondary, tertiary and quaternary procedures. While for most overlapping markets the CCI observed that the parties would face significant competitive pressure from Apollo Hospitals, Narayana Health, Manipal Hospitals etc; with regard to the city of Kolkata, the CCI voiced certain concerns. 

The CCI assessed the impact of the joint venture, Apollo Gleneagles Hospital in Kolkata entered between a subsidiary of IHH, Gleneagles Development Pte. Limited (GDPL) and Apollo Hospitals. The CCI expressed concern that FHL, Apollo Hospitals and GDPL were competitors in the field of healthcare and that the Joint Venture (JV) could act as a platform to facilitate collusion. In order to alleviate the concerns of the CCI, NTK gave voluntary commitments which would ensure that the JV and the entity created post transaction would operate as "separate, independent and competitive businesses". These included ensuring no common directors were appointed by IHH or GDPL on the board of the JV or the entity created post transaction; no sharing of "commercially sensitive information"; and such other commitments to prevent information sharing.

The commitments were accepted by the CCI and the transaction stood approved.

The Khaitan & Co Competition/Antitrust Team represented Northern TK Venture Pte. Limited before the CCI.

Click Here to access the order passed by the CCI.

  1. Penalty imposed on Adani Transmission Limited for Gun-Jumping (Combination Registration No. C-2018/01/547)

The CCI passed a penalty order under the Competition Act against Adani Transmission Limited (Adani) in relation to the acquisition of Reliance Electric Generation and Supply Limited (Reliance) from Reliance Infrastructure Limited (Seller). 

The CCI observed that the Share Purchase Agreement (SPA) entered into between Adani and the Seller required Adani to advance loans to the Seller before the approval of the CCI. Further, the SPA provided that Adani could adjust the loan advanced against the consideration payable for the acquisition. The CCI observed that the loan was in the nature of advance consideration for the combination. Accordingly, the CCI found a contravention of the Competition Act and imposed a penalty of INR 1 million (approximately USD 14,000) on Adani.

Click Here to access the order passed by the CCI

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at legalalerts@khaitanco.com

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions