India: Competition Law

CCI ordered Investigation against REC Power Distribution Company Ltd. and the Rural Electrification Corporation Ltd. for Abuse of Dominant Position

XYZ ("Informant") filed information against REC Power Distribution Company Ltd. ("Opposite Party") alleging an abuse of dominant position in contravention of the provisions of Section 4 of the Competition Act, 2002 ("Competition Act"). The Opposite Party was a wholly owned subsidiary of Rural Electrification Corporation Ltd. ("REC") and was the nodal agency for the implementation of the Rajeev Gandhi Grameen Vidyutikaran Yojna ("RGGVY") scheme.

It was alleged that the Opposite Party had leveraged its association with the REC in order to secure orders by giving a verbal promise that it would be able to get the approval from REC as the head of RGGVY scheme of REC is its Chief Executive Officer ("CEO"). Accordingly, the Informant prayed that the Opposite Party be stopped from bidding a consultancy work of project funded by REC and to stop the alleged anti-competitive activity being promoted by REC and the Opposite Party.

The Competition Commission of India ("CCI") inter alia drew out two relevant markets for the determination of contravention of section 4 of the Competition Act. The first relevant market being the 'market for financing of rural electrification schemes' and the second relevant market being the 'market for providing consultancy services in power projects'. On the point of abuse of dominance it was inter alia noted that the act of leveraging ultimately excluded other power utilities from the market for providing consultancy services in power projects appeared to be violative of section 4(2)(e) of the Competition Act and resulted in exclusionary conduct amounting to denial of market access to other utilities who were capable of preparing DPR's, which contravened section 4(2)(c) of the Competition Act.

Due to the foregoing reasons, the CCI vide order dated January 13, 2015 opined that prima facie the conduct of the REC and the Opposite Party appeared to be anti-competitive and hence, merits investigation by the Director General under section 26(1) of the Competition Act.

CCI Ordered Investigation against DLF Universal Limited for Abusing its Dominant Position

Mr. Vijay Kapoor ("Informant") filed information against M/s DLF Universal Limited ("Opposite Party") alleging inter alia contravention of section 4 of the Competition Act in development and sale of residential units in Gurgaon as the Opposite Party imposed extremely harsh and one sided terms and conditions in the 'Agreement to Sell' ("Agreement").

The CCI observed that the relevant market was the provision of services for development and sale of residential units in Gurgaon and prima facie the Opposite Party appeared to be dominant in the same. Further, the CCI noted that the terms of the Agreement appeared one-sided and such abusive conduct appeared to contravene section 4 (2)(a)(i) of the Competition Act.

Due to the foregoing reasons, the CCI vide order dated February 04, 2015 opined that prima facie the Opposite Party abused its dominant position and hence, merits an investigation by the Director General under section 26(1) of the Competition Act.

CCI Closed Complaint against M/S Volkswagen Group Sales India Private Limited for Abuse of Dominance

M/s Bhasin Motors (India) Private Limited ("Informant") against M/s Volkswagen Group Sales India Private Limited ("Opposite Party") alleging inter alia contravention of provisions of section 4 of the Competition Act. The Informant was a company which dealt with the distribution of cars in the Delhi/NCR region while the Opposite Party was a company that manufactured and sold automotives. The said parties had entered into Dealer Agreement as well as 'Basic Agreement for Sales and Purchase of Volkswagen Products' ("Agreement").

It was inter alia alleged that the Opposite Party, by virtue of its dominant position in the market, had exploited the Informant by forcing it to sign a unilateral agreement which was unfair and one sided and has excluded OP from any obligation and liability thereunder.

The CCI vide order dated February 11, 2015 inter alia stated that the information does not disclose a competition concern. Furthermore, the market share of Opposite Party was very negligible in comparison to the other market players and hence, it was not a dominant player. Hence, due to the foregoing reasons the CCI ordered the information to be closed in terms of section 26(2) of the Competition Act.

CCI Closed Complaint against M/S Lifestyle International Private Ltd. for Abuse of Dominance

Mr. Kamble Sayabanna Kallappa ("Informant") filed information against M/s Lifestyle International Private Ltd. ("Opposite Party") alleging, inter alia, contravention of the provisions of section 4 of the Competition Act. The informant had alleged that the Opposite Party had alleged its dominant position by charging an additional amount of INR 5 for plastic carry bags.

The CCI observed that the impugned practice carried out by the Opposite Party was in accordance with the provisions of Plastic Waste (Management & Handling) Rules, 2011, which was notified by the MEF vide notification dated February 04, 2011. The CCI vide order dated March 18, 2015 opined that no prima facie case was made out against the Opposite Party for contravention of the provisions of section 4 of the Competition Act and the information was ordered to be closed under section 26(2) of the Competition Act.

CCI Closed Complaint against M/S Flipkart India Private Limited and Others for Abuse of Dominance and Anti-Competitive Practices

Mr. Mohit Manglani ("Informant") filed information against M/s Flipkart India Private Limited ("Opposite Party No. 1"), M/s Jasper Infotech Private Limited ("Opposite Party No. 2"), M/s Xerion Retail Private Limited ("Opposite Party No. 3"), M/s Amazon Seller Services Private Limited ("Opposite Party No. 4"), M/s Vector E-commerce Private Limited ("Opposite Party No. 5") and other e-commerce/portal companies (collectively hereinafter, "Opposite Parties") for their alleged contravention of the provisions of section 3 and section 4 of the Competition Act. The Informant had alleged that Opposite Parties had been indulging in anti-competitive practices in the nature of 'exclusive agreements' with sellers of goods/services which contravened section 3(1) read with section 3(4) of the Competition Act and also alleged violation of sections 4(a) (i), 4(b) (i) and 4(b) (ii) of the Competition Act leading to appreciable adverse effect on competition.

The CCI inter alia observed that although there were agreements between the manufacturer and the Opposite Parties, the same did not satisfy the requisites of section 19(3) of the Competition Act in order to establish appreciable adverse effect on competition. With regard to the question of dominance, the CCI noted that irrespective of whether it considered e-portal market as a separate relevant product market or as a sub-segment of the market for distribution, none of the Opposite Parties were seen to be individually dominant.

In the light of the foregoing reasons, the CCI vide order dated April 23, 2015 held that prima facie no case of contravention of the provisions of either section 3 or section 4 of the Competition Act is made out against the Opposite Parties and hence, ordered the closure of matter under section 26(2) of the Competition Act.

CCI holds DLF Gurgaon Home Developers Private Limited liable for Abuse of Dominance

Mr. Pankaj Aggarwal, Mr. Sachin Aggarwal, Mr. Anil Kumar ("Informants") filed information against DLF Gurgaon Home Developers Private Limited ("Opposite Party") under separate cases alleging, inter alia, contravention of the provisions of Section 4 of the Act. It was alleged that the Opposite Party had imposed unfair and onerous terms and conditions in the Buyers Agreement ("Agreement"). The Informants prayed before the CCI to initiate an inquiry into the alleged conduct of the Opposite Party for abuse of dominant position in contravention of section 4(2)(a)(i) of the Competition Act.

The CCI stated that the activity of constructing apartments intended for sale to the potential consumers after developing the land came within the ambit of a 'service' for the purpose of the Act. The Director General ("DG") had delineated the relevant product market in three different ways in three different cases. However, the CCI opined the relevant market to be the market for the 'provision of services for development/sale of residential apartments in Gurgaon'. It was also stated that the terms and conditions imposed through the Agreement were abusive being unfair within the meaning of Section 4(2)(a)(i) of the Competition Act. The CCI in order to deduce dominance relied on the Belaire Owners‟ Association vs DLF Limited, HUDA & Ors. (Case No. 19 of 2010) ("Belaire's Case") case as its facts squarely applied to the instant case.

Accordingly, CCI vide order dated May 12, 2015, under section 27(a) of the Competition Act directed Opposite Party and its group companies operating in the relevant market to cease and desist from indulging in the impugned anti-competitive practices. The CCI also observed that since a penalty of INR 6.3 billion had already been imposed on the Opposite Party in the Belaire's Case for the same time period to which contravention in the present cases belong, no financial penalty under section 27 of the Competition Act was required to be imposed.

CCI Imposes Penalty on M/s GlaxoSmithKline Pharmaceutical Limited, Mumbai and M/s Sanofi, Mumbai for Abuse of Dominance

M/s Bio-Med Private Limited ("Informant") filed information against Union of India through Deputy Assistant Director General (Stores), Medical Store Depot ("DADG"), Ministry of Health and Family Welfare, Government of India, New Delhi ("OP-1"); M/s GlaxoSmithKline Pharmaceutical Limited, Mumbai ("OP-2"); and M/s Sanofi, Mumbai ("OP-3"); alleging, inter alia, contravention of the provisions of sections 3 and 4 of the Competition Act. The Informant alleged that OP-1 had abused its dominant position by unilaterally introducing and modifying the turnover conditions without any reasonable rationale and explanation. It was also alleged that OP-2 and OP-3 had cartelized through bid rotations and geographical allocations from the period 2002 to 2012. The Informant had prayed, inter alia, for issuance of a direction to the DG to investigate into the alleged abuse of dominant position by OP-1; to direct OP-1 to remove the restrictive conditions in the tenders; to investigate the marketing designs of OP-2 and OP-3 from 2002 to 2012 and to hold them guilty of cartelization in the market.

The CCI cumulatively on the findings of the DG as well as other instances opined that OP-2 and OP-3 had acted collusively which violated section 3(3)(d) read with Section 3(1) of the Competition Act. Accordingly, the CCI vide order dated June 04, 2015 under section 27(b) of the Competition Act imposed penalty on OP-2 and OP-3 at the rate of 3% of their turnover which amounted to INR 604.890 million and Rs.30.434 Million respectively. The CCI also directed OP-2 and OP-3 to cease and deist from indulging in the impugned anti-competitive practices.

COMPAT sets aside the order of the CCI under Section 43 against All India Organization of Chemists and Druggists

All India Organization of Chemists and Druggists ("AIOCD") filed an Appeal before the The Competition Appellate Tribunal ("COMPAT") against the penalty of INR 10 million imposed by the CCI for non-furnishing of information to the DG during Investigation under Section 43 of the Competition Act in Case No. 20 of 2011. The COMPAT vide its order dated April 27, 2015 had partly allowed the said Appeal and held that the order passed by the CCI violates one of the important facets of the Principal of Natural Justice – a person who hears must decide the case. It was also held that the penalty imposed by the CCI under Section 43 of the Competition Act became inoperative from the date of submission of the report by the DG; the CCI committed serious error by not rectifying the mistake and directed that the AIOCD shall be entitled to get refund of penalty imposed in excess of what was payable till the date of submission of the report by the DG.

Since the establishment of COMPAT in May 2009, for the first time it has upheld that one who hears must decide and this may have wide ramifications on the other pending matters involving similar issue.

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