India: Competition News Bulletin - February 6, 2016

Last Updated: 10 March 2016
Article by Vaish Associates Advocates



Competition Commission of India (CCI) closes case against General Insurance Public Sector Undertakings and their association for alleged cartelization

The CCI, by its order dated January 4, 2016, has closed a case alleging anti-competitive agreements between the four PSU general insurance companies and their association.

The Informant is the Association of Third Party Administrators (TPAs) engaged in ensuring that the administration of services in the health insurance market is efficient, consumer centric and serves the needs of India's growing healthcare infrastructure.

It was alleged that the General Insurance Public Sector Association (GIPSA), an informal association of the four PSU insurance companies, has been established and used to further the anti-competitive conduct of the four PSUs. The Informant alleged that despite being an ad-hoc body, the GIPSA issued expression of interest for setting up of a captive Health Insurance Third Party Administer (HITPA) joint-venture, thus demonstrating that GIPSA is indeed a platform for furthering the anti-competitive agreements among the PSU insurance companies.

The Informant supplied a circular issued by the Department of Financial Services (DFS) directing the Chief Managing Directors of the four PSU insurance companies not to obtain any standalone Group Health Insurance business from each other without obtaining express consent from the concerned CMD, to ensure that there is no competition amongst them. The Informant also supplied communication(s) showing compliance of the above said circular(s).

The DG investigation found that the decision of PSUs to have a captive TPA was meant to ensure increased efficiency in delivery of standards. HITPA shall have no exclusive rights of their business and hence would not foreclose the market or lead to Appreciable Adverse Effect on Competition (AAEC). Further, HITPA was not yet operational on the date of submission of DG Report. The DG also considered that the records of meetings supplied for alleging cartelization were incomplete and unsigned, and hence couldn't be considered genuine. As regards instructions issued by DFS, the DG found that the PSUs continued to compete with each other. The actual conduct of PSUs during the investigation showed no violation of provisions of Section 3(3) of the Act.

As regards the JV HITPA, the CCI considered that the mere formation of JV HITPA cannot be considered anti-competitive per se especially since the same was not functional at this nascent stage. The CCI was of the opinion that the formation of HITPA by way of a JV by the PSU insurance companies was a commercial decision aimed at combating the inefficiencies and deteriorated services provided by the existing TPAs. Even on analyzing the impact of the said JV i.e. HITPA in terms of the provisions contained in Section 19(3) of the Competition Act, 2002 (Act), it does not appear that HITPA would affect the market for TPAs in any appreciable adverse manner.

As regarding the alleged business-sharing agreement between the PSUs, the CCI noted that the evidence supplied by the Informant was not just incomplete but unsigned also. It did not even mention the name of the organization/ person/ authority who had purportedly issued the instructions/ guidelines.

Regarding the culpability of the association, the details furnished by the association and the minutes of meeting of its Governing Board did not indicate any discussion which attracted the provisions of Section 3 of the Act. The investigation did not find any anti-competitive arrangement among the four PSUs. The CCI was in agreement with these findings.

Regarding the alleged liability of DFS for issuing the purported circular, the CCI noted that the DFS is only functioning as an extension of the Government and acting on behalf of the President to monitor the overall performance and functioning of PSU insurance companies to achieve their objectives. Hence it does not qualify as an "enterprise" within the realms of Section 2(s) of the Act. However, the CCI did opine that DFS should refrain from issuing any such directions/guidelines to PSUs in the interest of protection of competition.

(Source: Order dated January 4, 2016. For full text see CCI website-

Competition Appellate Tribunal (COMPAT) directs re-consideration by CCI against movie producers/ distributors for alleged cartelisation in setting unfair standards in cinema exhibition

COMPAT, by its order dated December 8, 2015 reversed the order of CCI dated April 22, 2015 which closed a case without initiating investigation against the 7 movie producers/distributors engaged in the production/distribution of Hollywood movies.

The case was filed by K. Sera Sera Digital Cinema Pvt. Ltd alleging that the 7 opposite parties(OPs) compelled digital providers to use only DCI technology if the Indian digital service providers want to exhibit popular Hollywood films like "Fast and Furious 7" and "Avengers-Age of Ultron".

It was alleged that OPs are forcing equipments which are different from the ones used by K Sera Sera. The technology used by K Sera Sera and similar other service providers is generically called 'E-cinema'. It was alleged that the OPs are doing so with a view to force competition out so that their films can be exclusively projected using DCI technology and equipments made therefor. Thus their conduct amounts to cartelization, anticompetitive arrangement and suppression of competition in India. This also deprives 80% of the cinema halls in India of Hollywood films.

The OPs primarily argued that DCI compliant technology is essentially an open architecture technology prescribing high standards with a view to provide superior quality of performance for the viewer and improved efficiency of exhibition for the digital service provider. It provides open access and a much better viewing experience and though the equipment is expensive, the superior quality and more efficient projection compensates for the slightly higher capital cost.

COMPAT, while considering arguments, was of the opinion that there is no doubt that introducing efficiency in distribution of services through process of standardization is a desirable objective of the Act. However, it is a matter for consideration as to at what point forcing standards can lead to pushing out competition. High standards are not anti-competitive per se, but they should not be used to create anticompetitive conditions in the market or what is termed 'tyranny of standards' in trade literature. COMPAT considered that there are many instances where private standards have muted competition in many ways.

COMPAT ordered that the matter should be remitted to the CCI for reconsideration whether for directing investigation under Section 26(1) of the Act made out or not.

(Source: Order dated December 8, 2015. For full text see COMPAT website-

COMPAT quashes penalty for individual liability imposed on a member of Executive Committee of a pharmaceutical distributors' association

COMPAT vide its order dated December 7, 2015 set-aside the penalty of INR 47, 63,579/- imposed by CCI on Shri Swapan Kumar Karak (Director, Karak Pharmaceuticals) holding him accountable, as a member of the Executive Committee of Bengal Chemist and Druggist Association (BCDA), for the decision by BCDA to restrict discounts on medicines by the pharmaceutical retailers.

The COMPAT considered that Mr. Karak had categorically stated in its reply before the Director General (DG) that he had resigned from his positions within the Executive Committee of BCDA and that he had no knowledge about the decision taken by the Executive Committee for restraining the sale of drugs and medicines below MRP.

However, post the assertion made by Mr. Karak, the DG did not even try to find out the truth behind the claim of Mr. Karak. The DG did not make any effort in that direction. Not only this, DG solely relied upon the minutes of various meetings of the Executive Committee, in which the Mr. Karak's presence was shown without calling for the original record including the registers in which those participating in the meetings must have signed. CCI approved the DG's findings.

The COMPAT was of the view that there is no escape from the conclusion that the DG and the CCI committed serious error by holding the appellant liable for anti-competitive conduct/activity committed by the BCDA.

(Source: Order dated December 7, 2015. For full text see CCI website-

To read this Bulletin in full, please click here.

© 2016, Vaish Associates Advocates,
All rights reserved
Advocates, 1st & 11th Floors, Mohan Dev Building 13, Tolstoy Marg New Delhi-110001 (India).

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

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

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

Vaish Associates Advocates
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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