India: Competition Law Newsletter Q3

Last Updated: 9 December 2016
Article by HSA Advocates

I. GLOSSARY OF TERMS

AAEC

Appreciable Adverse Effect on Competition

ACCC

Australian Competition and Consumer Commission

Act

Competition Act, 2002

Anr

Another

AOD

Abuse of Dominance

CCI

Competition Commission of India

CIL/Commission

Coal India Limited

CMA

Cement Manufacturers Association

COMPAT

Competition Appellate Tribunal

DG

Director General

HSCC

Hospital Services Consultancy Corporation India Limited

IMFL

Indian Made Foreign Liquor

INR

Indian Rupee

Jt. DG

Joint Director General

Ltd.

Limited

NOC

No Objection Certificate

OP

Opposite Party

Ors.

Others

(P)/Pvt.

Private

USD

United States Dollar

u/s

Under Section

Vs.

Versus

II. Investigations initiated under Section 26 (1) of the Act

1. CCI initiates investigation against exclusive wholesale licensee of alcoholic beverages in Uttarakhand

International Spirits and Wines Association of India Vs. Uttarakhand Agricultural Produce Marketing Board & Others

CCI has initiated an investigation against Uttarakhand Agricultural Produce Marketing Board & Others (OP) on allegations of resorting to exclusionary practices against certain Indian manufactured foreign liquor (IMFL) brands and trying to restrict and manipulate consumer preferences w.r.t. IMFL brands. Informant has alleged that the OPs who are primarily concerned with distribution and retail sale of IMFL, have abused their dominant position by not procuring IMFL brands in accordance with consumer demand and imposing onerous conditions in agreements with IMFL manufacturers. The Informant has pointed out [in their submission/information with the CCI] that OPs are placing orders with alcoholic beverage manufacturers for supply of IMFL in an arbitrary and discriminatory manner without any nexus to consumer demand. It is further alleged that OPs are discriminating against certain IMFL alcoholic beverage manufacturers despite demonstrably high demand for their brands, leading to an adverse effect on competition since it manipulates and distorts consumer choice. CCI on examining the materials on record and submissions of the Informant, has taken a prima facie view that the conduct of OPs has limited and restricted production of IMFL and resulted in denial of market access contravening Section 4 of the Competition Act, and, thus, directed the DG to investigate the matter.

2. CCI initiates investigation against a leading real estate company

a) Shri Vivek Chandra Vs. Jaiprakash Associates Limited

Jaiprakash Associates Limited (JAL) is a leading national real estate company and is constructing a multi-storied project named KUBE, Jaypee Greens in Noida. The Informant had booked an apartment with JAL in 2011 and has paid the entire sale consideration of the booked apartment to JAL, but has not yet received possession of the apartment. Informant wanted to sell his allotted flat to a third party and requested JAL to grant him NOC. Informant has alleged that JAL has imposed unfair/discriminatory conditions in the NOC granted to him whereby JAL is trying to avoid any liability for delay in delivering possession of the apartment. Informant has invoked Section 4 of the Competition Act alleging abuse of dominance by JAL. CCI has observed that such conditions imposition by JAL in the NOC appears to be a unilateral imposition affecting original delivery schedule and saleability of the apartment in question, prima facie contravening Section 4 of the Act. CCI has directed the DG to initiate an investigation in the matter.

b) Shri Dharam Vir and Shri Aditya Umang Vir Vs. Jaiprakash Associates Limited

The Informants had jointly applied for an apartment at 'Crescent Court' at Jaypee Greens, which is a project of JAL and the possession of the flat was to be delivered by December 8, 2009. It is stated in the information that the sale consideration of the flat was revised in August 2008 and 95% of the total revised consideration was demanded by the OP in advance. The Informants have specified that in 2013 they were offered to take possession of the flat, however, they found that the flat was far from completion and it continued till April 2014. It is alleged that certain clauses in the allotment agreement are unfair, one-sided and do not contain a proportionate liability on JAL for breach in discharge of its obligations. CCI has directed the DG to investigate the matter.

[HSA Note: There have been a large number of cases before the CCI complaining of unfair terms imposed by real estate developers. It is relevant to highlight here that Section 4 of the Competition Act is applicable only in cases where the concerned enterprise enjoys a dominant position in the particular geographical and product market related to the complaint. However, it may be observed that with reference to deficiency of services in real estate sector, the domain usually lies with the consumer courts and not with CCI. Unlike some other jurisdictions e.g. Australia, the scope of the consumer courts in India is distinct and different rom CCI. The Government of India has also passed the Real Estate (Regulation and Development) Act, 2016 Act wherein real estate regulators would be constituted to deal with such complaints.]

3. CCI initiates investigation against one of the world's leading producers of medical diagnostic systems

M/s House of Diagnostics LLP Vs. M/s Esaote S.p.A & Others

Informant runs three diagnostic centers in Delhi and Faridabad. Esaote is the first and only company to have developed a dedicated standing/tilting MRI machine. Esaote has its subsidiary in India and together, they hold the patent and know-how for the said technology. Informant purchased three dedicated MRI scanners manufactured by Esaote for a total consideration of Rs. 6,15,00,000/-, which included installation and commissioning charges. It is alleged that Esaote has given the exclusive right for servicing the machines and providing after-sales support services to its subsidiary and has created monopoly in providing services for upkeep of machines and consumers are being compelled to spend huge amount for spares and services. The Informant states that the price for the technology is already built into the price of the machine and the same cannot be re-charged in the name of supply of spares. It is also alleged that OPs are exploiting and extorting huge sum of money for annual contracts and demanding payment for services and supply of spares.

It is further stated that after selling the machines to the Informant, Esaote has entered into an arrangement with M/s Star Imaging and Path Labs (P) Ltd (another diagnostic center in New Delhi) to supply the same machines with 'free of cost' and 'free of maintenance cost' which is anti-competitive. It is averred that after selling the machines to the Informant for full price, Esaote entered into the same market through M/s Star Imaging and Path Labs (P) Ltd., as a competitor and it has made it difficult for the Informant to compete with OPs as they can provide the same services to the consumers at lower prices. CCI has directed the DG to investigate contravention of Section 4 of the Act in the present case.

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