India: Competition News Bulletin - August 2017

Last Updated: 10 August 2017
Article by Vaish Associates Advocates



CCI finds Container Trailer Owners Coordination Commission and its four participating associations guilty of anticompetitive conduct

The Competition Commission of India ("CCI") vide dated 01.08.2017 has found Container Trailer Owners Coordination Committee ('Committee') and its four participating associations, namely Cochin Container Carrier Owners Welfare Association, Vallarpadam Trailer Owners Association, Kerala Container Carrier Owners Association and Island Container Carrier Owners Association (collectively 'OPs') guilty of anti-competitive conduct and has directed the erring OPs to desist from indulging in anti-competitive conduct in the future.

Cochin Port Trust in a reference made to the CCI had primarily alleged that the imposition of a 'Turn System' by the Committee from January, 2014 till September, 2014 led to the unilateral fixation of prices. It was alleged that during the Turn System, the users and container trailers were obliged to book services only through this centrally controlled system and that the Committee was restraining outside transporters from lifting the containers which was impeding the ability of the users to hire trailers of their choice. Reliance in this regard was placed on the circular dated January 13, 2014 which was issued by OP-1 to all the members of the transporters' association. On finding a prima facie case, the CCI directed investigation by the Director General ("DG").

The DG upon investigation found that the 'Turn System' imposed by the OPs not only unilaterally fixed the prices for coastal container services, but also led to limiting and controlling of such services at the Informant port in contravention of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Competition Act ('Act').

During the inquiry CCI noted that the OPs had not denied the existence of "Turn System" And rather it was sought to be justified on the basis that Firstly, it was not coercive or mandatory in nature. However, the CCI rejected the arguments holding that a mutually agreed upon collusive agreement is as much a contravention, if not more, as a coercive diktat imposed by a trade association.

Secondly, the OPs stated that the prevailing conditions during the period such as (i) under-quotation by certain container trailer owners. (ii) delay in payment by users of the container trailer transport services justified the imposition of the Turn System.

The CCI held that the first issue i.e. under quotation by certain container trailer owners is rather an outcome of a competitive market and that the said justification is rather antithetic to the basic principles of a competitive market. The second issue/justification given by the OPs that some of the users/consumers were delaying payments to the container trailer transporters and thus, to ensure timely payments, Turn System was adopted was also rejected being insufficient to justify the solution devised by the OPs. It was held that fixing prices under the newly introduced Turn System to ensure timely payment of transportation charges was, to say the least, an excessively restrictive remedy to meet the objective stated by the OPs.

Accordingly, the OPs were found to have indulged in price fixing in terms of Section 3(3)(a) read with Section 3(1) of the Act.

With regard to the allegation of limiting and controlling the services in contravention of Section 3(3)(b) of the Act, it was found that the total number of container trailers to which the users had access to was 900 (approx.) out of which 800 were owned by the OPs. However, the CCI noted that there was insufficient evidence to show that the remaining 100 trailers were denied an opportunity to operate in the Informant port. Further, there was no evidence to suggest that membership was denied to any of the transport operator or that the non-members were restricted to provide services to the users willing to avail the services of the independent trailers. Thus, the CCI noted that there was insufficient evidence to hold a contravention of Section 3(3)(b) read with Section 3(1) of the Act.

With regard to the imposition of penalty, the CCI was of the view that certain mitigating circumstances existed in favour of OPs in the present case namely that the Turn System, was in operation for a very limited time period, i.e. from January 2014 to September 2014 and the Turn System was discontinued even before the investigation was ordered in this case. Therefore, the CCI did not impose any penalty on the OPs and merely issued a direction to OPs to cease and desist from indulging in such anti-competitive conduct in future.

(Source: CCI decision dated August 1, 2017; for full text see CCI website)

CCI penalizes Hyundai for resale price maintenance and tie-in

The CCI vide its order dated June 14, 2017 imposed a penalty of INR 87 Crore (Rupees Eighty Seven Crores) on Hyundai Motor India Limited ('HMIL') for contravention of Section 3(4) read with Section 3(1) of the Act.

The Information before the CCI was filed by Fx Enterprise Solutions India Pvt. Ltd and St. Antony's Cars Pvt. Ltd., both dealers of HMIL in Case No. 36 of 2014 and Case No. 82 of 2014 respectively. It was inter alia alleged that the HMIL enters into exclusive dealership arrangements with its dealers and that HMIL also imposes a "Discount Control Mechanism". It was further alleged that HMIL has control over the sources of supply for the dealer's products and ties the purchase of desired cars to the sale of high-priced and unwanted cars to its dealers and that HMIL designates sources of supply for complementary goods for dealers as well which constitute a "tie-in" arrangement within the meaning of Section 3(3) of the Act. The case was referred by CCI to the DG for detailed investigation after CCI found a prima facie case for inquiry.

During the investigation, the DG identified 3 segments of automobile market, viz. : (a) the primary market consisting of manufacturing and sale of passenger cars, (b) the secondary market or aftermarket for each brand of spare parts and (c) an aftermarket for each brand of repair services and defined it as "after sales services of Hyundai brand of cars" . The DG found that HMIL was dominant with 100% market share in the aftermarket for after sales services of Hyundai brand of cars. DG then identified the following three types of anti-competitive vertical agreements. The findings of DG on each and the decision of CCI thereupon are explained below:

i) Exclusive Supply Agreement and Refusal to Deal:

DG findings - DG found that that Clause 5(iii) of the Dealership Agreement providing for permission to be obtained from HMIL before investing in new business amounted to an 'exclusive supply arrangement" in contravention of section 3(4)(b) and also as "refusal to deal' in contravention of section 3(4)(d) of the Act.

CCI decision – CCI held that the clause 5(iii) of the Dealership Agreement does not result in imposition of de facto exclusivity since HMIL does not, in practice, refuse such permission to its dealers to operate competing dealerships or other businesses. It was found that neither of the informants in both the cases ever asked for such a permission under this clause. Moreover, HMIL submitted a list of over 100 Hyundai dealerships that operate dealerships of competing brands. Hence, it was concluded that HMIL does not impose an exclusive supply obligation or refusal to deal on its dealers. It was held that Clause 5(iii) of the Agreement did not mandate exclusivity but only required the prior permission of the OP in order for dealers to operate competing dealerships and therefore it does not contravene section 3(4)(b) or section 3(4)(d) of the Act.

ii) Resale Price Maintenance [Section 3(4)(e)]

DG findings – DG found that HMIL has established and admitted "Discount Control Mechanism" by which the maximum discount which a dealer can offer to its end customers is maintained. DG found that HMIL itself maintains certain scheme through which various discounts are offered to the customers such as Diwali discounts or schemes for teachers. It was found that the maximum discount which can be offered by a dealer under the schemes launched by HMIL itself was also fixed by HMIL. Further during investigation, HMIL also admitted to have engage various mystery shopping agencies for policing its dealers and monitoring the abovementioned arrangements and where a dealer was found to be debiting from the discount control mechanism, HMIL imposes a penalty per violation of INR 2.0 lakhs upto a maximum of INR 80 Lakhs for the 6th violations. These penalties were to be deposited by the violating dealers in the name of its advertising agency (VIBGYOR). DG, therefore, found that through its discount control mechanism, HMIL maintained the resale price of Hyundai cars and these arrangements perpetuated the OP restricting intra-brand competition amongst Hyundai Dealers. This does not result in accrual of any consumer benefits and at the same time impairs the ability of dealers to compete in price competition. Therefore, DG concluded that HMIL contravene section 3(4)(e) of the Act for resale price maintenance.

CCI decision – CCI agreeing with the findings to the DG held that such arrangements resulted in denial of due benefits to the consumers as they were made to pay high prices. Further, they were not resulting into any improvements in production or distribution of goods or provision of services. The arrangements perpetuated by HMIL resulted in creation of barriers to new entrants in the market and restricted the ability of the dealers toengage in intra-brand price competition. Accordingly, the CCI held that HMIL has imposed an arrangement that results in Resale Price Maintenance, which includes monitoring of the maximum permissible discount level through a "Discount Control Mechanism" and a penalty punishment mechanism upon non-compliance of the discount scheme. It was accordingly held that HMIL contravened the provisions of section 3(4)(e) read with section 3(1) of the Act.

iii) Tie-in arrangement [Section 3(4)(a)]

DG findings – DG found that HMIL tied the sale of its cars to its dealers with the purchase of (a) CNG kits, (b) Lubricants and Oils, and (c) Car Insurance which result in "Tie-in" arrangement in violation of section 3(4) (a) read with section 3(1) of the Act.

Regarding (a)-DG concluded that dealers of HMIL and its customers are coerced in to purchasing CNG kits from its nominated CEV Engineering Pvt Ltd. ("CEV"). Dealers found selling Hyundai cars which are not fitted with CEV provided CNG kits were penalized and customers not obtaining a CNG kit from CEV were not provided with a warranty. Such an arrangement falls within the definition of "tie-in" arrangement and violated section 3(4) (a) of the Act.

Regarding (b)- DG found that HMIL has designated vendors for engines of its vehicles and mandates its dealers to purchase engine oil only from 2 designated vendors i.e. Indian Oil Corporation Limited (IOCL) and Shell Oil Company (Shell) and it recommended engine oil; of certain specification to be only used for its cars as "Hyundai genuine oil". DG found that this practice followed by HMIL to get lubricants supplied by IOCL and Shell only and that too at a pre fixed price resulted in price discrimination which did not accrue any benefit to the dealers as well as to the customers and that this practice was causing hindrance in the improvement of production or distribution of goods and provision of services in relation to supply and use of lubricants in the cars particularly, when other oil companies are also manufacturing and marketing same grade of lubricants. Such an arrangement falls within the definition of "tie-in" arrangement and violated section 3(4)(a) of the Act.

Regarding (c)- DG found that HMIL has entered into memorandum of understanding with an insurance broker, ABIBL, which in turn has an agreement with 6 insurance companies namely ICICI Lombard, HDFC Ergo, New India, Future Generali, Bharti Axa and Bajaj Allianz for selling insurance policies and restricted its dealers by issuing bulletins and circulars to offer insurance services of only these 6 selected companies to its customers. DG found that this resulted in the dealers and the end consumers getting "locked in" with the OP for fear of termination of agency. Such an arrangement falls within the definition of "tie-in" arrangement and violated section 3(4)(a) of the Act.

DG however, did not find any contravention of tie-in with respect to the allegation of selling non-premium segment cars with premium segment cars.

CCI decision - Regarding (a)- CCI did not agree with the DG findings and held that HMIL may have a legitimate interest in ensuring that alternative brands of CNG kits are not used as the OP would be bearing the cost of warranty. Accordingly, it was held that cancellation of warranty upon use of non- CEV CNG kits does not as a general rule amounted to contravention of section 3(4) (a) read with section 3(1) of the Act.

Regarding (b) - CCI agreed with the finding of the DG and held that the practice followed by the OP resulted in to creation of entry barriers for new entrants in the market with regard to the supply and marketing of lubricants for use in the cars manufactured by HMIL. Such arrangement are also against consumer welfare as the consumer are made to comparably a higher prices and are also denied freedom to make fair choices. Accordingly, it was held that this practice of HMIL mandating its dealers to use a particular brands of oil / lubricants and penalizing the dealers where non-recommended oils are used amounted to "tie-in" arrangement in contravention of section 3(4)(a) read with section 3(1) of the Act.

Regarding (c) –CCI did not agree with the DG findings as it noted that there was no clause in the dealership agreement that dictated that the informant could take up dealership only on the condition of that the deal with only the list of empaneled insurance companies. Further, there was no record to show that any dealership has been cancelled only because the dealer failed to get the customers to take up insurance of the listed companies only. According to CCI, mere recommendation that dealers consider / suggest the insurance companies partnered with OP does not amount to tie-in arrangement and held that this practice did not amount to contravention of section 3(4) (a) read with section 3(1) of the Act.

Further, with to the allegation of selling non-premium segment cars with premium segment cars, CCI agreed with DG findings.

The CCI while imposing penalty followed the decision of the Hon'ble Supreme Court in the Excel Corp case and therefore penalty was imposed on the "relevant turnover". Accordingly, a penalty of 0.3% of the "Relevant Turnover" was imposed on HMIL amounting to INR 87 Crores.

(Source: CCI decision dated June 14, 2017; for full text see CCI website)

To read this Newsletter 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
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.