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In a recent order, the Competition Commission of India
(CCI) has granted Panasonic Energy India Co. Ltd.
("PanasonicIndia") and
its office bearers, a 100% penalty reduction under the leniency
regime provided by the Competition Act, 2002
(Act).1 This is the second time
Panasonic India has been granted full immunity under the leniency
regime in India.
Background
The CCI initiated an investigation on the basis of a leniency
application filed by Panasonic Corporation, Japan
(Panasonic Japan) on behalf of itself, Panasonic
India and their respective office bearers and employees.
The applicant disclosed that there existed a bilateral ancillary
cartel between Panasonic India and Geep Industries (India) Pvt.
Ltd. (Geep) from 2013 to late 2015/early 2016,
where Panasonic India contract manufactured zinc-carbon dry-cell
batteries that were sold to Geep on an institutional basis.
Panasonic India was already part of a primary cartel with Eveready
Industries India Ltd. and Indo National Limited wherein market
prices of zinc-carbon dry-cell batteries were
coordinated.2 Being a member of this cartel, Panasonic
India would disclose pricing information to Geep and use it as
leverage to negotiate and increase the prices of the batteries
sold.
Further, it was also disclosed that Panasonic India and Geep
agreed on the market price of the batteries so as to maintain price
parity. Additionally, they used to monitor the market operating
price of each other as well as other manufacturers and keep each
other informed in case of any discrepancy.
Director General's (DG) Investigation
After examining the conduct of Panasonic India and Geep, the DG
concluded that there was sufficient evidence in the form of e-mails
and the terms and conditions of the product supply agreement, that
the parties had exchanged commercially sensitive information in
order to maintain price parity with respect to the sale of dry-cell
batteries.
Anti-Competitive Conduct & Penalty
The CCI upheld the DG's findings and held that the parties
were involved in price-fixing in violation of Section 3 of the Act.
It rejected the argument that Geep was compelled by Panasonic India
to maintain such prices. Based on a reading of the
'Guidelines of European Union on applicability of Article
101 of TFEU to Horizontal Co-operation Agreements, 2010'
(specifically, at paragraph 62), it was held that even if the
disclosure was unilateral on the part of Panasonic India, and Geep
was a recipient of pricing information, such evidence was not
sufficient for Geep to escape liability. The CCI reasoned that
since Geep chose to willingly enter into the agreement with
complete knowledge about the primary cartel and continued
coordinating the prices in line with the members of the primary
cartel, it would be considered to be an active participant of the
ancillary cartel with Panasonic India.
The CCI imposed a penalty on Panasonic India at 1.5 times the
profit for each year of continuance of the cartel. The CCI
considered the small size of Geep and consequently imposed a
penalty at only 4% of its turnover for the period of contravention.
The officers of Panasonic India and Geep who were in charge of the
affairs of their respective companies were penalised at 10% of
their average income for the past three financial years.
Grant of Leniency
The CCI noted that the leniency application filed by Panasonic
Japan made true and vital disclosures, which enabled the CCI to
form a prima facie opinion regarding the existence of the
cartel. Further, the CCI noted that Panasonic India provided
crucial evidence regarding the modus operandi of the
cartel and extended full and continuous cooperation. Taking into
account all these factors, the CCI granted a 100% reduction in
penalty imposed on Panasonic India and its directors, officers and
employees.
Footnotes
[1] Order in Suo Motu Case No. 2 of 2017 dated 30
August 2018.
[2] Suo Motu Case No. 2 of 2016.
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