In a recent order, the Competition Commission of India (CCI) has granted Panasonic Energy India Co. Ltd. ("Panasonic India") 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.
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.
 Order in Suo Motu Case No. 2 of 2017 dated 30 August 2018.
 Suo Motu Case No. 2 of 2016.
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