Welcome to the October 2024 edition of our Competition and Antitrust Laws Newsletter. In this month, notable enforcement orders/judgments have been passed by the Delhi High Court, Madras High Court, National Company Law Appellate Tribunal ("NCLAT") and Competition Commission of India ("CCI"). On the merger control front, the CCI has approved prominent combinations relating to acquisitions of investments of Future Enterprises Limited by Central Bank of India pursuant to a bid/resolution plan submitted under Insolvency and Bankruptcy regulations; and acquisition of shares and control of Aavas Financiers Limited by Aquilo House Pte. Ltd. concerning mandatory open offer, among other approvals.
For keeping our readers updated, in this edition we provide a quick snapshot of role of parties in appointment of agencies by CCI under newly introduced Regulation 54 of the Competition Commission of India (General) Regulations, 2024 ("New General Regulations"), followed by brief of orders/judgements passed by Delhi High Court, Madras High Court, NCLAT & CCI, and other upcoming events.
I. Role of parties in appointment of agencies by Competition Commission of India for effective implementation of orders passed by it
Regulation 54 of New General Regulations introduced in September 2024, empowers CCI to appoint agencies to oversee the implementation of orders passed by it. An agency under Regulation 54 may be appointed only if CCI opines that implementation of its orders passed under Section 31 (Order of approval of a Combination) or Section 48A (Order concerning Settlement) or Section 48B (Order concerning Commitment) or any other provisions of the Competition Act, 2002 ("Act") needs monitoring. The agencies appointed by the CCI are required to monitor the implementation of its orders, report non-compliance or non-implementation of the same, submit reports related to monitoring of the implementation and perform any other duty as directed by the CCI.
An independent professional body such as accountancy firm, management consultancy, chartered accountants, company secretaries or cost accountants may be appointed for the task by CCI, provided there exists no conflict of interest between the agency and parties to the proceedings. As per Sub-Regulation 6 of Regulation 54, the payment to an agency is to be made by the party who has approached the CCI for an approval of a combination, or who has proposed settlement or commitment under the applicable regulations, or by any other person as directed by the CCI. An agency may also be suspended or terminated by the CCI for the reasons recorded by it in writing and the same is barred from being challenged before any court of law.
II. Orders passed by High Courts
i. Delhi High Court disposes writ petition filed by Fight Against Corruption for completion of enquiry in a matter pending before Competition Commission of India.
Great Sands Consulting Private Limited Vs. Competition Commission of India & Ors. (W.P.(C) 14963/2024)
The Delhi High Court vide its order dated 24.10.2024 disposed of a petition filed by Fight Against Corruption (an NGO) for seeking mandamus against CCI for completion of enquiry pending in Case No. 12 of 2024. The CCI in its response submitted that it has passed an order in the matter and is seeking comments/replies from Delhi International Airports Limited, GMR Airports Limited and other opposite parties. It was further submitted by the CCI that the petitioner may now even inspect the documents and records of the case. In view of the submissions made by the CCI, Delhi High Court disposed of the petition and noted that the petition of the petitioner stands redressed and require no further orders.
ii. Amazon and Flipkart seller(s) approaches Madras High Court against arbitrary change of status from third party to opposite party in a matter before Competition Commission of India.
Great Sands Consulting Private Limited Vs. Competition Commission of India & Ors. (WP. 30248/2024)
The Madras High Court has granted an interim stay to the petitioner, namely, Great Sands Consulting Private Limited against order dated 28.08.2024 passed by CCI in Delhi Vyapar Mahasangh vs. Amazon Seller Services Private Limited (Case No. 40 of 2019). The petitioner in its petition had challenged the said order of CCI on the grounds that the status of the petitioner in the said matter has been arbitrarily changed from third party to opposite party.
The Madras High Court while granting the interim relief to the petitioner took note of the fact that similar writ petition(s) have also been filed by various other sellers of Amazon and Flipkart against the said order of the CCI before Karnataka High Court as well as Punjab and Haryana High Court.
III. Judgements passed by National Company Law Appellate Tribunal
iii. National Competition Law Appellate Tribunal dismisses appeal filed in bid-rigging & cartelization in tender process by SBI Infra Management Solutions Pvt. Ltd.
Amreesh Neon Private Limited. & Ors. Vs. Competition Commission of India & Ors. (Competition Appeal (AT) No. 30 of 2022)
The NCLAT vide its judgment dated 16.10.2024 dismissed appeal filed by Amreesh Neon Private Limited and its Managing Director against CCI order dated 03.02.2020 passed in Suo Motu Case No. 02 of 2020. The appellant(s) before NCLAT prayed for reduction in penalty imposed upon them by the CCI for being found guilty of bid rigging and cartelization in a tender process initiated by SBI Infra Management Solutions Pvt. Ltd. The appellant(s) challenged the penalties on the grounds that they were disproportionate in comparison to their role in the alleged bid-rigging and were erroneously computed on total turnover instead of relevant turnover.
The NCLAT while dismissing the appeal noted that the merits of the impugned order were already challenged before it as well as Hon'ble Supreme Court through multiple appeals which were dismissed by both the forums. With respect to erroneous computation of penalty upon total turnover, the NCLAT observed that there is no distinction in the main business and other business activities of the appellant(s) and that such artificial distinction cannot be accepted. The NCLAT also noted that CCI has already taken a lenient view while imposing the penalty and has only imposed a penalty of 1% of average of their relevant turnover for the preceding 3 financial years because most of the opposite parties are Micro, Small & Medium Enterprises ("MSMEs").
iv. National Competition Law Appellate Tribunal upholds Competition Commission of India order of dismissal of information against the Department of Expenditure and affiliated travel agencies.
In Re: Travel Agents Association of India vs. Competition Commission of India & Ors. (Competition App. (AT) No. 26 of 2020)
The NCLAT vide its judgment dated 25.10.2024, upheld CCI order dated 08.05.2020 in case No. 04 of 2020 whereby it dismissed information filed by the Travel Agents Association of India ("TAAI") against Department of Expenditure, Government of India ("DOE") for violation of Section 3(4) of the Act. TAAI alleged that DOE indulged in exclusionary conduct and foreclosed the market for private travel agents through its office memoranda that mandated the use of only two government affiliated travel agencies, namely, Balmer Lawrie & Co. Ltd. and Ashok Travels & Tours, for all official bookings. The CCI while closing the information under Section 26(2) of the Act held that DOE is not an 'enterprise' within the meaning of Section 2(h) of the Act as the decision of DOE under its office memoranda is not an economic activity but an administrative decision. It further held that office memoranda of DOE do not constitute an anti-competitive agreement. Aggrieved by the said order, TAAI filed an appeal before approved NCLAT challenging the same.
The NCLAT in its judgment noted that TAAI had raised same issues earlier in 2010 (Case No. 39 of 2010) which were dismissed by the CCI, and the order of dismissal was further challenged by TAAI before erstwhile Competition Appellate Tribunal ("COMPAT") (Appeal No. 21 of 2010), which was also dismissed. However, the order of COMPAT was not challenged before Hon'ble Supreme Court and the same attained finality. Based on these facts, NCLAT dismissed the appeal based on principles of res judicata and imposed a cost of Rs. 5 lakhs on TAAI.
IV. Orders Passed and Combinations Approved by the Competition Commission of India
i. Competition Commission of India closes information against IREL (India) Ltd.
In Re: Kalpit Sultania and IREL (India) Ltd. (Case No. 22 of 2021)
The CCI vide order dated 08.10.2024 closed an information filed against IREL (India) Ltd. ("IREL") for alleged abuse of dominance under Section 4 of the Act. The informant alleged that IREL has abused its dominant position by imposing unfair discriminatory prices of Sillimanite for domestic MSMEs as compared to foreign companies /multi-nationals and has arbitrarily fixed Silimanite supply quantities, forcing customers to accept the same. Basis the information filed by the informant, CCI passed a prima facie order and directed the Director General ("DG") to investigate the same. The DG returned its investigation report with an adverse finding against IREL.
The CCI in its order noted that IREL is an 'enterprise' in terms of Section 2(h) of the Act as it is performing non-sovereign functions of extraction and sale of Silimanite in India & abroad. Further, in terms of factors enumerated under Section 19(4) of the Act, CCI found IREL in dominant in the relevant market of "mining and supply of Beach Sand Sillimanite in India". With respect to allegation of unfair and excessive pricing, CCI noted that IREL increased the prices of Sillimanite due to justifiable factors. Regarding discriminatory pricing amongst customers, CCI noted that IREL granted discounts to its customers in lieu of commercial relations based on justifiable grounds of long-standing commercial relationship with them which mutually benefited the parties. Thus, provisions of Section4(2)(a)(ii) were not violated by IREL. With regards to allegations of supply of arbitrary quantities of Sillimanite by IREL, CCI held that quantity supplied by IREL to different categories of consumers of Sillimanite may be different for the reasons such as long-standing business relations, assured off-take quantity, past off-take etc. and therefore, may not be discriminatory. Thus, no case of contravention of Sections 4(2)(a)(i) and 4(2)(a)(ii) of the Act was found by the CCI.
ii. Combinations Approved by Competition Commission of India
I. CCI approved merger of Diliigent Power Private Limited (DPPL) into DB Power Limited, with DB Power Limited being the surviving entity. CCI also approved internal reorganization of Decore Thermal Power Private Limited (a sister concern of DPPL) pursuant to which it will buyback certain securities from its investors.
II. CCI approved acquisition of additional shareholding in Thoughtworks Holding, Inc. by Tasmania Midco LLC, with Nevado Investments Pte. Ltd. holding 10% equity in Thoughtworks Holdings, Inc. as a minority non-controlling passive investor. The said acquisition was structured as a merger under US laws.
III. CCI approved acquisition of shares and control of Aavas Financiers Limited by Aquilo House Pte. Ltd. pursuant to share purchase agreements executed amongst the parties and mandatory open offer in accordance with the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
IV. CCI approved acquisition of 31.52% of the equity share capital of Agilus Diagnostics Limited by Fortis Healthcare Limited.
V. CCI approved acquisition of 24.91% equity stake in Future Generali India Insurance Company Limited (FGIICL) and 25.18% equity stake in Future Generali India Life Insurance Company Limited (FGILICL) by Central Bank of India from Future Enterprise Limited. The said acquisitions have been notified to the CCI in view of Bid/Resolution plan submitted under regulation 29 & 36(a) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016
VI. CCI approved acquisition of – i) up to 48.96% shareholding of JM Financial Credit Solutions Limited (JMFCSL) by JM Financial Limited (JMFL) from INH Mauritius 1 (seller) by way of one or more tranches; and ii) acquisition of 71.79% shareholding of JM Financial Asset Reconstruction Company (JMFAARC) by JMFCSL from JMFL.
VII. CCI approved acquisition of Home and Personal Care business division of Patanjali Ayurved Limited by Patanjali Foods Limited.
VIII. CCI approved transaction likely to result in increase in shareholding of Bharti Airtel limited up to 50% or more in Indus Towers Limited.
IX. CCI approved acquisition of 100% shareholding of Bharat Serums and Vaccines Limited by Mankind Pharma Ltd.
V. Mark Your Calendar: Upcoming Events!
- 6th Annual BIICL/Linklaters Tech Antitrust Roundtable scheduled on 19th November 2024 (click here)
- Advanced EU Competition Law Conference scheduled on Nov 25, 2024, in Brussels (click here)
- The New Frontiers of Antitrust Conference scheduled on Nov 24, 2024, in Paris (click here)
- Pharma Competition Law Conference scheduled on Dec 3, 2024, in Brussels (click here)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
