The last month of 2024 witnessed quite a few developments on the anti-trust front in India. The Hon'ble Supreme Court of India has accorded relief to the Competition Commission of India ("CCI") against multiple writ petitions filed before various High Courts of India in an ongoing anti-trust proceeding involving Amazon and Flipkart before CCI. The National Company Law Appellate Tribunal ("NCLAT") upheld CCI's penalty order against Ghaziabad Development Authority in relation to its housing scheme for the Economically Weaker Sections. Additionally, the CCI has passed a cease-and-desist order against Table Tennis Federation of India & its affiliated bodies and has closed four other anti-trust complaints filed before it. On the Merger Control front, the CCI has granted its first ever approval to a combination notified under the Deal Value Threshold ("DVT") criteria, among other approvals.
To keep our readers updated on the Indian Competition Law, in this edition we provide a quick snapshot of regulation of exclusive agreements/arrangements under Section 3(4) of the Competition Act, 2002 followed by a brief summary of orders/judgments passed by Hon'ble Supreme Court, NCLAT, Anti-trust orders passed and Combinations approved by the CCI, as well as other upcoming events.
I. Exclusive Agreements/Arrangements Under Section 3(4) of the Competition Act, 2002
Section 3(4) of the Competition Act, 2002 ("Competition Act") prohibits vertical agreements entered between enterprises / persons that causes or like to cause appreciable adverse effect on competition in India ("AAEC"). In context thereof, clause (b) and (c) of Section 3(4) explicitly prohibits 'exclusive dealing agreement(s)' and 'exclusive distribution agreement(s)', respectively.
What are exclusive dealing agreements?
The definition of 'exclusive dealing agreement' is provided at Explanation (b) to Section 3(4) of the Competition Act and includes any agreement that restricts in any manner the purchaser or seller, in the course of its trade, from acquiring or selling or otherwise dealing in any goods or services other than those of the seller or the purchaser or any other person. The said definition was amended in 2023 to expressly cover the imposition of exclusivity from buyer's side as well.
What are exclusive distribution agreements?
The definition of 'exclusive distribution agreement' is provided at Explanation (c) to Section 3(4) of the Competition Act and includes any agreement to limit, restrict, or withhold the output or supply of any goods or services or allocation of any area or market for the disposal or sale of the goods or service.
Are exclusive dealing agreements and exclusive distribution agreements per se illegal in India?
The exclusive dealing agreements and exclusive distribution agreements are not considered per se illegal and are required to be tested under the rule of reason. In terms of Section 3(4) of the Competition Act, only those vertical agreements are prohibited which causes or are likely to cause AAEC in terms of factors enumerated under Section 19(3) of the Competition Act, which inter alia, includes – creation of barriers to new entrants in the market; driving existing competitors out of the market; foreclosure of competition; benefits or harm to consumers; improvements in production or distribution of goods or provision of services; and promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.
Are there any exempted agreements?
The agreements falling under Section 3(5) of the Competition Act are exempted from the applicability of the provisions of Section 3(4) of the Competition Act, which, essentially, are in the nature of the protection of statutory rights granted or conferred under the Intellectual property laws of India or such agreements which protect the right of any person to export goods from India. Further, as per jurisprudence laid down by the CCI, the agreements entered between enterprises belonging to a 'single economic entity' fall outside the ambit of Section 3(4) of the Competition Act.
What are the implications under the Competition Act?
In case of violation of Section 3(4) of the Competition Act, in terms of Section 27 of the Competition Act, the CCI may at its discretion impose a penalty up to 10% of the average global turnover of an enterprise for the last three preceding financial years and may also pass a cease-and-desist order. Additionally, the CCI may also impose a penalty upon individuals of such enterprise in accordance with Section 48 of the Competition Act.
II. Petition(s) filed before Hon'ble Supreme Court of India
i. Hon'ble Supreme Court of India dismisses appeal filed by Competition Commission of India against Delhi High Court's ruling in JCB case
Competition Commission of India vs. JCB India Limited & Ors. (Diary No. 52849 / 2024)
The Hon'ble Supreme Court on 20.12.2024 dismissed CCI's appeal against Delhi High Court's ruling that quashed the anti-trust investigation against JCB India Limited. The Hon'ble Court while dismissing the appeal considered the facts and noted that no case of interference is made out in exercise of its jurisdiction under Article 136 of the Constitution of India. The Delhi High Court had quashed the investigation into the matter when the informant, Bull Machine, withdrew its information after arriving at a settlement.
ii. Hon'ble Supreme Court of India transfers all the Writ Petition(s) concerning anti-trust proceedings against Amazon and Flipkart to Karnataka High Court
Competition Commission of India vs. Cloudtail India Private Limited & Ors. (T.P.(C) No. 003364 – 003387 /2024)
On 03.12.2024, the CCI by way of a transfer petition approached the Hon'ble Supreme Court of India for transfer of 26 Writ Petition(s) filed before various High Courts in India by parties in an anti-trust proceeding against Amazon and Flipkart pending before the CCI. The Hon'ble Supreme Court vide its order dated 16.12.2024 ordered stay on proceedings in Writ Petitions being heard by the High Court of Karnataka and prima facie viewed that all the pending Writ Petitions before other High Courts should be transferred to High Court of Karnataka.
The aforesaid transfer petition was filed by CCI for expediting its proceeding in Delhi Vyapar Mahasangh vs. Amazon Seller Services Private Limited (Case No. 40 of 2019), which is pending before it since 2020. In the said matter, multiple parties have sought interim stay on the proceeding through various Writ Petitions filed before High Court of Karnataka, High Court for the State of Telangana, High Court of Punjab & Haryana, High Court of Judicature at Allahabad, and High Court of Delhi.
III. Judgments passed by National Company Law Appellate Tribunal
iii. National Company Law Appellate Tribunal dismisses appeal of Ghaziabad Development Authority filed against a penalty order of the Competition Commission of India
Ghaziabad Development Authority vs. Competition Commission of India (Competition Appeal (AT) No. 26 of 2018)
The NCLAT vide its judgment dated 18.12.2024 dismissed appeal filed by Ghaziabad Development Authority ("GDA") against CCI order dated 28.02.2018 in Case No. 86 of 2016. The CCI in the said order imposed a penalty of INR 1,00,60,794/- upon GDA for abuse of dominance by arbitrarily increasing the price of flats under its Pratap Vihar Residential Housing Scheme for Economically Weaker Section ("EWS") from INR 2,00,000/- to INR 7,00,000/-. The appellant in its appeal challenged the impugned order on the grounds that – (i) GDA is not an 'enterprise' as defined under the Competition Act as it an organ of the Government of Uttar Pradesh and is a non-profit organization; (ii) CCI has erroneously defined the relevant geographic market as 'Ghaziabad' instead of 'Delhi NCR'; (iii) it is not dominant as there are other players existing in the relevant market; and (iv) the CCI has imposed an disproportionate penalty upon GDA without giving due regards to the mitigating factors.
The NCLAT in its judgment concurred with the findings of the CCI in the impugned order. It noted that the activities performed by GDA are economic activities falls within the definition of an 'enterprise' in terms of Section 2(h) of the Competition Act. With respect to definition of relevant geographic market, NCLAT held that just because the scheme of the appellant was open for all residents of NCR, the relevant geographic market cannot be taken as NCR as there are considerable differences in the conditions of competition for EWS flats in the different cities in NCR. Regarding dominance, NCLAT agreed with the findings of the CCI that basis market share, its size and resources, and exclusive powers to undertake development in Ghaziabad, the GDA enjoys a dominant position in the relevant market and that the GDA's conduct of arbitrarily increasing the cost of EWS flats is akin to an abuse of dominance. With respect to the quantum of penalty, NCLAT noted that same has been rightfully imposed by the CCI in terms of provisions of Section 27(b) of the Competition Act. Thus, in view of the same, NCLAT dismissed the said appeal of the GDA.
IV. Anti-trust Orders Passed and Combinations Approved by the Competition Commission of India
i. Competition Commission of India issues a cease-and-desist order against the Table Tennis Federation of India and its affiliate bodies
In Re: TT Friendly Super League Associate And The Suburban Table Tennis Association & Ors. (Case No. 19 of 2021)
The CCI on 12.12.2024 passed a cease-and-desist order under Section 27 of the Competition Act against Table Tennis federation of India ("TTFI") and its affiliate bodies – The Suburban Tale Tennis Association("TSTTA"); Maharashtra State Table Tennies Association ("MSTTA"); and Gujarat State Table Tennis Association ("GSTTA"), for violating the provisions of Section 3(4) and Section 4 of the Competition Act.
The Informant, a registered NGO that conducts Table Tennis ("TT") matches for its members, was primarily aggrieved by TSSTA's circular dated 30.10.2020 which was circulated on a WhatsApp group. The said circular directed players, parents, coaches, and clubs not to join any unaffiliated organization or participate in matches organized by such unaffiliated bodies. It further stated that in case any member club or academy enters into an agreement with an unaffiliated TT organization, their club or academy would be prohibited from participating in any tournaments organized by the District or State body, and their entries for TT tournaments would be suspended or not accepted. Additionally, the Informant also alleged that certain clauses of Memorandum of Association ("MoA") of TTFI are restrictive in nature that prohibits unauthorized tournaments in an anti-competitive manner. Based on the facts and merits of the information filed, CCI vide its prima facie order dated 17.11.2021 directed the Director General ("DG") to investigate the matter.
For the purposes of allegations pertaining to Section 4 of the Competition Act, the CCI defined two relevant market(s) – (i) "Market for organization of table tennis leagues/events/tournaments in India'; and (ii) 'Market for provision of services by the players for table tennis leagues/events/tournaments in India". Regarding dominance, CCI noted that there exists a pyramidal structure in the governance and regulation of the sport of TT in India from district to national level. TTFI operates at the national level, while MSTTA and GSTTA operate at the state level, and TSTTA operate at the district level. The CCI observed that TTFI being the apex body governs the entire activities related to TT events in India and represents India in the international TT events and, hence, dominates the organization of TT events in India. The CCI concluded that due to this ecosystem of the regulation of TT at the national level and by virtue of its situation and affiliation, TSTTA, MSTTA and GSTTA also enjoys monopoly on behalf of TTFI at the district and state level.
In its analysis, CCI found that TSTTA has contravened the provisions of Section 4(c) of the Competition Act by indulging in refusal to deal vide circular dated 30.10.2020 as the same not only restricted players, coaches, clubs, and academies from associating with or participating in non-affiliated clubs and organizations, but also warned them of consequences such as suspension, rejection etc. Additionally, CCI also found clause 22(d) of MSTTA's scheme/constitution and associated WhatsApp message regarding "MAHAKUMBH MELA KHELO INDIA TOURNAMENT" to be in contravention of Section 4(c) of the Competition Act. CCI noted that Clause 22(d) grants MSTTA the authority to prohibit unauthorized TT tournaments within Maharashtra, and the said WhatsApp message is restrictive in nature as it advised players not play the said tournament because the same was not approved by any state or district association. Further, CCI also found clause 24C(e), (f), (h) and 27(a) of TTFI's MoA; TTFI's public notice dated 06.07.2022; clause 25 of GSTTA's MoA; and GSTTA's circular dated 15.02.201, to be in contravention of Section 4(c), 4(2)(a)(i) and 4(2)(b)(i) of the Competition Act as the same were restrictive and unreasonable in nature.
With respect to allegations pertaining to violation of Section 3(4) of the Competition Act, the CCI held that circular dated 30.10.2020 circulated on WhatsApp was in the nature of exclusive distribution and refusal to deal as defined under Section 3(4)(c) and 3(4)(d) of the Competition Act resulting in creation of entry barrier, foreclosure of competition, and restriction of opportunities available to the TT players.
The CCI in its order noted that TTFI and its affiliate bodies have already undertaken corrective measures to address the concerns raised during the investigation, thus, in view of the same CCI decided to issue only a cease-and-desist order against TTFI and its affiliate bodies under Section 27(a) of the Competition Act.
ii. Competition Commission of India closes information against Coal India Limited for alleged abuse of dominance
In Re: Bijay Poddar And Coal India Limited (Case No. 25 of 2023)
The CCI vide order dated 30.12.2024 closed an information filed by Mr. Bijay Poddar alleging abuse of dominance by Coal India Limited ("CIL"). The informant alleged that CIL has abused its dominant position by imposing various one-sided, unfair, complex, and discriminatory provisions under its new e-auction scheme 2022 which was introduced to replace its earlier Spot E-Auction Scheme 2007. The Informant alleged that the said provisions required the bidders to clear all pending dues before bidding, empowered CIL to take a fixed advance bid security resulting in discriminatory effect on different bidders when bid security is forfeited, accorded CIL a right to cancel the sale of coal under e-auction at its sole discretion without assigning any reason thereof, etc.
The CCI defined the relevant market as 'production and sale of non-coking coal to bidders under e-auction scheme in India' and found CIL to be dominant in the said relevant market. With respect to abuse, CCI perused various clauses of the new e-auction scheme and found that none of the clauses raised any competition law concerns or amounts to an abuse within the terms of Section 4 of the Competition Act. In view of the same, CCI proceeded to close the said information by passing an order under Section 26(2) of the Competition Act.
iii. Competition Commission of India closes information filed by M/s AGI Greenpac Limited against M/s Bhagyanagar Gas Limited for alleged abuse of dominance
In Re: M/s AGI Greenpac Limited vs M/s Bhagyanagar Gas Limited (Case No. 08 of 2024)
The CCI vide order dated 30.12.2024 closed information filed by M/s AGI Greenpac Limited ("AGL") against M/s Bhagyanagar Gas Limited ("BGL") for alleged abuse of dominance. AGL alleged that BGL being authorized by Petroleum and Natural Gas Regulatory Board ("Board") for implementation of City Gas Distribution ("CGD") in the region of Hyderabad/Secunderabad, Vijayawada & Kakinada, has abused its dominant position by (i) charging unreasonably high/excessive prices, (ii) not agreeing to enter into a Tri-partite agreement whereby the AGL would purchase natural gas from a third party and would use the pipeline of the BGL for supply of natural gas to its plant by paying reasonable transportation price, and (iii) not sharing the basis for fixation of price of natural gas in a transparent manner.
The CCI in its analysis, delineated the relevant market as the 'market for supply of natural gas to consumers having requirement upto 50,000 SCMD of gas in Hyderabad' and held that by virtue of framework of the Petroleum and Natural Gas Regulatory Board Act, 2006 ("PNGRB Act") and regulations thereunder, BGL appears to be a dominant player in the said relevant market. With respect to allegations of charging excessive prices, CCI noted that AGL has compared the prices of two relevant markets which does not seem appropriate as the various relevant markets operate under separate market conditions. Regarding allegation of not agreeing to enter into Tri-partite agreement, CCI noted that in terms of PNGRB Act and regulations, BGL has rightfully refused to enter into such agreement as AGL has not been declared as a common carrier as required under the law. Lastly, with respect to allegations of not sharing the basis for fixation of price of natural gas, CCI opined that the same appears to be primarily a subject matter of contractual agreement between the parties. Thus, in view of the same, CCI proceeded to close the information and passed an order under Section 26(2) of the Competition Act.
iv. Competition Commission of India closes information filed against Astrotalk Services Private Limited
In Re: InstaAstro Technology Private Limited And Astrotalk Services Private Limited (Case No. 22 of 2024)
The CCI vide order dated 11.12.2024 closed an information filed by InstaAstro Technology Private Limited ("Informant") against Astrotalk Services Private Limited ("Astrotalk"). The Informant alleged that Astrotalk has violated the provisions of Section 3 of the Competition Act by poaching its consultants by offering them better remuneration and spreading false news making them to leave Informant's firm and coercing them to break their contracts with the Informant. Informant alleged that Astrotalk has entered into agreements with consultants whereby they are prohibited from contacting their previous employers and/or competitors. Information also alleged that Astrotalk has violated Section 4 of the Competition Act by poaching astrology consultants by offering them better renumeration which has resulted in reduction of competition in the market.
With respect to allegations related to violation of Section 3 of the Competition Act, CCI held that the same falls under the purview of contract law. Further, consultants have freedom to provide their services to any entity at per their discretion in lieu of better remuneration and the same cannot be examined under the realm of Section 3 of the Competition Act. Regarding allegations pertaining to Section 4 of the Competition Act, CCI defined the broad relevant market as "provision of astrology related goods and services through online applications in India" and noted that in the said market has entrenched competition due to presence of multiple players such Daily horoscope, Astrosage, Astroyogi, Guruji, Clickastro Astrology, Mpanchang, Astroved, Ganeshaspeaks, Starstell, Monkvyasa, Astro-vision, I Horoscope, etc. Therefore, there appears to be enough competitive constraints for Astrotalk to operate in the market. Thus, no case of abuse of dominance was found by the CCI and an order of closure under Section 26(2) of the Competition Act was passed by the CCI.
v. Competition Commission of India closes information filed against Woodman Electronics India Private Limited
In Re: XYZ vs. Woodman Electronics India Private Limited (Case No. 24 of 2024)
The CCI vide order dated 11.12.2024 closed another information filed against Woodman Electronics India Private Limited ("OP") by an Individual for alleged violation of Section 4, Section 2(47), Section 36A of the Competition Act, and Section 21(2) of the Consumer Protection Act, 2019 by indulging in anticompetitive practice/ unfair trade practice by not disclosing the country of origin of the product and claiming it to be indigenous in advertisements, on its website, YouTube channel etc.
With respect to allegations of violation of section 2(47) and Section 36A of the Competition, the CCI observed that the informant has incorrectly mentioned these sections as no such sections exist under the Competition Act. Also, allegations of violation of Section 21(2) of the Consumer Protection Act, 2019 do not fall within the ambit of CCI as the same is entrusted with Central Authority constituted under the Consumer Protection Act, 2019. Further, regarding allegations pertaining to Section 4 of the Competition Act, CCI held that the product(s) of the OP belongs to the car audio market which appears to be competitive with the presence of established players like Sony, Panasonic, Blaupunkt, JVC Kenwood, Harman, Bose etc. as well as various unorganized players. CCI also noted that the alleged conduct of the OP of suppressing the details of country of origin and misleading advertisement appears to be a consumer issue for which remedy lies elsewhere. In view of the same, CCI held that there appears no case of contravention of Section 4 of the Competition Act and hence proceeded to pass an order of closure under Section 26(2) of the Competition Act.
vi. Combinations Approved by Competition Commission of India
- CCI approved acquisition of 32.72 % and 26% of the paid-up equity share capital of India Cements Limited by UltraTech Cement Limited from its promoters and by way of open offer, respectively. 2
- CCI approved acquisition of minority stake by Ramon Investments Pte. Ltd. by Speed JVco S.à r.l. The said combination is the first ever combination filed under the DVT stipulated under Section 5(d) of the Competition Act. 3
- CCI approved acquisition of 1,02,48,582 equity shares representing 42.1% of the voting share capital and 11,00,000 equity shares representing 4.54% of the voting rights of Prataap Snacks Limited by Authum Investment & Infrastructure Limited ("Acquirer") and Ms. Mahi Madhusudan Kela as person acting in concert with Acquirer, respectively. 4
- CCI approved investment of USD 275 million in Fourth Partner Energy Private Limited by International Finance Corporation, Asian Development Bank and DEG – Deutsche Investitions – and Entwicklungsgesellschaft mbH.5
- CCI approved – a) acquisition of up to 100% of the share capital of Covestro AG by Abu Dhabi National OIL Company P.J.S.C by way of all-cash voluntary public takeover offer to all shareholders of Covestro AG; and b) subsequent subscription of 18,900,000 new shares in Covestro AG by Abu Dhabi National Oil Company International Germany Holding AG, corresponding to 10% of Covestro AG's current share capital. 6
- CCI approved certain minority investment by BREP Asia III India Holsing Co VIII Pte. Ltd. in Bagmane Developers Private Limited and Bagmane Rio Private Limited. 6
- CCI approved acquisition of 100% share capital of thyssenkrupp Electrical Steel India Private Limited by Jsquare Electrical Steel Nashik Private Limited. 7
- CCI approved acquisition of certain shareholding in VVDN Technologies Private Limited by India Business Excellence Fund – IV through a combination of equity shares and subscription to compulsorily convertible debentures. 8
- CCI approved – a) subscription of unlisted and unrated optionally convertible debentures of GMR Infra Enterprises Private Limited by Platinum Stone A 2014 Trust; and b) Acquisition of 9% shareholding of GMR Airports Limited from its promoter GMR Enterprises Private Limited. 9
- CCI approved acquisition of minority shareholding of Shiprocket Private Limited by MUFG Bank, Ltd. 10
- CCI approved acquisition of minority shareholding of Shiprocket Private Limited by KDT Venture Holdings, LLC by way of both primary subscription and secondary purchase. 11
Deemed Approvals:
- Jost Werke International Beteiligungsverwaltung GmbH received deemed approval of CCI to acquire 100% shareholding of Hyva III B.V. 12
- Zashvin Pty. Ltd. received deemed approval of CCI to acquire additional shareholding of 33.33% in Jellinbah Group Pty. Ltd on fully diluted basis from Anglo Coal (Jellinbah) Holding Resources Pty. Ltd. 13
- Royce Asia Holdings II Pte. Ltd. received deemed approval of CCI to acquire certain equity shares and compulsory convertible preference shares of Rebel Foods Private limited on fully diluted basis by way of secondary purchase. 14
- CCI granted deemed approval to the conversion of entire class of preference shares of McDermott International Ltd. into ordinary shares and redemption or exchange of all the preference shares held by Baupost Group Securities, L.L.C. into ordinary shares of McDermott International Ltd. 16
V. Mark Your Calendar: Upcoming Events!
- The TECH Antitrust Conference scheduled on Jan 16, 2025, in Palo Alto (click here)
- Cartels Workshop- An Advanced Seminar- scheduled on Jan 23, 2025 in Brussels (click here)
- Private Enforcement Conference scheduled on Feb 11, 2025, in Brussels (click here)
- UK Competition Law Conference scheduled on Feb 25, 2025, in London (click here)
Footnotes
1. Generally understood as agreement(s) amongst enterprises or persons including but not restricted to agreement amongst enterprises or persons at different stages or levels of the production chain in different markets.
2. C-2024/09/1185
3. C-2024/10/1195
4. C-2024/11/1205
5. C-2024/10/1201
6. C-2024/11/1204
7. C-2024/11/1203
8. C-2024/10/1202
9. C-2024/11/1210
10. C-2024/10/1200
11. C-2024/10/1198
12. C-2024/10/1196
13. C-2024/12/1223
14. C-2024/12/1221
15. C-2024/12/1220
16. C-2024/12/1217
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.
