The month of January 2025 has witnessed several developments on the anti-trust front in India. The Hon'ble Supreme Court of India has ruled that a resolution plan in an insolvency matter cannot be accepted by the committee of creditors prior to the approval of Competition Commission of India ("CCI"), if such resolution plan comprises of a combination within the meaning of Section 5 of the Competition Act, 2002 (as amended in 2023) ("Act"). Further, the National Company Law Appellate Tribunal ("NCLAT") has reserved its judgment in an appeal filed by Alphabet Inc. against an order of penalty of INR 936 crore (Rupees Nine Hundred And Thirty-Six Crores) imposed by CCI. The NCLAT has also granted a stay on a five-year ban on WhatsApp LLC imposed by CCI, which prohibited it from sharing its user's data with Meta. Furthermore, on the merger control front, the CCI has imposed a penalty of INR 40,00,000/- (Rupees Forty Lakhs) on Goldman Sachs for gun-jumping, in addition to other enforcement orders and combination approvals.
To keep our readers updated, this edition provides a quick snapshot of the regulation of vertical agreements under Indian competition law, followed by a 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. Regulation of vertical agreements under Indian competition law
The provisions of Section 3(4) of the Act i.e., Competition Act, 2002 (as amended in 2023), regulate vertical agreements in India and specifically prohibit – i) tie-in arrangements; ii) exclusive dealing agreements; iii) exclusive distribution agreements; iv) refusal to deal; and v) resale price maintenance. However, this list is not exhaustive and in the light of Competition (Amendment) Act, 2023, any other agreement amongst enterprises or persons at different stages or levels of production chain may also fall under the purview of the said provision. Agreements with end consumers, however, are not subject to the provisions of Section 3(4) of the Act.
In terms of Section 3(4) of the Act, only those vertical agreement(s) are prohibited which causes or are likely to cause an appreciable adverse effect on competition in India ("AAEC") in terms of factors enumerated under Section 19(3) of the Competition Act, which inter alia, includes – i) creation of barriers to new entrants in the market; ii) driving existing competitors out of the market; iii) foreclosure of competition; iv) benefits or harm to consumers; v) improvements in production or distribution of goods or provision of services; and vi) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.
In India, vertical agreements are not considered 'per se' illegal and are tested under the 'rule of reason'. Furthermore, the Indian competition law does not provide any 'Safe Harbour' market share benchmark. Therefore, any vertical agreement that causes or likely to cause an AAEC may violate of the Act, irrespective of the market shares of the parties to the agreement.
II. Judgment(s) passed by Hon'ble Supreme Court of India
i. Hon'ble Supreme Court of India declares AGI Greenpac's resolution plan for Hindustan National Glass & Industries Ltd. unsustainable due to lack of prior approval from the Competition Commission of India
Independent Sugar Corporation Ltd. vs. Girish Sriram Juneja and Ors. (Civil Appeal No. 6071 of 2023)
The Hon'ble Supreme Court of India, in an insolvency matter, declared by a majority of 2:1 that AGI Greenpac's ("AGI") resolution plan for Hindustan National Glass and Industries was invalid, as AGI failed to seek prior approval from the CCI as mandated under the Insolvency and Bankruptcy Code, 2016 ("IBC").
The Court held that the provisions under the proviso to Section 31(4) of the IBC are mandatory and in terms of the same, if a resolution plan involves a combination as specified under Section 5 of the Act i.e., Competition Act, 2002 (as amended in 2023), a prior approval of the CCI must be obtained. It was clarified by the Hon'ble Supreme Court that it is only after CCI's approval, the Committee of Creditors ("COC") may examine and accept the resolution plan.
III. Orders passed by National Company Law Appellate Tribunal
ii. National Company Law Appellate Tribunal reserves its judgment in appeal filed by Alphabet Inc. against an order of penalty passed by the Competition Commission of India
Alphabet Inc. & Ors. vs. Competition Commission of India & Anr. (Competition Appeal (AT) No. 4 of 2023)
The NCLAT vide its order dated 22.01.2025 has reserved its judgment in an appeal filed by Google's parent entity, Alphabet Inc., against CCI's order dated 25.10.2022 whereby a penalty of INR 936 crore (Rupees Nine Hundred And Thirty-Six Crores) was imposed. The CCI in its order found Google to be abusing its dominance in the markets for licensable OS for smart mobile devices & market for app stores for Android smart mobile OS, in India.
The NCLAT has granted the parties two weeks from the date of its order to file their final written submissions, after which a judgment in the appeal is expected to be announced by the tribunal.
iii. National Company Law Appellate Tribunal stays CCI's five-year ban on WhatsApp LLC concerning sharing of its user's data with Meta
WhatsApp LLC vs. Competition Commission of India & Ors. (I.A No. 280 of 2015 in Competition Appeal (AT) No. 1 of 2025)
WhatsApp LLC approached NCLAT praying for stay against CCI order dated 18.11.2024 where a penalty of INR 213.14 crores was imposed by the CCI on Meta for abuse of dominance. In addition to the penalty, the CCI also imposed certain restrictions upon Meta and WhatsApp that included a five-year ban on WhatsApp LLC ("WhatsApp") on sharing its user's data collected on its platform with other Meta Companies or Meta Company Products for advertising purposes.
The NCLAT, in its order, noted that the aforementioned five-year ban could lead to the collapse of business model of WhatsApp. The tribunal also noted that WhatsApp is providing its services to the users free of cost. Additionally, NCLAT took note of the fact that the Hon'ble Supreme Court had not granted an interim order staying the 2021 privacy policy. The tribunal further noted that Digital Personal Data Protection Act, 2023, which is likely to be enforced soon may cover all issues pertaining to data protection and data sharing.
IV. Orders passed and combinations approved by Competition Commission of India
i. Competition Commission of India imposes a penalty of INR 40,00,000/- (Rupees Forty Lakhs) upon Goldman Sachs for gun-jumping
In Re: Proceedings against Goldman Sachs (India) Alternative Investment Management Private Limited under Section 43A of the Competition Act, 2002 (Ref. No.: M&A/10/2020/01/CD)
The CCI on 14.01.2025 imposed a penalty of INR 40,00,000/- (Rupees Forty Lakhs) upon Goldman Sachs AIF Scheme-1 ("GS AIF") and its investment manager, Goldman Sachs (India) Alternative Investment Management Private Limited ("GS AIMPL") [collectively referred as "GS"] for failure to notify subscription of certain Optionally Convertible Debentures ("OCDs") issued by Biocon Biologics Limited ("Biocon") that upon conversion would amount to approximately 3.81% of entire shareholding of Biocon.
The CCI noted that pursuant to a Securities Subscription Agreement and a Shareholders Agreement ("SHA") dated 7th November 2020, the transaction was closed by GS on 9th December 2020 without filing any notification under Section 6(2) of the Act. GS in its defence submitted that the transaction was not notified as the same was exempted under Item 1 of Schedule 1 (Item 1 Provision) of the erstwhile Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulation, 2011. In this regard, CCI held that the transaction does not qualify for the said exemption as it was neither made 'solely as an investment' nor was it an investment made in 'ordinary course of business' of the acquirer. The CCI observed that GS AIF gained certain information rights and access rights in Biocon such as – i) access to certified true copies of minutes of board/committee/shareholder meeting ("Minutes Rights"); ii) access to information relating to any direct change in certain shareholdings, access to certified true copies of the latest capitalization table of Biocon etc; and iii) access to the premises and personnel of Biocon during normal business hours. The CCI held that through Minutes Rights, GS AIF has gained privileged access to all commercially sensitive information discussed and deliberated upon during the Board meeting of Biocon. Thus, in view of the same, the said transaction cannot be said to be made 'solely as an investment'. It was further noted that GS AIF has also gained a right to convert the OCDs into equity shares any time prior to the final maturity date. In this regard, CCI held that any transaction which is made with an intent of remaining invested for a relatively longer period involving acquisition of any additional rights (compared to the rights of an ordinary shareholder) cannot be said to be in ordinary course of business. Therefore, in view of the same, CCI held that the transaction cannot be said to be made in 'ordinary course of business'. Thus, an exemption under Item 1 Provision is not available and the transaction was ought to have been notified by GS to the CCI under Section 6(2) of the Act.
ii. Competition Commission of India finds Torrent Power Limited liable for gun-jumping but imposes no penalty under Section 43A of the Competition Act, 2002
Proceedings against Torrent Power Limited under Section 43A of the Competition Act, 2002
The CCI vide order dated 14.01.2025 found Torrent Power Limited ("TPL") liable for gun-jumping but did not impose any penalty under Section 43A of the Act. The CCI noted that TPL ought to have notified its acquisition of 51% shareholding of Dadra and Nagar Haveli and Daman and Diu Power Distribution Corporation Limited ("Target") as the jurisdictional thresholds specified under Section 5 of the Act were met. TPL had acquired the said shareholding in the Target in pursuant to the Request for Proposal (RFP) issued by the Executive Engineer, Electricity Department-DD, Daman for selection of bidder for purchase of 51% shares in Target which would be responsible for distribution and retail supply of electricity and having distribution license in Union Territory of Dadra and Nagar Haveli and Daman and Diu.
In its defense, TPL submitted that the said transaction was not notifiable as the same was subject to the exclusive jurisdiction of the appropriate commission under the Electricity Act, 2003 ("Electricity Act"). TPL submitted that in terms of Section 60 of the Electricity Act, any combination entered into by a licensee in the electricity sector would be regulated by the "Appropriate Commission" if the combination is likely to cause or causes an adverse effect on competition within the electricity industry. The CCI, however, rejected the said argument of TPL and held that Competition Act vests the CCI with the jurisdiction to regulate combinations for the purposes of eliminating practices having adverse effect on competition, promoting and sustaining competition, and ensuring freedom of trade in markets in India, including electricity markets, whereas Electricity Act vests the appropriate commission with the jurisdiction to regulate other matters in which the sectoral regulator has necessary expertise such as determining access, maintaining standards and determining tariffs. Therefore, the two Acts can be harmoniously constructed without any law being rendered a dead letter.
While determining the quantum of penalty under Section 43A of the Act, CCI considered mitigating factors such as structural issues inherent to the bidding process like TPL's obligation to comply with the strict bid timelines etc., ambiguity due to overlapping provisions in the two special acts, i.e., Competition Act and Electricity Act, the transaction not resulting in AAEC in the relevant market, and TPL extending full cooperation in respect of the ongoing proceedings, and accordingly, decided not to impose any penalty upon TPL.
iii. Competition Commission of India closes information against IREL for alleged abuse of dominance
In Re: Beach Mineral Producers Association And IREL (India) Ltd. (Case No. 26 of 2022)
The CCI vide order dated 17.01.2025 closed information filed by Beach Mineral Producers Association ("Informant") against IREL (India) Limited ("IREL") for alleged abuse of dominance under Section 4 of the Act. The Informant alleged that IREL being sole producer / miner of Beach Sand Ilmenite in India, has abused its dominant position by creating a shortage of supply of ilmenite for domestic consumers, whereas it has been simultaneously supplying adequate quantity of ilmenite to foreign companies / multi-nationals. The informant also alleged that IREL does not respond to Expression of Interest of the domestic consumers and instead force them to accept the terms and quantity mentioned under its Standard Quantity Sales Contract.
After considering preliminary submissions of the parties, the CCI formed its prima facie view and passed an order of investigation under Section 26(1) of the Act on 18.10.2022. In view of the said order, the DG conducted its investigation and submitted a report to the CCI on 01.05.2023. The DG in its report concluded that IREL has contravened the provisions of Section 4(2)(a)(i), 4(2)(a)(ii) and 4(2)(c) of the Act.
The CCI, in its order, held that IREL is an 'enterprise' within the meaning of Section 2(h) of the Act, insofar as its activities pertain to mining and supply of Ilmenite. The CCI further clarified that IREL's activities related to extraction and handling of Monazite are exempted under Section 2(h) of the Act, as they are carried out on behalf of the Department of Atomic Energy and relate to atomic energy, thus constituting 'sovereign functions' of the Government. With respect to dominance, CCI found IREL to be dominant in the relevant market of "mining and supply of beach sand Ilmenite in India". Regarding allegations of violation of Section 4(2)(a)(i) and 4(2)(C) of the Act, CCI noted that the DG has failed to place any evidence on record to substantiate the allegations of imposition of discriminatory conditions in sale of Ilmenite or refusal to deal/supply by IREL. While analysing the allegations concerning excessive and discriminatory pricing in violation of Section 4(2)(a)(ii) of the Act, CCI compared IREL's domestic market price to its export price and import price and concluded that the prices do not appear to be excessive or discriminatory.
iv. Competition Commission of India closes information filed against Honda Motorcycle & Scooter India Pvt. Ltd. for alleged abuse of dominance
In Re: Mr. Rajesh George And Honda Motorcycle & Scooter India Pvt. Ltd. (Case No. 16 of 2024)
The CCI vide order dated 14.01.2025 closed an information filed by Mr. Rajesh George, Managing Director of Classic Omega Auto Private Limited ("Informant") against Honda Motorcycle & Scooter India Private Limited ("Honda") alleging contravention of Section 4 of the Act. The Informant, a former dealer of Honda was aggrieved by the termination of his dealership. It was alleged by the informant that Honda has abused its dominant position by –(i) coercing the Informant to abandon his previous dealership of Suzuki Motorcycle India Private Limited ("Suzuki") as a condition to obtain the dealer of Honda; (ii) dumping of offbeat and unpopular models of two-wheelers by the Honda without any order placed by the Informant; and (iii) unilateral and arbitrary terminating Informant's dealership.
The CCI, in its analysis, noted that the information filed by the Informant is barred by limitation as per provisions of Section 19(1) of the Act. However, notwithstanding the same, the CCI decided to analyze the allegations levelled by the Informant. With respect to allegations of coercion of termination of Informant's previous dealership of Suzuki, CCI held that the same is a matter of choice as the Informant exercised his choice in becoming a dealer of Suzuki earlier and of Honda later and that choosing dealership of any company is a matter of choice for any dealer who enters into a contractual relationship with a manufacturer on acceptable terms and conditions. Further, with respect to allegations of dumping of offbeat and unpopular models, CCI observed that purchase and sale of a particular model or make by any authorized agency of a vehicle manufacturer relate to the business-related aspects of the agreement and they themselves do not give rise to any anti-competitive conduct. Lastly, with respect to allegations of unilateral and arbitrary termination of Informant's dealership, CCI noted that clause 27 of the dealership agreement provides terms and conditions for termination of dealership and that Informant's dealership has been terminated in view of the same. CCI further noted that the correspondence between the Informant and Honda reflects commercial disputes arising out of the agreement and such transactional issues do not fall within the purview of the Act.
v. Competition Commission of India combines another information regarding Google's conduct in ad-tech intermediation services with ongoing investigation being carried out by the Director General
In Re: Mr. Maulik Surani And Alphabet Inc. and Ors. (Case No. 34 of 2024)
The CCI vide order dated 08.01.2025 clubbed the information filed by Mr. Maulik Surani, with Case Nos. 41 of 2021, 10 of 2022 and 36 of 2022, where the DG is already investigating certain aspects of ad-tech intermediation services provided by Google. The CCI, in its order, directed the DG to investigate all the allegations levelled by the informant in a comprehensive manner and submit a consolidated investigation report in the matter.
The informant, co-founder of M/s Capset Infotech, alleged that Google's conduct such as tying of DoubleClick for Publishers with Google's Ad Exchange into Google Ad Manager, preferential treatment to its own properties over Google Network Members, Google's Open Bidding policy, Unified Pricing Rule functions, exorbitant fees on publishers etc., have resulted in violation Section 3(4) and section 4 of the Act.
vi. Combinations Approved by Competition Commission of India
I. CCI approved – i) Acquisition of 46.64% of shares of the total issued and voting equity share capital of ITD Cementation India Limited by Renew Exim DMCC; and ii) Open Offer of Renew Exim DMCC in pursuant to SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (as amended) to further acquire 4,46,64,772 fully paid-up equity shares representing approximately 26% of voting share capital of ITD Cementation India Limited.[1]
II. CCI approved acquisition of entire ownership interest held by Brookfield Group in 21 special purpose vehicles by way of acquisition of equity shares and compulsorily convertibles debentures in two tranches by Gentari Renewables India Pte. Ltd.[2]
III. CCI approved – i) Acquisition of majority shareholding of Pegatron Technology India Private Limited by Tata Electronics Private Limited; and ii) A subsequent transfer of business undertaking of a wholly owned subsidiary of Tata Electronics Private Limited to Pegatron Technology India Private Limited.[3]
IV. CCI approved – i) Acquisition of entire shareholding of AI Lenarco Midco Ltd. by Majesty II Pte. Ltd. resulting in indirect acquisition of the majority equity shareholding in Manjushree Technopack Limited; and ii) Acquisition of compulsory convertible debentures of Manjushree Technopack Limited collectively by Ashoka India Equity Investment Trust plc; Nuvuma Private Investment Trust; and InCred Growth Partners Fund.[4]
V. CCI approved amalgamation of – i) Sequent Research Limited; ii) Viyash Life Sciences Private Limited; iii) Symed Labs Limited; iv) Appcure Labs Private Limited; v) Vindhya Pharma (India) Private Limited; vi) Vandana Life Sciences Private Limited; vii) S.V. Labs Private Limited; viii) Vindhya Organics Private Limited; ix) Geninn Life Sciences Private Limited with Sequent Scientific Limited as the ultimate surviving entity.[5]
VI. CCI approved acquisition of up to 68.9% shareholding of Roop Automotives Limited by CA Carob Investments, and securities swap between M/s UM Holdings and Roop Automotives Limited.[6]
VII. CCI approved acquisition of additional 34% shareholding along with certain convertible instruments in Ashoka Concessions Limited by Ashoka Buildcon Limited; and additional 26% shareholding of Jaora Nayagaon Toll Road Company Private Limited by Ashoka Buildcon Limited through subsidiary Viva Highways Limited.[7]
VIII. CCI approved 100% acquisition shareholding of Del Monte Foods Private Limited by Agro Tech Foods Limited. As a consideration for the said acquisition, Agro Tech Foods Limited will be issuing its 20.95% and 14.39% of equity shares to sellers - Bharti Units and DMPL India Limited, respectively.[8]
V. Mark Your Calendar: Upcoming Events!
- 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)
- Nordic Competition Law Conference scheduled on Mar 25, 2025, in Stockholm (click here)
References:
- C-2024/11/1211
- C-2024/11/1209
- C-2024/11/1208
- C-2024/12/1219
- C-2024/12/1218
- C-2024/12/1216
- C-2024/12/1215
- C-2024/12/1214
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.
