foreword - cyril amarchand mangaldas jaiprakash associates limited and ... as the supreme court of...

Selected Essays in Competition Law | 1 © 2016 Cyril Amarchand Mangaldas

It is no secret that whether you are a multinational enterprise or an entrepreneurial business venture, compliance with competition laws is steadily finding its way to boardroom discussions. The subject has continued to garner global attention and has carved out a distinctive position for itself, in what may be termed as the sacrosanct principles of good corporate governance.

With a significant number of companies operating in multiple jurisdictions, corporations routinely face merger reviews in several countries, and their business practices and conduct are often subject to parallel investigations. Further, every new decision of global antitrust regulators holistically contributes to the evolving jurisprudence on competition law. In a nutshell, compliance with competition law is inevitable as failure to do so can expose corporations and their senior management to an augmented risk of

scrutiny resulting in severe penalties and even loss of reputation.

Akin to competition regimes in matured jurisdictions, the Competition Act, 2002 (Competition Act) prohibits anti-competitive agreements, abuse of dominant position and regulates mergers and acquisitions that exceed the prescribed financial thresholds. In this backdrop, it deserves mention that while the competition law regime in India is still at a nascent stage, on the enforcement side, the Competition Commission of India (CCI) has examined more than 700 cases, as it enters into the eighth year of implementation. On the other hand, the CCI has approved approximately 400 merger notifications to date and imposed stringent penalties for gun jumping, belated notification and non-notification of notifiable transactions. Undisputedly, the CCI is fast establishing itself as a potent

Foreword

2 | Selected Essays in Competition Law © 2016 Cyril Amarchand Mangaldas

regulator with enormous powers to deter anti-competitive business practices. As corporate India and overseas corporations operating in India learn to live, or rather imbibe, the culture of competition law compliance, it is imperative that market participants are familiar and informed of the developments in this space, given the cascading effects of competition law on the corporate ecosystem and doing business in India.

In seven years of its functioning, the CCI has its extended its scrutiny in diverse industries, including cement, automobiles, pharmaceuticals, real estate, and information technology-enabled services. However, in several cases the legal integrity of CCI orders has been challenged and quite a few cases have been set aside by the Competition Appellate Tribunal (COMPAT) and remitted to the CCI for fresh adjudication (for instance, Coal India Case, BCCI Case, Airlines Fuel Surcharge Case, etc.), predominantly for violation of the principles of natural justice. This has resulted in a serious debate on the contours of the scope and objective of the quasi-judicial regulator.

Additionally, the issue of “relevant turnover” continues to remain unsettled as the COMPAT, ever since the Aluminium Phosphide Case, has been limiting the computation of penalty attributable to the business to which the infringement relates, on the contrary, the CCI continues to impose penalties based on the total turnover of the contravening

company. The decision of the COMPAT awaits decision of the Supreme Court to settle the jurisprudence in this regard.

On merger control, during the past five years, the Combination Regulations have undergone several amendments, with the most recent one in January 2016. The CCI has adopted a largely collaborative approach in this reform process by inviting comments from stakeholders on a periodic basis. Broadly, the amendments made thus far in the merger regulations have contributed towards the overall effort in bringing about ease in doing business in India and simplifying the antitrust approval process. For instance, originally, acquisitions involving target entities with assets below INR 250 crore in India or turnover below INR 750 crore in India, would not require prior notification to and approval of the CCI (referred to as the de minimis exemption). This exemption was introduced for an initial period of five years. On 4 March 2016, the Ministry of Corporate Affairs has re-notified the de minimis exemption and in addition to extending the term of applicability of the de minimis (until 4 March 2021), and also enhanced the asset and turnover thresholds to INR 350 crore and INR 1000 crore, respectively in India. The rationale for this re-notification and revised thresholds is essentially to facilitate “ease of doing business” in India and is in consonance with the Government of India’s proactive stance on fuelling start-ups under the aegis of ‘Start-up


Regards,

Cyril Shroff Managing Partner

Cyril Amarchand Mangaldas [email protected]

November 2016

India’. The objective is also ensure that the CCI is not unnecessarily burdened with inconsequential merger filings and is able to focus its resources on transactions which truly have market impact.

Laudably, the Indian antitrust regulator has not blocked any transaction so far. Apart from three Phase II cases entailing a detailed investigation, namely, Sun Pharma/Ranbaxy, Holcim/Lafarge,and PVR/DT Cinemas which resulted in structural modifications, the remaining transactions have all been cleared in Phase I.

The CCI has imposed penalties for “gun jumping” in over 15 occasions with the highest fine amounting to INR 5 crore in the General Electric/Alstom Case. The evolving trends indicate a discernible pattern that the CCI intends to actively pursue its mandate to curb anti-competitive activities and regulate combinations to ensure that there is no appreciable adverse effect in India. While there have been some “hits and misses”, the

CCI has constantly adopted constructive measures to positively alter the manner in which business is done not only by developing jurisprudence but also by promoting advocacy initiatives. The rules of the game have started to change and the culture of competition compliance will gradually but definitely find its feet in India.

In this backdrop, the Competition Law Team has compiled a series of articles which provide keen insights into the various issues and aspects in relation to this nascent yet evolving and interesting body of law in India.


ABOUT CYRIL AMARCHAND MANGALDAS Cyril Amarchand Mangaldas was founded on 11 May 2015 and takes forward the legacy of the erstwhile 97-year old Amarchand & Mangaldas & Suresh A. Shroff & Co. Tracing its professional lineage to 1917, the Firm is the largest full-service law firm in India, with over 600 lawyers, including 90 partners, and offices in Mumbai, New Delhi, Bengaluru, Hyderabad, Chennai and Ahmedabad.

The Firm advises a large and varied client base that includes domestic and foreign commercial enterprises, financial institutions, private equity & venture capital funds, start-ups and governmental and regulatory bodies. Our major practice areas include corporate, dispute resolution, banking, financing and capital markets, and also our specialist areas such as private client, competition law, employment, financial regulatory, investment funds, bankruptcy, intellectual property, TMT, real estate, tax and investigation.

The Firm was awarded with “India Deal Firm of the Year” by ALB SE Asia Law Awards, 2016 & 2015 and has Ranked no. 1 amongst India’s top 40 law firms in 2015 as per RSG India report as well as ALB on Asia’s Top 50 Largest Law Firm report in 2015.

ABOUT COMPETITION LAW PRACTICEThe Firm’s Competition Law Practice is one of the largest and most established in India with a dedicated team of 19 lawyers

based in New Delhi and Mumbai. The team advises on a full range of competition law issues, including enforcement (cartel investigations and abuse of dominance), merger control, competition law audit and compliance. The Practice offers an insightful mix of legal, strategic, commercial and regulatory expertise for the benefit of both domestic and international clients, spanning across sectors.

The Practice stands out for its innovative solution-oriented structuring, credibility with the regulator and interface with reputed economists. Over the years, the team has been involved in some of the most challenging and complex behavioural cases and mergers and acquisitions, including several multi-jurisdictional matters.

We have advised on a number of transactions in the past which have been recognized as deals of the year by a number of publications. We were awarded the “Competition and Antitrust Firm” for the year 2015 by the International Business Law Journal, evidencing our proven track record of expertise in handling complex competition law matters.

“What the team is known for: Prestigious full-service firm with considerable experience on the Indian leg of multi-jurisdictional competition matters. Depth of expertise in merger control and also recognized for representing clients before the CCI in major abuse of dominance and cartel investigations.” Chambers Asia Pacific 2016

“They think creatively and have a problem-


solving attitude. They have a high degree of commitment of time and resources.” Chambers Asia Pacific 2016

MERGER CONTROL:We have a market leading merger control practice complementing our highly reputed transactional practice, wherein we hold an enviable track record of having obtained the highest number of short form merger control clearances in India. Having acted on several seminal matters in recent years, our forte includes advising on multi-jurisdictional mergers, typically involving in-depth regulatory scrutiny and remedy negotiation. Some of the marquee deals we have advised on include:

• Divestiture worth EUR 41 billion in the Lafarge Holcim merger.

• Acquisition of certain cement assets of Jaiprakash Associates Limited and its subsidiaries in several states across India by Ultratech Cement Limited.

• Acquisition of the chloroprene rubber business of E.I. du Pont de Nemours and Company.

• Acquisition of United Spirits Limited by Relay B.V.

• Setting up of a JV between Indian Oil Corporation Limited, Bharat Petroleum Corporation Limited, Mumbai Aviation Fuel Farm Facility Limited and others at Chhatrapati Shivaji International Airport, Mumbai.

• Acquisition of equity stake in Jet Airways (India) Limited by Etihad Airways.

• Amalgamation of ING Vysya

Bank Limited with Kotak Mahindra Bank Limited.

• Amalgamation of Coffee Day Overseas Private Limited with Coffee Day Enterprises Limited.

• First Phase II investigation in relation to the USD 4 billion merger of Ranbaxy Laboratories Limited with Sun Pharmaceutical Industries Limited.

• Acquisition by JSW Energy of a 1000 MW power plant from Jindal Steel.

• Acquisition by KKR Jupiter Investors Pte. Ltd. of a stake in JBF Industries Ltd. and its subsidiary JBF Global Pte.Ltd.

• Acquisition of equity stake by ATC Asia Pacific Pte. Limited in Viom and a connected merger.

BEHAVIOURAL/ ENFORCEMENT:On the behavioural front, we have been involved in developing strategies to defend clients before the Office of the Director General, the CCI, the COMPAT as well as the Supreme Court of India and have consistently secured favourable decisions at each level. We have been recognized for our involvement in several precedent-setting contentious matters, including obtaining an order from the COMPAT setting aside an order of the CCI on grounds of violation of principles of natural justice. We regularly represent clients in high profile cartel and abuse of dominance cases, and have advised clients on the multiple yet significant nuances of the leniency program in India.


We also advise clients on compliance strategies and risk mitigation measures, including preparing for dawn raids. Some of the key clients we have represented include:

• Ambuja Cements Limited and Lafarge India Limited before the CCI and COMPAT in relation to alleged cartelization.

• Prestige Estates Projects Limited before the CCI in relation to alleged cartelization.

• International Air Transport Association in relation to an investigation for alleged cartelization before the CCI and currently before COMPAT.

• ANI Technologies Private Limited (Ola Cabs) against allegations of abuse of dominance before the CCI.

• Board of Control for Cricket in India in relation to allegations of abuse of dominance before the CCI and COMPAT.

• Adani Gas Limited in relation to allegations of abuse of dominance before the CCI and currently before COMPAT.

• Gujarat Gas Company Limited against allegations of abuse of dominance before the CCI.

• Puravankara Projects Limited before the CCI in relation alleged anti-competitive conduct by real estate developers in India.

• Excel Crop Care Limited before the CCI, COMPAT and Supreme Court in relation to allegations of bid rigging


KEY CONTACTS BHARAT BUDHOLIA, Partner

Bharat advises on the full range of competition matters, including cartel enforcement, abuse of dominance, merger control and competition audit and compliance.

He has represented various Indian and multinational clients across sectors such as, cement, banking, pharmaceuticals, agro-chemical, natural gas, airlines, steel, manufacturing, FMCG, passive telecom infrastructure, polyester value chain products, airport passive infrastructure etc. Bharat has also successfully represented several domestic and international clients before the Office of Director General, the CCI and the COMPAT in relation to alleged anti-competitive agreements and abuse of dominance investigations.

ANSHUMAN SAKLE, Partner

Anshuman advises clients on all issues related to market practice as well as market structure, including merger control, abuse of dominance

and cartel enforcement. He has also advised on compliance aspects related to the enforcement provisions of Indian competition law and conducted mock


‘dawn raids’ and competition audits. Further, he has been involved in the drafting and filing of leniency applications with the CCI.

RAHUL GOEL, Partner

Rahul focuses on Competition Laws and Technology, Media & Telecommunication (TMT) Laws. Rahul was involved in some of the landmark matters

in competition law space including the cement cartel, aluminium phosphide cartel, real estate cartel, auto-parts matter, PVC flooring cartel, leather upholstery cartel among others.

Rahul advises clients on all issues relating to competition law including behavioural/enforcement matters and merger control provisions. He assists and represents clients before the Supreme Court of India, High Courts (Writ Jurisdiction), the COMPAT and the CCI.

He also advises and assists companies in auditing their existing agreements/ practices and forming compliance programmes/ procedures.

Rahul has been recently ranked by Indian Lawyer 250 (a publication of Law Business Research, United Kingdom) among leading Indian lawyers under 45 years (40 under 45).

CYRIL SHROFF, Managing Partner, Cyril Amarchand Mangaldas

Mr. Shroff has over 34 years of experience in a range of areas, including corporate and securities law, disputes, banking, infrastructure, private client, financial

regulatory and others.He has been recognized as a legendary figure in the Indian legal community and is consistently ranked as a star practitioner in India by Chambers Global and other directories. Often regarded as the M&A King of India, Mr. Shroff was named the ALB Managing Partner of the Year for 2015. Mr. Shroff is a member of the first apex advisory committee of the IMC International ADR Centre; a member of the advisory board of the Centre for Study of the Legal Profession of Harvard Law School; a member of the advisory board of the National Institute of Securities Markets and on the board of the Indian Institute of Management, Trichy. He is a director on several boards and member of various committees. He also regularly comments and advises on policy reforms in India.

PERCIVAL BILLIMORIA (PERCY), Partner & National Chair – Disputes, Regulatory, Advocacy and Policy

Percy specializes in legal services to


international companies and investors doing business in India, and his expertise includes commercial and anti-trust litigation. He has argued key matters before the Supreme Court of India and the COMPAT. The matters before the COMPAT concern both behavioural aspects and also disputes pertaining to merger control.

Mr. Billimoria is a member of the Associated Chambers of Commerce and Industry of India’s National Council for Competition Law and the Unilateral Conduct Committee of the American Bar Association’s Section of Anti-trust Laws.

ASHOK CHAWLA, Senior Advisor – Public Policy and Member – Strategic Advisory Board, Cyril Amarchand Mangaldas; Former Chairperson, CCI

Mr. Chawla is a distinguished civil servant with over 40 years of experience in various sectors of the economy at the State Government

and Union Government in India, as well as at international multilateral agencies. He was the Chairperson at the CCI from 2011 until 2016. He has served as the Economic Counsellor in the Indian Embassy at Washington DC, USA, held several senior positions within the Union Government of India including being member of the Insurance Regulatory and

Development Authority. He was the Permanent Secretary in key ministries of the Government of India, a board member in Reserve Bank of India also served as Chairman & Managing Director of Indian Petrochemicals Corporation Limited and Director of Oil & Natural Gas Corporation Limited.


1. Competition law in India: Legislative and Regulatory Architecture . . . . . . . . . . . . . . . . . . . . . .

2. Cartel Enforcement in India Recent Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. Cement Cartel Case A Critical Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4. Dawn Raids Are you Prepared ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5. Due process and CCI proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . .

6. Individual Liability Are We There Yet? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. Abuse of Dominance Evolving Law and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. To Control Or Not To Control That Is The Question . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9. Imposition of penalty for belated/non-notification Trends in Merger Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10. PE transactions and merger control An Interplay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11. CCI’s prowess in the Pharmaceutical sector . . . . . . . . . . . . . . . . . .

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Content


Cyril Shroff

Percival Billimoria

Bharat Budholia

Anshuman Sakle

Rahul Goel

Aishwarya Gopalakrishnan

Anisha Chand

Arunima Chandra

Kaustav Kundu

Kritika Sethi

Neelambera Sandeepan

Rahul Satyan

Ruchi Verma

Smita Andrews

Soham Banerjee

Tarun Mathur

Unnati Agrawal

Contributors


COMPETITION LAW IN INDIA -

LEGISLATIVE AND

REGULATORY ARCHITECTURE


COMPETITION LAW IN INDIA: LEGISLATIVE AND REGULATORY ARCHITECTURE

Historical Background Over the last few decades, an increasing number of countries have undertaken legislative as well as regulatory measures for promoting and sustaining competition and eliminating practices that adversely effect the competition in a relevant market.1 Competition law in India is governed by the Competition Act, 20022 (Competition Act), which was termed by the Organisation for Economic Co-operation and Development (OECD) as close to “state-of-the-art” competition law legislation3. The Competition Act replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) which had become obsolete in certain

areas in the light of the international economic development, more particularly in the areas of competition laws.4

The objective of the Competition Act may be inferred from its preamble, which states: “An Act to provide, keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to promote the interests of the consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.” Further, Section 18 of the Competition Act provides for duties

1 Today, there are more than 130 countries that have adopted competition laws with corresponding agencies to enforce them. United Nations member States to review the “UN Set” on competition for the seventh time (3 July 2015) http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=1031(last visited on 4 November 2016).

2 Act No. 12 of 2003. The Competition Act was enacted by the Indian Parliament in December, 2002 and received the assent of the President of India in 13 January 2003. The Competition Act was amended in 2007 in furtherance of the judgement of the Hon’ble Supreme Court in the matter of Brahm Dutt v. Union Of India (Case No.: Writ Petition (civil) 490 of 2003)

3 OECD Economic Surveys: India, Volume 2007/14, Page 109 (October 2007). 4The Statements of Objects and Reasons annexed to the Competition Bill, 2001 at paragraph 1 states

that, “In pursuit of globalization, India has responded by opening up its economy, removing controls and resorting to liberalization. The natural corollary of this is that the Indian market should be geared to face competition from within the country and outside. The Monopolies and Restrictive Trade Practices Act, 1969 has become obsolete in certain respect in light of the international economic developments relating more particularly to competition laws and there is a need to shift our focus from curbing monopolies to promoting competition.”


of the Competition Commission of India (CCI), which inter alia require the CCI to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India. The ideals and objectives stated under the preamble, Section 18 and the substantive provisions enumerated under Section 3 (Prohibition of anti-competitive agreements), Section 4 (Prohibition of abuse of dominance) and Sections 5 and 6 (Regulation of combinations) is in pari materia with the laws in some of the mature jurisdictions such as, the United States of America, the European Union, the United Kingdom, Australia and Canada. This article attempts to discuss the historical background of competition law in India and the recommendation of the high level committee set up by the Government of India for assessment of the MRTP Act leading to the enactment of the Competition Act. This piece also highlights the legislative and regulatory architecture of the Competition Act along with some of the peculiar features of the Competition Act.

Metamorphosis of MRTP Act to Competition Act: Embracing International Economic Developments

The decision to enact a new law on competition policy was announced by the Union Finance Minister in his budget speech on 27 February 1999. This was followed by the constitution of a high level committee consisting of experts under the chairmanship of Mr. S.V.S. Raghavan to examine the provisions of the MRTP Act (Raghavan Committee), and propose a modern competition law in view of the liberalisation of the Indian economy and international trends and developments.

5

The Raghavan Committee observed that the MRTP Act was limited in its sweep and failed to fulfil the needs of competition law in the present competitive milieu. Among others, some of the lacunae identified by the Raghavan Committee under the MRTP Act:

a. concepts like cartels, collusion and price fixing, bid rigging, boycotts and refusal to deal, and predatory pricing were not present in the MRTP Act;

b. provisions relating to mergers were repealed from the MRTP Act in 1991,

5 The Raghavan Committee submitted its report on 22 May 2000 to the Central Government. The Central Government consulted all concerned including the trade and industry associations and the general public. The Central Government after considering the suggestions of the trade and industry and the general public decided to enact a law on Competition. (Statements of Objects and Reasons annexed to the Competition Bill, 2011 at paragraph 2).


thus leading many cases of mergers to escape the regulatory assessment;

c. only “cease and desist” orders could be passed and the MRTP Act did not had any other powers to prevent or punish or provide for punitive/ penalty provisions;

d. MRTP Act was applicable to private and public sector undertakings only, and did not extended its reach to governmental departments engaged in business activities; and absence for provisions pertaining to competition advocacy.

Accordingly, the Raghavan Committee recommended repealing the MRTP Act and winding up the Monopolies and Restrictive Trade Practices Commission and enactment of a new legislation dealing with competition law in India, which was passed in 2002. Although the Competition Act was passed by the Parliament in 2002, it’s substantive and operative provisions were not enforced until May 2009. This was on account of a writ petition filed before the Supreme Court of India in the matter of Brahm Dutt v. Union of India

6 challenging the constitutional

validity of the appointment of a retired

bureaucrat as the head of the CCI. The Supreme Court passed its order on the said matter in January 2005, declining to grant relief sought by the Petitioner in view of the Government offering to amend the Competition Act. Accordingly, the Competition (Amendment) Bill, 2007 was passed in September 2007 which inter alia divided the competition authority, as envisaged in the original Competition Act, into two i.e., (a) the CCI as an administrative expert body; and (b) the Competition Appellate Tribunal (COMPAT) to carry out adjudicatory functions. Legislative and regulatory framework under the Competition Act

As mentioned above, in line with the competition law provisions enacted and enforced by some of the mature jurisdictions, the Competition Act also envisages three enforcement areas i.e., (a) prohibition of anti-competitive agreements; (b) prohibition of abuse of dominance; and (c) regulation of combinations.

6 (2005) 2 SCC 431. 7 While determining dominance, the CCI is required to consider the factors listed under Section 19(4)

of the Competition Act, which among other things include market share, size and resources of the enterprise, size and importance of competitors, economic power of the enterprise, including commercial advantages over competitors, vertical integration of the enterprises or sale or service network of such enterprises and entry barriers, including regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale and high switching costs.


Prohibition of anti-competitive agreements

Section 3 of the Competition Act 7

states that any agreement which causes, or is likely to cause, an ap-preciable adverse effect on competition (AAEC) in India is deemed anti-competitive. Section 3(1) of the Competition Act

prohibits any agreement with respect to “production, supply, distribution, storage, and acquisition or control of goods or services which causes or is likely to cause an appreciable adverse effect on competition within India”. Section 3(3) prohibits four categories of horizontal agreements between enterprises in the same industry (with the exception for efficiency enhancing joint ventures). These include agreements that (a) directly or indirectly determine purchase or sale prices; (b) limits or controls production, supply, markets, technical development, investment or provision of services; (c) share or divide markets or source of production or provision of services; and (d) directly or indirectly results in bid-rigging or collusive bidding.

Section 3(4) of the Competition Act identifies vertical agreements that are subject to review under a rule of reason test. The Competition Act requires the CCI to determine whether the vertical agreement will lead to AAEC. Section 3(4) specifically includes vertical agreements amongst enterprises or persons at different stages or levels of the production chain in different markets and prohibit agreements which are in the nature of (a) tie-in arrangements; (b) exclusive supply and distribution agreements; (c) refusal to deal; and (d) resale price maintenance. Section 3(5) lists exemptions from the application of Section 3, which include conditions that protect intellectual property rights and exports.


Prohibition of abuse of dominance

Section 4 of the Competition Act prohibits the abuse of a dominant position by any ‘enterprise’ or ‘group’. It defines dominant position as a position of strength enjoyed by an enterprise in the relevant market in India that enables it to operate independently of the competitive forces prevailing in such relevant market or affect its competitors or consumers or the relevant market in its favour. Section 4 stipulates that practices such as imposition of unfair or discriminatory conditions on price in purchase or sale (including predatory pricing), limiting or

restricting the production of goods, denial of market access, and leveraging market position in one relevant market to enter into another relevant market, amount to abuse of dominance.8

Regulation of combinations

Section 59 and 6 of the Competition Act are the operative and substantive provisions dealing with combinations and Section 29 to 31 read along with the CCI (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2011 (Combination Regulations)10 set

8Abuse of dominance requires an analysis of the level of dominance of the concerned enterprise in the relevant market and its abusive conduct. While determining the abusive conduct of a dominant enterprise or group, the CCI scrutinises the abusive practices by way of the following three steps: (a) determination of the relevant market; (b) assessment of dominance of such enterprise or group; and (c) assessment of its abusive conduct.

9 Section 5 enumerates broadly three types of transactions which may be termed as combination requiring prior notification and approval of the CCI for consummation, visually, (a) acquisition of control, shares, voting rights or assets by one enterprise (being the acquirer) of another enterprise (being the target entity) (Section 5(a)), (b) acquisition of control by a person over an enterprise when such person has already direct or indirect control over another enterprise engaged in the business of similar or identical or substitutable goods or services (Section 5(b)), and (c) merger or amalgamation of the enterprises (Section 5(c)).

10Combination Regulation came into force on 1 June 2011 and the CCI has amended the Combination Regulations five times i.e., in 23 February 2012; 4 April 2013; 28 March 2014; 1 July 2015; and 8 January 2016 respectively.

11In a short span of five years, approximately 450 combination notification have been made with the CCI and the CCI has cleared the majority of the merger transactions in the Phase I (i.e., within 30 days on the filing of the combination notification) and only three cases have moved to a full fledged Phase II which requires detailed inquiry.


forth the procedural provisions in relation to combinations.11 Further, a transaction will be construed as a combination for the purposes of Competition Act, if the parties cross prescribed statutory thresholds in terms of the assets and/ or turnover.12

Enforcement architecture under the Competition Act

As mentioned above, the Competition Act is enforced by the CCI (with assistance from the Director General (DG) for investigation of cases). The decisions of the CCI may be appealed before the COMPAT, whose orders in turn can be appealed before the Supreme Court of India. Some of the other salient features of the Competition Act are discussed in brief below.

Imposition of penalty

The Competition Act provides for the imposition of enormous penalties in cases of contravention. Under Section 27 of the Competition Act, if after inquiry, the CCI is of the opinion that any agreement is an anticompetitive agreement or that any enterprise has abused its dominant

12 Under Section 20(4) of the Competition Act, for the purposes of determining whether a combination

would have the effect of or is likely to have an AAEC, the CCI shall have due regard to the factors, such as actual and potential level of competition through imports in the market, extent of barriers to entry into the market, level of combination in the market, degree of countervailing power in the market, likelihood that the combination would result in the parties to the combination being able to significantly and sustainably increase prices or profit margins, nature and extent of vertical integration in the market, possibility of a failing business and nature and extent of innovation.


position, it may, inter alia, impose a penalty of up to 10 per cent of the average turnover for the past three financial years. In the case of cartels, the CCI may impose on each member a penalty of up to three times its profit for each year of the duration of the cartel.

Under Section 43A of the Competition Act, enterprises that fail to notify a qualifying combination to the CCI could face penalties that may extend up to 1 per cent of the total turnover or the assets of the combination, whichever is higher. For continuing offences, the Competition Act also empowers the CCI to impose fines that may reach up to INR 1 lakh for each day of non-compliance with the directions or orders issued by the CCI, subject to a maximum of INR 1 crore. Further, if the orders or directions of the CCI are not complied with or there is a failure to pay the fine imposed, the CCI can order imprisonment for a term of up to three years, or a fine of up to INR 25 crore. Further, Section 48 of the Competition Act allows the CCI to proceed against and penalize individuals who are responsible for the conduct of a company’s business (such as, directors, managers, secretaries or other officers).

Dawn raids

Section 41 of the Competition Act lays down the duties and powers of the DG. The Competition Act empowers the DG with the same powers relating to search and seizure (often referred to as ‘dawn raids’), as they apply to an inspector

in terms of Section 240 and 240A of the Companies Act, 1956. In terms of Section 240A of the Companies Act, where in the course of investigation, the DG has reasonable grounds to believe that the books and papers of, or relating to, any company or any other body corporate, may be destroyed, mutilated, altered, falsified or secreted, as the case may be, the DG may obtain on order of the Magistrate, to (a) enter, with such assistance, as may be required, to such places where such books or papers are kept, (b) to search that place in the manner specified in the order, and (c) seize the books and papers as he considers necessary for the purposes of his investigation. The DG has so far sparingly used the dawn raid powers under the Competition Act.

Leniency applications

Section 46 of the Competition Act read with the CCI (Lesser Penalty) Regulations, 2009 (Lesser Penalty Regulations), empowers the CCI to impose a lesser penalty on cartel members who provide full, true, and vital disclosure regarding a cartel’s existence to the CCI, provided that the member discloses the information in a timely manner; in other words, before the CCI completes its investigation in the matter. Lesser Penalty Regulations provides for marker system and accordingly provide for immunity on imposition of quantum of penalty for the first, second and third applicant of the leniency application.


Competition advocacy

Competition advocacy is one of the main pillars of the Competition Act which aims at creating, expanding and strengthening awareness of competition in the market. Section 49 of the Competition Act mandates the CCI to undertake advocacy for promoting competition and taking suitable measures for the promotion of competition advocacy, creating awareness and imparting training about competition issues.

Epilogue

Over a period of seven and five years, since the enforcement of Section 3 and 4 and Section 5 and 6 respectively, the CCI has achieved several milestones. On the behavioural front, the CCI has disposed of around 600 cases of approximately 700 cases it has handled so far indicating a positive trend for enforcement of anti-

competitive behaviour and setting-up a culture for competition law compliance by the enterprises. On merger control side, the CCI has cleared approximately 400 proposed combinations out of the 450 odd combination notification filed for its approval. Most of these approvals came within the Phase I review process thereby allaying concerns for delay and red-tapism in the approval process and building trust in the minds of India Inc. as well as foreign investors on the ease of doing business in India. The CCI has evidently made substantial headway ever since its inception by not only contributing to the competition law jurisprudence but also heavily investing in advocacy initiatives thereby garnering accolades internationally and securing a position for itself as a revered regulator. However, being a young regulator in a relatively niche sphere of law, the CCI must endeavour to further evolve its practices and standards to ensure alignment with international best practices.


CARTEL ENFORCEMENT IN

INDIA - RECENT TRENDS


Cartel Enforcement in India – Recent Trends

Competition law globally finds its origins in the necessity to prohibit cartel activity. Cartels are perceived as the most harmful anti-competitive practices and are universally dealt with an iron hand by competition law authorities. Adam Smith famously wrote of cartels in his magnum opus, An Inquiry into the Nature and Cause of the Wealth of Nations that, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices”. The Competition Commission of India (CCI) is the antitrust watchdog responsible for the enforcement and administration of the Competition Act,

2002 (Competition Act) in India. In a relatively short span of seven years, the CCI has investigated and prosecuted cartels across sectors and imposed unprecedented fines in India. For instance, the CCI fined 11 cement companies INR 6,714 crore for cartelization. This article sets out the law on cartels in India and the recent developments in cartel jurisprudence which include, imposition of penalty on individuals in-charge of the enterprises found to be operating in a cartel, the concept of single economic entity and the concept of group for the purposes of affixing liability. Overview of the substantive provisions

Section 3(1) of the Competition Act prohibits any agreement that causes or is likely to cause an appreciable adverse effect on competition (AAEC) within India. Section 3(3) of the Competition Act prohibits agreements or coordinated conduct by enterprises or persons engaged in identical or similar trade of goods or services. Under the Competition Act, the following agreements are presumed to cause an AAEC in India:

a. Agreements to fix, purchase or sale prices;

b. Agreements to limit or control the production, supply, markets, t echnical development, investment or provision of services;

c. Market sharing agreements; and


d. Bid-rigging or collusive bidding.The only exception to this rule is

joint ventures which enhance efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services.

The Competition Act lists various factors to determine whether an agreement would lead to an AAEC in India. While the first three factors assess the negative effects on competition, the remaining factors relate to the positive effects.e. creation of barriers for new entrants in

the market;f. driving existing competitors out

of the market;g. foreclosure of competition by hindering

entry into the market;h. accrual of benefits to consumers;i. improvements in production or

distribution of goods or provision of services; and

j. promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services.

Once the existence of an agreement is established under the Competition Act, the onus to prove that the agreement

will not result in any AAEC lies with the parties accused to be the alleged cartel participants. Over the years, given that the CCI, by way of its orders has significantly diluted the definition of what constitutes an agreement for the purposes of Section 3, this onus has progressively become more onerous for the parties under investigation.

An agreement1 for the purposes of Section 3 is very widely defined under the Competition Act to include any arrangement, understanding or action in concert, whether or not such agreement is formal or in writing or enforceable by legal proceedings, and whether explicit or tacit. Resultantly, the form of agreement is immaterial. In All India Tyre Dealers’ Federation v. Tyre Manufacturers2 (Tyre Case), the CCI held that the existence of an explicit agreement is not required and can be inferred from the intention or conduct of parties. Investigation under the Competition Act An investigation into the violation of the Competition Act can be commenced

1 Section 2(b) of the Act defines ‘agreement’ as follows: an agreement includes any arrangement or understanding or action in concert:

a. whether or not such arrangement, understanding or action is formal or in writing; or b. whether or not such arrangement, understanding or action is intended to be enforceable by legal

proceedings. As such, an agreement could be oral or written. 2 RTPE No. 20/2008.


by the CCI on the basis of a reference from the Central or State government, information filed by any person, consumer or association thereof or a trade association and suo moto. On the basis of the information if a prima facie case of violation of the cartel provisions of the Competition Act is established, the CCI directs the DG to conduct a detailed investigation and draft a report on the findings of the investigation (DG Report). 3 The DG Report is provided to the parties under investigation and the informant, and all the parties are given the opportunity to present their objections / submissions upon the findings of the DG before the CCI in writing and orally. The CCI upon consideration of the objections/submissions by the parties arrives at its conclusion. At this stage, the CCI can either absolve the parties under investigation or arrive at a conclusion of cartelization and impose penalties upon the enterprises and the individuals controlling the affairs and management of such enterprises. Under the Competition Act, the CCI has wide discretionary powers to impose monetary penalty of upto three times the profit or ten per cent. of the average turnover for the period of the cartelization, whichever is higher.

Evolving concept of ‘standard of proof ’

The standard of proof employed by the CCI in cartel cases has evolved over the years from ‘beyond reasonable doubt’ – applicable to criminal offences to that of, ‘balance of probabilities’ or ‘preponderance of probabilities’ applicable to civil offences. The CCI in its first order in a cartel case, Neeraj Malhotra v. Deutsche Post Bank Home Finance Ltd & Ors4 set out the conditions for proving the existence of an ‘agreement’. While the DG concluded that the banks had formed a cartel, the CCI held that the levy of pre-payment penalties for the foreclosure of home loans does not amount to cartelisation. The CCI noted:

The word ‘agreement’ for the purposes of the Act has wide connotations as defined under Section 2(b). However, it is imperative that existence of such an ‘agreement’ is unequivocally established. The European Court of Justice has clearly laid down this principle with respect to infringements of Article 81(1) of the EC Treaty in... Compagnie Royale Asturienne des Mines SA and Rheinzink GmbH v. Commission wherein the Commission has said that precise and coherent proof must be produced by the party or authority alleging infringement […].

3 Section 26 (1) of the Act. 4 Decision dated 2 December 2010 in Case No. 5/2009. The case related to levying of pre-payment

penalties on homeowners for foreclosure of loans. 5 Suo motu case No. 3/2011, decided on 24 February 2012.


The decision and the dissenting order demonstrated divergent approaches in relation to the term ‘agreement’. The majority preferred a ‘meeting of minds’ or concerted approach, while the minority was satisfied with the factual existence of a common (though not ‘concerted’) approach. The CCI diluted the standard of proof required to be establish the existence of an agreement in violation of Section 3 (3) in its subsequent orders.

In the LPG Gas Cylinder Manufacturers’ case5, the CCI observed that cartels have been treated as a civil offence under the Competition Act and therefore, the standard of proving the violation “beyond reasonable doubt” would not apply to Section 3 violations. Instead, the proof in cases of cartels should establish the offence on “balance of probability” and “liaison of intention”. The CCI further held that cartels being an offence where proof is difficult to obtain, indirect or circumstantial evidence may be used to support a finding of a cartel.

Thereafter the CCI in re: Aluminium Phosphide Tablet Manufacturers observed that since cartels relate to secret or clandestine understandings, it is difficult to obtain ‘well-documented’ proof. Hence, in the absence of evidence of a written agreement, the CCI held that reliance

can be placed on other sources of credible evidence. In this case, identical pricing in bids despite varying cost structure of the parties and common entry in the visitors’ register for all the three parties when submitting the bids, was held to be sufficient evidence to establish the existence of an understanding between the parties.

Subsequently, In re: Sugar Mills6, the CCI laid down the standard of proof required in cartel cases and held that (i) “conclusive proof of meeting of minds” is required; (ii) there must be evidence of the alleged cartel participants having met and decided to take concerted action; and (iii) the concerted action must have been implemented. The CCI found there to be no evidence of a cartel in this case.

The decision of the CCI in the Builders Association of India v. Cement Manufacturers’ Association & Ors7 (Cement Cartel) was a watershed in the cartel jurisprudence in India. The CCI for the first time, in the absence of direct evidence, accepted the existence of a cartel on the basis of circumstantial evidence alone. The CCI concluded that an increase in cement prices, following two meetings of the Cement Manufacturers’ Association (CMA) and a steady reduction in the production that did not match with the

6 Case No. 1 of 2010. 7 Case No. 29 of 2011


capacity utilisation patterns from previous years and was sufficient evidence to indicate cartelisation. Further, the CMA while collecting retail and wholesale prices provided an opportunity to the cement companies to discuss production and prices. The Cement Cartel case was appealed before the Competition Appellate Tribunal (COMPAT) which set aside the CCI order on the ground of violation of principles of natural justice and remanded the case back to the CCI to pass fresh orders. Recently, the CCI passed its order in the Cement Cartel case wherein the CCI upheld its findings in the previous order as well as the penalty imposed on the 11 cement companies. This standard of proof was subsequently emphasised by the CCI in the Tyre Case. Further, the CCI recently in the Airline Fuel Surcharge case8 found three airlines guilt of cartelization on account of the increase in fuel surcharge by each of the airlines on same or nearby dates along with no plausible reason for such an increase.As such, the CCI is increasingly relying on parallel conduct to establish the existence of a cartel. However, international best practices suggest that parallelism alone is not sufficient to prove an allegation of cartelisation. The existence of certain ‘plus’ factors is required to be established when circumstantial evidence alone is relied upon to prove an allegation of cartelisation.

Recent Developments Individual Liability

The Competition Act contains provisions for attributing liability for violation of the cartel provisions of the Competition Act upon individuals such as director, manager, secretary or any other officer of the company. Such an individual(s) can be held responsible in the event it can be established that such individual(s) were responsible for the affair of the company at the time the violation occurred or that they were aware of the violation. The CCI in the Bengal Chemist case6 for the first time, not only held the Bengal Chemists and Druggists Association (BDCA) guilty for anti-competitive practices and penalized it, but also held the office bearers of the BDCA guilty under section 48 of the Competition Act. To determine the penalty to be imposed upon the individuals, the CCI took into account, the income certificates of the concerned office bearers and imposed a cumulative penalty of INR 18.38 crore (while the penalty on BDCA was a mere INR 13.24 lakh). This decision was a breakthrough for the CCI, given that this was the first instance wherein penalties on individuals were imposed.Similarly, the CCI found the office bearers of Indian Jute Mills Association (IJMA) and Gunny Trade Association (GTA) to be vicariously liable

8 Case No. 30 of 2013. 9Case No. 38 of 2011.


and penalized such persons who were members of the Executive Committee of IJMA and the Executive Committee of GTA @ 5 per cent of the average income of the last three financial years in the Indian Jute Mills Association case9.

Single Economic Entity

The basic premise of a cartel presupposes agreement between two or more enterprises. The grouping of several enterprises or persons into a single economic entity leads to the question whether an agreement amongst such enterprises or persons can be considered a cartel.

While this concept is widely recognized in mature competition jurisdictions such as

the European Union (EU) and the United States of America (USA), it is a gradually evolving defence to a cartel and anti-competitive agreement allegation in India. The ‘single economic entity’ defence was argued before the CCI for the first time in the Lambhorgini case.10 While ruling upon an allegation of an anti-competitive vertical agreement 11 the CCI held that an internal agreement between entities that are part of the same group cannot be viewed as an ‘agreement’ for the purposes of establishing a violation of Section 3 of the Competition Act. This decision of the CCI was further endorsed and reinforced by the COMPAT. 12

Recently, the single economic entity argument was adopted by 4 insurance companies 13 while defending a cartel

10 Exclusive Motors Pvt. Lt.d v. Automobili Lambhorgini, Case no. 52 of 2012. 11 Section 3 (4) of the Act. 12 In re: Cartelization by public sector insurance companies in rigging the bids submitted in response to the

tenders floated by the Government of Kerala for selecting insurance service provider for Rashtriya Swasthya Bima Yojna, Case No. 2 of 2014.

13 National Insurance Co. Ltd., New India Insurance Co. Ltd., Oriental Insurance Co. Ltd., and United India Insurance Co. Ltd.


allegation before the CCI. However, in this instance, the CCI found the 4 insurance companies guilty of bid-rigging and imposed a cumulative penalty of INR 6,71.05 crore @ 2 per cent of the average turnover of the past three financial years

The insurance companies argued that while they did discuss the prices to be quoted in the tender, given that they were wholly-owned subsidiaries of the Government of India (GoI), controlled by the Ministry of Finance (MoF), the 4 insurance companies constituted a single economic entity. As such, the discussion amongst the 4 insurance companies could not be considered an agreement to manipulate the bids for the tender. The CCI dismissed the above argument on the ground that the insurance companies submitted separate bids and all decisions in relation to the bids were taken internally at company level without any approval from the MoF. The CCI’s decision was appealed before the COMPAT and is pending adjudication.

Group Companies

Closely related to the concept of a single economic entity is the concept of ‘group’14. Enterprises that form part of the

14 The explanation to Section 5 (b) defines group ‘Group’ for the purposes of the Act to mean two or more enterprises which, directly or indirectly, are in a position to:

• Exercise50%ormoreofthevotingrightsintheotherenterprise;or• Appointmorethan50%ofthemembersoftheboardofdirectorsintheotherenterprise;or• Controlthemanagementoraffairsoftheotherenterprise.


15 Containers with disc, required for 81 mm bomb.

same group may be deemed to constitute a single economic entity. Recently, while investigating a cartel of thirteen manufacturers/ suppliers of “CN container” 15 the DG observed that one of the parties being investigated, i.e., Narendra Explosive Limited (Narendra Explosive) had a group company engaged in a similar business activity. As such, the DG proceeded to extend the cartel conduct to Narendra & Company on the ground that it belonged to the same group as Narendra Explosive.

The COMPAT on appeal dismissed the finding against Narendra & Company given that the DG had erroneously clubbed Narendra Explosive and Narendra & Company in the investigation and the lone fact that the same individual was a shareholder in one of the companies and the proprietor of the other cannot lead to a finding that the two enterprises form part of the same group.

Conclusion Over the past seven years, the jurisprudence on the law of cartels has significantly evolved in India. The CCI has proactively pursued cartels as is evidenced by the large number of suo moto cases investigated and adjudicated upon by the CCI. While the standard of evidence required to prove an agreement has been diluted over the years, it is pertinent that the CCI employs more sophisticated economic and data analysis in its investigations in this field. In addition to the above, given the extensive powers provided to the CCI to enforce the provisions of the Competition Act and to impose heavy penalties it is imminent that the CCI publishes guidelines for determining the quantum of penalty to be imposed on companies and individuals for violations of the Competition Act. Further, India has a leniency regime wherein cartel participants are encouraged to break rank

and provide information to the CCI in relation to the cartel in lieu of immunity from penalty.

Although there have been a few leniency applications, given the absence of any CCI orders in this regard, there is no publicly available information about the course of investigation and the success of such leniency applications. Further, the experience from EU and US competition regimes prove that as the competition law in a given jurisdiction evolves, leniency applications progressively become the primary means of detection of cartels. As such, it is likely that in the years to come, cartel investigation in India will be driven by the leniency regime.


CEMENT CARTEL CASE - A CRITICAL ANALYSIS


The Competition Commission of India (CCI) recently passed an order in the Cement Cartelization Case1 - one of the most landmark cases in the Indian antitrust regime. The order, dated 31 August 2016 (Order), was passed pursuant to the directions of the Competition Appellate Tribunal (COMPAT). By way of background, the case originated from a complaint filed by the Builders Association of India (BAI) with the CCI in the year 2010 against the Cement Manufacturers’ Association (CMA) and 11 cement manufacturing companies2 (collectively, the Opposite Parties). Based on the inquiry conducted in this case, the CCI, in June 2012, (2012 Order) had imposed a penalty of INR 6,317.32 crore on the Opposite Parties for allegedly using the platform provided by the CMA to act in concert, fix cement prices as well as limit and control production and supply of cement in the market, thereby contravening the provisions of Section 3(1) read with Sections 3(3)(a) and 3(3)(b) of the Competition Act, 2002 (Competition Act) which prohibit anti-competitive agreements, in particular, cartelization. In addition, a complaint that had been previously filed by BAI under the erstwhile Monopolies & Restrictive

Trade Practices Act, 1969 against cement manufacturers3 in 2006 and was transferred to the CCI (RTPE No. 52/2006) (RTPE Case), was also dealt with by the CCI.

Pursuant to an appeal filed by the Opposite Parties before the COMPAT, the 2012 Order was set aside on grounds of violation of principles of natural justice and the matter was remanded to the CCI for fresh adjudication. The primary reason for the COMPAT’s decision was the absence of the CCI Chairman (who was a signatory to the 2012 Order) during the hearings where the Opposite Parties presented their oral arguments. Consequently, the CCI re-heard the Opposite Parties (Oral Hearings) and passed the Order, upholding its findings in relation to each of the issues in entirety. The Order also placed reliance on the report of the Director General (the investigate arm of the CCI) (DG) which was submitted to the CCI for the 2012 Order.

This article highlights certain key findings of the CCI and briefly analyzes whether the CCI has adequately employed economic tools in its determination of cartel conduct by the Opposite Parties.

1Builders Association of India v. Cement Manufacturers’ Association & Ors (Case 29/2012).2ACC Limited, Ambuja Cements Limited, UltraTech Cements, Grasim Cements (now merged with UltraTech Cements), JK Cements, India Cements, Madras Cements, Century Cements, Binani Cements, Lafarge India and Jaypee Cements. 3 In addition to the 10 cement companies (excluding Grasim cement), the Information in the RTPE Case also included Shree Cement Limited as a party.


All-India Cartel The Opposite Parties’ key arguments before the CCI during the Oral Hearings were premised on the DG’s failure to adequately establish the existence of the cartel. One such argument was that the DG could not have concluded on the existence of a pan-India cartel, in view of the cement industry’s regional nature – a fact which the CCI itself recognizes in several of its decisions analyzing M&A transactions in the cement space. The CCI, in the Order, was of the view that while the cartel arrangements may have been implemented at regional levels, the Opposite Parties could have entered into anti-competitive agreements at a national level. However, both the DG and the CCI failed to rationalize as to why regional players in the cement industry, who operate in different parts of the country, would cartelize with each other. Further, the CCI did not acknowledge that the regional nature of the market could imply varying market conditions in each region,

which meant that players would have to base their arrangements on such region-specific conditions.

The CCI also noted that when regional markets are viewed separately, the concentration levels may be higher, thereby making the regional markets more conducive for cartel conduct. Furthermore, the CCI observed that there was no specific threshold of concentration level, above which collusion becomes likely. However, several global antitrust regulators such as the European Commission (EC) and the Department of Justice – Federal Trade Commission, USA (DoJ) recognize that certain levels of concentration, typically measured using the Herfindahl-Hirschman Index4(HHI), are indicative of concentrated markets which facilitate collusion. Nevertheless, the CCI did not undertake a concentration ratio analysis to that effect.

4 For instance, the DoJ’s Horizontal Merger Guidelines, classify markets into three types: • Unconcentrated Markets: HHI below 1500; • Moderately Concentrated Markets: HHI between 1500 and 2500; and Highly Concentrated• Markets: HHI above 2500.•


CMA as a platform for cartelization

The CCI reiterated its findings in the 2012 Order and held that the CMA was being used as a platform to collect data relating to prices (retail and wholesale level), production, dispatch, capacity utilisation, etc., thereby, facilitating cement manufacturers to determine prices and production in a concerted and collusive manner. As highlighted by the Opposite Parties, the CMA collected cement prices on a weekly basis for the Department of Industrial Policy and Promotion (DIPP), based on the direction of the Ministry of Commerce. While the CCI recognized that the CMA had sought clarification from the DIPP on whether it should continue to collect cement prices in light of the Competition Act, it had done so prior to the provisions of Section 3 being brought into force. The CCI also noted that mere collection of prices by the CMA would not be anti-competitive, unless such information was shared with other cement companies.

In relation to the role played by the trade association in forming a cartel, the CCI observed that the platform of the CMA was “apparently” used in sharing “critical information” amongst cement companies. The information being collected by the CMA related to past retail cement prices as a range


and wholesale prices, which the CCI concluded as being strong evidence of co-ordinated behavior. Pertinently, the EC’s guidelines specify that information exchange of historic data is unlikely to result in a collusive outcome since it is not indicative of the competitors’ future behavior. Further, the guidelines stipulate that in order to facilitate collusion, information exchange should reduce strategic uncertainty amongst players – however, the CCI did not analyze whether such information being shared by CMA was useful for determining the Opposite Parties’ future conduct or elucidate how the past retail and wholesale prices were being utilized by the Opposite Parties’ to collude amongst each other.5

5Guidelines on the Applicability of Article 101 of the Treaty on the Functioning of the European Union to Horizontal Co-Operation Agreements, 2011/C 11/01.


Standard of Proof and “Plus Factors” The CCI held that based on the inclusive definition of the term ‘agreement’ and the clandestine manner in which anti-competitive agreements are entered into, the standard of proof would be that of preponderance of probabilities and direct evidence was not needed for such cases. The agreement was to be inferred from a number of co-incidences and indicia which, taken together, may, in the absence of any other plausible explanation, constitute evidence of the existence of an anti-competitive agreement.

It should be noted that circumstantial evidences can, in some cases, be ambiguous and subject to differing interpretations. Accordingly, competition law regulators are required to analyze whether the conduct evidenced by such circumstantial evidence is a result of collusion or independent action by players6. In the instant case, it is arguable whether the CCI has appropriately interpreted the circumstantial evidence as reported by the DG and considered if such evidence could also be based on pro-competitive behaviour or the nature of industry, market conditions, etc.

For instance, the CCI has characterized the cement market in India as an oligopolistic market while noting that interdependence between firms is an important feature of such a market. There is established jurisprudence which recognizes that the existence of

an oligopolistic market does not always imply collusion.7 The CCI has also previously recognized the absence of collusion in oligopolistic markets where players merely “mimicked their rivals’ conduct”. In its decision in Shailesh Kumar v. M/s Tata Chemicals Limited and Ors.8, while noting that soda ash manufacturers were not engaged in cartel conduct, the CCI observed that in a highly concentrated market, players may maintain their prices at supra-competitive levels, or even raise them to those levels, without engaging in any overt concentrated action. The CCI held that while oligopoly pricing may result in prices above the competitive price level, such pricing is an outcome of the structure of the market. Accordingly, if it were to be assumed that the cement market is highly oligopolistic in nature, the prices of all players moved in the same manner and players charged high prices which resulted in “supra-normal” profits, such conduct could be regarded as an outcome of the oligopolistic nature of the market and does not necessarily imply the existence of a cartel.

Further, the CCI undertook a price correlation analysis to establish that there was a strong positive correlation in the prices of most of the Opposite Parties in a given State. In relation to the Opposite Parties’ arguments regarding use of correlation percentage change in prices rather than correlation of absolute price, the CCI was of the view that such ‘hair


splitting’ analysis was not required – as it did not change the finding of price parallelism. The CCI also observed that it was sufficient to state that the cartel participants do not necessarily change prices in the same ratio, nor do they effect changes on the same day and that correlation of absolute prices was a sufficient indicator to establish price parallelism. Interestingly, the CCI observed that high level econometrics or statistical tools is not required to observe price-parallelism. However, the CCI’s decision in Express Industry Council of India v. Jet Airways (India) Ltd.9(Airlines’ Case), reveals that conducting the price correlation analysis based on percentage change may lead to differing results. In the Airlines’ Case, which related to alleged cartelization for fuel surcharge in cargo transport, both, the absolute and percentage based analysis were conducted by the DG to deduce price parallelism. The CCI noted that the two analyses gave significantly conflicting observations. The absolute analysis highlighted a positive correlation while the percentage analysis gave a negative correlation. In the backdrop of the given ambiguity, the CCI concluded that correlation analysis was not a good indicator of the behaviour of the movement of fuel surcharge of

the airlines and did not provide any conclusive evidence of the nature of this relationship. It is possible that a correlation coefficient analysis of the prices being charged by cement players, based on percentage change, would also have resulted in a differing conclusion by the CCI.

Additionally, in order to establish the existence of the cartel, the CCI examined the prices of cement after High Powered Committee (HPC) meetings of the CMA. While the CCI noted that seven HPC meetings were held in the relevant period, the CCI based its conclusions only on the increase in prices after two of such meetings. To substantiate its finding, the CCI stated that in a cartel arrangement, the conduct of the parties may represent a competitive market structure and it was not necessary that prices would increase after every meeting. However, such selective analysis is indicative of the absence of a holistic examination of circumstantial evidence by the CCI. Further, the CCI placed reliance on the minutes of one of these seven HPC meeting, where the cement manufacturers’ discussed seeking a legal opinion on the treatment of excise duty on clinker, to conclude

6 Prosecuting Cartels without Direct Evidence, OECD, 2006. 7 Ibid. 8 Case no. 66 of 2011. 9 Case No. 30 of 2013.


that the cement companies were sharing information about price, which facilitated discussion on determination of prices and production. It is common knowledge that most trade associations act as a platform for players to discuss policy issues and it is unclear how such discussions could be indicative of collusion.

Further, the CCI also placed reliance on low capacity utilization by cement manufacturers. The CCI’s case was that the cement manufacturers deliberately restricted production by underutilizing their plants’ capacities in order to restrict the supply of cement in the market, create an artificial shortage and then increase prices to generate profits. However, the CCI ignored the fact that low capacity utilization could also have resulted from an increase in installed capacity which was not commensurate with the increase in demand for cement. This is also evidenced from the fact that the dispatch of cement in all months of 2010-11 was more than (and not even equal to) the cement consumption in such months.

The CCI has also viewed the absence of documentary evidence for the change in prices by the cement manufacturers as a factor establishing anti-competitive conduct. The CCI noted that while the Opposite Parties had submitted that

pricing decisions were based on the feedback received from sales offices, none of their communication changing prices reflected the reason for such change. The CCI’s reliance on absence of documentation for pricing decisions could have been useful if such absence was noticed only in cases where the prices were increased based on the cartel arrangement. However, mere absence of a “formal mechanism” to document pricing decisions, including price reductions, cannot be viewed as evidence of collusive behaviour.

In relation to production parallelism, an additional factor on which the CCI placed reliance, it noted that the Opposite Parties reduced production in November 2010, as compared to October 2010, which was not the case in the year 2009. However, while the CCI did place reliance on production statistics of one month to establish production parallelism, it did not explain as to why there should have been a year-on-year consistency in production trends.

As such, there are alternative and equally, if not more, plausible explanations to the various plus factors and circumstantial evidences examined by the CCI which, may lead to contrary conclusions.


Penalty

In line with the 2012 Order, the CCI imposed a penalty of 0.5 times of the net profits for the past two years (here it was 2009-10 (from 20 May 2009) and 2010-11). However, when examining economic evidence such as price increase after HPC Meetings and production and dispatch parallelism, the CCI’s conclusions were based on statistics for the year 2010-2011 and it noted that there may be periods

of competitive conduct and periods when coordination is more gainful than competition. While the Competition Act stipulates that the CCI should impose penalty based on profits on turnover “for each year of continuance” of the cartel, the CCI did not outline the duration of the cartel and chose to impose penalty on the entire duration under investigation.

Conclusion Although the CCI has tried to do way with procedural errors in light of the COMPAT’s order, several of the Opposite Parties have already announced their intentions of appealing the Order before the COMPAT. The decision that will now be passed by the COMPAT is likely to be precedent setting for all future cartel investigations and it can only be hoped

that the COMPAT’s decision will provide concrete guidelines and evidentiary thresholds for cartel findings, which are adequate to warrant the imposition of such high economic penalties.


DAWN RAIDS: ARE YOU PREPARED?


Introduction On 23 August 2016, officials from the Office of the Director General DG, the investigative arm of the Competition Commission of India CCI, conducted a search and seizure operation at the offices of Eveready Industries Limited Eveready. Such search and seizure operations or ‘dawn raids’ as they are popularly known, are common tools for antitrust agencies worldwide, although not very common in India. The dawn raid on Eveready was but the second of its kind in India, the first one being on 22 September 2014 at the premises of JCB India Limited JCB India. Given the highly intrusive nature of such operations, the dawn raid on Eveready is likely to signify the beginning of a more pro-active approach by the CCI in enforcing the provisions of the Competition Act, 2002 Competition Act.

Dawn raids are highly effective tools in the hands of antitrust and competition regulators across the world. This is true especially in cartel cases where direct evidence of the infringement may only

be obtained by a search and seizure operation upon the premises of the suspected participants. Accordingly, dawn raids have become common occurrences in advanced antitrust jurisdictions such as the United States of America US and the European Union EU. Further, given that many cartels operate across national boundaries, antitrust agencies from different countries often co-operate with each other to conduct simultaneous raids in across jurisdictions. To take an example, in 2009, pursuant to a leniency application, there were simultaneous dawn raids across the US, EU and Brazil on companies engaged in the manufacture and sale of compressors. Given that the CCI has established close links with several overseas antitrust regulators such the US Department of Justice, Federal Trade Commission, European Commission EC, the Russian Federal Antimonopoly Service and the Australian Competition and Consumer Commission, CCI’s participation in such co-ordinated dawn raids is a very likely proposition in the future.

Legal background The power to conduct a dawn raid is conferred upon the DG under the provisions of Section 41 of the Competition Act. Section 41 lays down that the investigation made by the DG is to be conducted in accordance with the provisions of Sections 240 and 240A of

the Companies Act, 1956 CA 1956. As per the above provisions, the DG has the power to conduct a search or seizure operation on the premises of a company and its officials after obtaining a warrant from the Chief Metropolitan Magistrate, Delhi, if he has the ‘reasonable


apprehension’ that books, papers or other material documents relating to the company may be destroyed, mutilated, falsified etc. In 2013, the Indian parliament passed the Companies Act, 2013 (CA 2013) which repealed Sections 240 and 240A of the CA 1956 and replaced them with the new Sections 217 and 220. While Sections 217 and 220 of the CA 2013 are broadly similar to Sections 240 and 240A of the CA 1956, a crucial difference is that the CA 2013 does away with the express requirement of obtaining a warrant from a judicial magistrate before conducting a search and seizure operation. However, the Code of Criminal Procedure, 1973 CrPC applies to every search and seizure operation carried out by the DG. Since the CrPC mandates that search and seizure operations be conducted with a judicial warrant, it is likely that, notwithstanding the lack of an express requirement under the CA 2013, the DG will have to continue to seek a warrant from the Chief Metropolitan Magistrate, Delhi before conducting a dawn raid.

Within the scope of its powers to conduct a dawn raid, the DG is empowered to seize the books and documents of the company. Emails and electronic evidence is of particular interest to competition authorities across the world and it is likely that the DG will seize, apart from documents, electronic devices such as computer hard-drives etc. The DG also has the power to depose concerned persons. At this juncture, it is important to mention that the DG’s conduct during

its first ever dawn raid conducted is being examined by the Supreme Court of India at present. JCB India had challenged the 17 September 2014 order of the Chief Metropolitan Magistrate, Delhi, which gave the DG the right to conduct the search and seizure operation, before the Delhi high Court. The warrant issued allowed the DG to search and inspect the premises, however, the DG seized certain material found in the premises as well. The Delhi High Court, on 2 June 2016, restrained the CCI from using any of the material seized from the premises of JCB India for the purpose of the investigation, on the grounds that the warrant did not authorize the CCI to seize any materials from such premises. This order of the Delhi High Court is being heard by the Supreme Court at present and when decided, would give useful indications about the scope of the DG’s powers. However, it is pertinent to note that this would not prevent the DG from seizing any materials in a subsequent instance, as all it would take would be obtaining a warrant which allows the DG to do so.

Unlike certain other jurisdictions such as the EU, there are no guidelines with respect to dawn raids in India. For example, the European Commission has issued guidance in the past (and most recently in September 2015) on the conduct and scope of a dawn raid. Further, the European Court of Justice ECJ, on 18 June 2015, came down heavily on the EC for indulging in a ‘fishing expedition’. The ECJ found that dawn raids conducted by the EC on Deutsche


Bahn in 2011 were partially illegal. The ECJ held that the EC must state in its warrant (authorizing the dawn raid) the reasons for its inspection by specifying the subject matter and purpose of the investigation, and that the information obtained during such a dawn raid must not be used for any other purpose other than indicated in the warrant. There are no such guidelines in India at present. Hence, the scope of the DG’s powers with respect to dawn raids is wide, and mostly untested.

In light of this, it is important for enterprises to constitute a formal protocol

to be implemented when the DG comes calling. The immutable rule of thumb in such cases is to co-operate with the DG at all times, since any non-cooperation is likely to result in significant penalties.1 Non-cooperation is also likely to be seen as an aggravating factor when deciding the quantum of penalty, should it come to that. While the CCI has not prescribed any guidelines or issued any guidance on how enterprises, below is a checklist of steps, based on international best practices, which may be taken/implemented by enterprises to contain and attenuate the risks posed by a dawn raid by the DG.

What to do before a dawn raid takes place The CCI is a pan-sectoral regulator, thus no entity which qualifies as an ‘enterprise’ under the Competition Act is truly immune from a dawn raid.2 Bearing this in mind, it is advisable for all enterprises to designate a dawn raid contact Designated Contact. The Designated Contact should be known to the entire organization. This is the person

who must be contacted by the reception/front desk/security station Front Desk at the very outset when DG’s officials Raiding Party arrive at the premises. The Designated Contact is responsible for alerting the senior management of the dawn raid, reaching out to internal and external counsel, initiating the established dawn raid protocol and being the primary liaison with the Raiding Party.

1 Section 43(b) of the Competition Act lays down that if any person fails to comply, without reasonable cause, any direction of the DG whilst he is, inter alia, conducting a search and seizure operation, he shall be punishable with fine which may extend up to INR 1 Lakh for each day during which such failure continues, subject to a maximum of INR 1 Crore, as may be determined by the CCI.


What to do when the DG’s officials arrive

The point of arrival of the Raiding Party is the one which is fraught with the most amount of risk – since the team usually arrives unannounced. However, the shock effect of their arrival can be contained by establishing a reception protocol. The first point of contact between the Raiding Party and the employees of the enterprise is the Front Desk. Upon arrival of the Raiding Party, the Front Desk must immediately inform the Designated Contact. Once the Designated Contact has been informed, the Front Desk must check the identity cards of all the officials and make a note of their names and designations. The Front Desk must also ask to see the warrant and make a copy of it, if permitted.

It is not obligatory for the Raiding Party to wait until any members of the senior management or internal/external counsel arrive. However, the Front Desk must request the Raiding Party to wait in a designated spot (preferably a room away from the main working stations), offer them refreshments and general seek to keep them occupied till the Designated Contact/internal or external counsel arrives. If the Raiding Party insists upon initiating the inspection, the Front Desk must not impede them in any manner. However, if the Designated Contact or any member of legal team is not present at the moment, the Front Desk must alert certain senior employees to shadow the Raiding Party at all times.

2 Section 2(h) of the Competition Act defines an ‘enterprise’ to mean - …a person or a department of the Government, who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries, whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or at different places, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space. Explanation.-For the purposes of this clause,— (a) “activity” includes profession or occupation; (b) “article” includes a new article and “service” includes a new service; (c)“unit” or “division”, in relation to an enterprise, includes (i) a plant or factory established for the production, storage, supply distribution, acquisition or control of any article or goods; (ii) any branch or office established for the provision of any service.


What to do once the dawn raid has begun Once the Raiding Party initiates the inspection, the Designated Contact must ensure that members of the internal and external legal counsel reach the premises at the earliest. Further, the Designated Contact has the responsibility of warning all the employees in the premises that a dawn raid is taking place at that time. The Designated Contact must also quickly form two teams of employees to support the Raiding Party as it begins to inspect the premises. One team must shadow every member of the Raiding Party and keep a list of all documents being seized/copied, as well as note the names of every employee spoken to/deposed by the officials. The second team must stand by for administrative assistance. All documents sought by the Raiding Party should be quickly photocopied by this team and given to the officials. When docents are

being photocopied, two copies must be made – one for the Raiding party and one for the legal team to scrutinize post the dawn raid. The Designated Contact is responsible for collecting all such photocopies and presenting the comprehensive set to internal and external counsel. In case the Raiding Party seeks access to email servers and documents stored in electronic form, members of the company’s IT team must be kept on standby to assist the Raiding Party in this. Further, the IT team must keep detailed records of the information copied and taken away by the raiding party, to be submitted at the earliest to the Designated Contact. In the event the Raiding Party seeks statements from/deposes any employee or person connected with the investigation, the shadowing employees must note down the name of the person giving the statements as well as the details of what was said.

What NOT to do once the dawn raid has begun

As said above, the broad rule of thumb is that the Raiding Party not be impeded in any way. All staff must be instructed to co-operate (strictly to the extent

required) with the Raiding Party. Under no circumstances must any documents, physical or electronic, be destroyed or hidden. The same rule applies to emails.

What to do after the dawn raid has ended

It is likely that news of the dawn raid will leak out and the company may

be contacted by media personnel for details. A member of the corporate


communication team must be designated to handle media queries. They must be instructed to confirm that a dawn raid took place, but in no event given any details regarding the information/documents seized/copied by the Raiding Party. Once the Raiding Party has left the premises, the Designated Contact should immediately compile the list/inventory of all document sand information which was seized/copied by the Raiding Party. This is to be handed over to internal and external counsel at the earliest. Further, a

list of all employees who have been asked to orally provide any information by the Raiding Party must be compiled and presented to internal and external counsel so that they can be properly debriefed.

The legal team (comprising of both internal and external counsel) are to assess the information/document seized/copied by the Raiding party and prepare a comprehensive risk assessment for senior management. In the event the Raiding Party has acted beyond the scope of their warrant or seized legally privileged documents, senior management may consider appropriate legal action.

Conclusion Given their effectiveness, instances of dawn raids in India are only bound to increase. While a dawn raid is an extremely intrusive experience for any enterprise, by putting into place a comprehensive protocol and training employees suitably, the effects and consequences of a dawn raid by the CCI can be contained to a significant extent. External counsel may be brought in to establish such protocols and institute training sessions for employees. In any event, it must be remembered that a

dawn raid is merely an investigation procedure. By itself, it is no proof of any contravention. Handling a dawn raid properly thus goes a long way in ensuring that interests of the company are protected to the fullest extent possible.


DUE PROCESS AND THE COMPETITION COMMISSION OF INDIA’S PROCEEDINGS


Introduction Due process is the underlying principle which lays down the inalienable requirement that all judicial, quasi-judicial and administrative bodies must adhere to and respect all the legal rights owed to a person, including principles of natural justice, while discharging their functions.

The principles of natural justice are ingrained in judicial procedures to root out arbitrary behaviour by adjudicating bodies. The principle of natural justice are an essential inbuilt component of the judicial mechanism, through which decision making process passes, in the matters touching the rights and liberty of the people.1 As such, the principles of natural justice primarily entail twin concepts of the rule against bias and right to a fair hearing. Over the years the scope of natural justice has been broadened substantially. However, due to its over arching nature, the principles of natural justice have been often defined to mean ‘the natural sense of what is right and wrong’2 and ‘ fundamental justice’3.

The Constitution of India, (Constitution) does not have express provisions articulating the principles of natural justice. However, the Supreme Court of India (Supreme Court) has indoctrinated the principles of natural justice in India through wide interpretations of Articles 14, 19, 21, 22, 39A of the Constitution. The Supreme Court in Mohinder Singh Gill v. Chief Election Commissioner4,


stated that “natural justice is a pervasive facet of secular law where a spiritual touch enlivens legislation, administration and adjudication, to make fairness a creed of life. It has many colours and shades, many forms and shapes and, save where valid law excludes, it applies when people are affected by acts of authority. It is the bone of healthy government, recognised from earliest times and not a mystic testament of judge-made law”.

Further in the landmark case of Maneka Gandhi v. Union of India5 the Supreme Court emphasized the importance of adoption of a “ fair, just and reasonable” procedure by judicial and administrative authorities. Consequently, over the years, the legislature has consciously provided express provisions in various legislations requiring quasi-judicial bodies to uphold the principles of natural justice.

Scheme of competition law in India The Competition Act, 2002 (Competition Act) encapsulates the competition law regime in India. The Competition Act provides for the establishment of a specialized quasi-judicial body, the Competition Commission of India (CCI) along with its investigative arm, i.e., the office of the Director General (DG Office) to investigate and adjudicate upon contraventions of the of the Competition Act. The Competition Appellate Tribunal (COMPAT) is the court of first appeal and hears appeal from the decisions of the CCI. Orders passed by the COMPAT are appealable to the Supreme Court.

The CCI, under Section 36(1) of the of the Competition Act, has an explicit statutory duty to follow the principles of natural justice in the exercise of its powers. Further, to ensure that the CCI and the DG Office follow the basic tenets of due process while conducting investigations and hearings, the regulations that supplement the of the Competition Act have built-in checks and balances to ensure adherence to principles of natural justice. The Supreme Court in the landmark case of Competition Commission of India v. Steel Authority of India Limited6 held that the CCI, being a quasi-judicial authority, is bound by the principles of natural justice.

1 Justice Brijesh Kumar, Principles of Natural Justice, Available at: http://ijtr.nic.in/articles/art36.pdf. 2 Vionet v. Barrett (1885 (55) LJRD 39, 41).3 Hookings vs. Smethwick Local Board of Health (1890(24) QBD 712).4 AIR 1978 SC 851.5 AIR 1978 SC 597.6 (2010) 10 SCC 744.

http://ijtr.nic.in/articles/art36.pdf


Analysis of the CCI’s proceedings The CCI is a fairly young regulator which has vast powers, including the ability to impose the highest possible penalties amongst all regulatory bodies. However in its quest to be perceived as a vigilant regulator, the CCI may have conducted investigations and passed orders in haste. Consequently, the CCI, on occasions has failed to observe fundamental principles of natural justice while conducting its proceedings. As a result, the affected parties appealed to the COMPAT alleging violations of principles of natural justice by the CCI.

However, it is reassuring and fortifying that COMPAT has strictly stood custodian of the principles of natural justice and remanded matters back to the CCI wherein the CCI has breached due process.

The majority of orders remanded by the COMPAT back to the CCI can be broadly classified under two categories, i.e., orders in breach of rule against bias and orders wherein right to a fair hearing was denied.

Key orders on the doctrine of “revolving door” The proviso to Section 22 of the Competition Act provides that the quorum for meetings of the CCI shall be three members. It is common practice of the CCI that the quorum of the CCI members which hears the oral arguments of the parties is different than the quorum that passes the final order. As such, the CCI has repeatedly failed to appreciate that although the Competition Act provides that the quorum of the CCI meetings is three members, the principles of natural justice further necessitate that the quorum which passes the final order shall be the same as the quorum which hears the oral arguments.

The All India Organization of Chemists and Druggists v. Competition Commission of India7 was the first instance in which the COMPAT took cognizance of the procedural anomaly in relation to the revolving quorum issue at the CCI meetings. In this case, the final order of the CCI was signed by members who were not present during the oral hearings. Further, two of the five CCI members who had signed the order had not even joined the CCI on the date of the oral hearing. The COMPAT, relying on landmark Supreme Court precedents8, observed that “an order passed by a person who had not heard the arguments offends the principle of judicial procedure.”

7 Appeal No.56 /2014 with I.A. No. 97/2014, I.A. No. 86/2014 & I.A. No. 05/2015.8 Union of India v. Shivraj (2014) 6 SCC.


Further, the COMPAT explained the rationale of this principle stating that the “[…] personal hearing enables the authority concerned to watch the demeanor of the witnesses and clear up his doubts during the course of the arguments, and the party appearing to persuade the authority by reasoned argument to accept his point of view. If one person hears and another decides, then personal hearing becomes an empty formality.”

In Lafarge India Limited v. Competition Commission of India9, the COMPAT set aside an order by the CCI wherein a cumulative penalty of INR 6,307 crore (approx. USD 945 million) was levied on 11 cement companies for cartelization. The appellate body held that the Chairperson of the CCI, who initialed every page of the order and in all likelihood authored the order, was absent during the oral hearings. Accordingly, the order was vitiated due to the violation of the rule that “only one who hears can decide”.

Additionally, the views and statements of the CCI’s Chairperson were widely reported in several newspapers which showed that the CCI proceeded with the case with a pre-determined mind to penalize the cement manufacturers and publicize the role of the CCI. It was held that such a conduct by the CCI violated the principle that justice should not only be done but should manifestly and undoubtedly be seen to have been done.

It is pertinent to note that a plethora of the CCI’s final orders suffer from a lack of valid quorum. Accordingly the COMPAT, in consonance with its earlier orders, has set aside the CCI’s orders in Narendra Explosive Ltd. v. Competition Commission of India10, Coal India Limited (CIL) and Ors. v. Competition Commission of India11, Indian Jute Mills Association and Ors.v. The Secretary, Competition Commission of India12 cases on the ground that participation of a CCI member in the decision-making process despite the fact that such a member had not heard the arguments of the advocates/representatives of the appellants is in breach of the principles of natural justice.

9 Appeal No. 105 of 2012 with I.A. No. 224/2012 and I.A. No. 270/2012, alongwith Appeal No. 110 of 2012 With I.A. No. 222/2012 & I.A. No. 223/2012, Appeal No. 108 of 2012 With I.A. No. 218/2012 & I.A. No. 219/2012, Appeal No. 103 of 2012 With I.A. No. 211/2012 & I.A. No. 212/2012, Appeal No. 104 of 2012 With I.A. No. 113 of 2012, Appeal No. 106 of 2012 With I.A. No. 115 of 2012 & I.A. No. 116 of 2012, Appeal No. 107 of 2012 With I.A. No. 117 of 2012, Appeal No. 109 of 2012 With I.A. No. 221 of 2012, Appeal No. 111 of 2012 With I.A. 214/2012. I.A. 274/2012 & I.A. 275/2012, Appeal No. 112 of 2012 With I.A. No. 225 of 2012, Appeal No. 113 of 2012 With I.A. No. 232/2012 & I.A. No. 233/2012, Appeal No. 134 of 2012 With I.A. No. 267/2012 & I.A. No. 268/2012, Appeal No. 122 of 2012, Appeal No. 123 of 2012 With I.A. No. 259/2012 & I.A. No. 260/2012, Appeal No. 124 of 2012, Appeal No. 125 of 2012, Appeal No. 126 of 2012, Appeal No. 127 of 2012, Appeal No. 128 of 2012, Appeal No. 129 of 2012, Appeal No. 132 of 2012, Appeal No. 133 of 2012.


Key orders wherein right to a fair hearing was denied Another violation of the principle of natural justice is that the CCI chronically fails to serve the parties the complete records and material information relied on by them to find a contravention of the Competition Act. Such a conduct of CCI is in breach of due process as it denies the parties the opportunity to effectively defend themselves.

In early 2015, the COMPAT also set aside (in entirety) an order passed by the CCI against the Board of Control for Cricket in India (BCCI) in the case of Board of Control for Cricket in India v. Competition Commission of India13, on the ground of violation of principles of natural justice.

The COMPAT found that the CCI in its order relied on an analysis and definition of the relevant market which was manifestly different from the definition of the relevant market in the DG’s report. Consequently, BCCI never had an opportunity to contest the relevant market definition that formed the basis of the CCI’s decision. The COMPAT viewed this as a violation of the principles of natural justice as BCCI was not heard in relation to the specific allegation on the basis of which it was found guilty.

Additionally, the CCI relied on new information, which did not form part of the information that the BCCI had

access to. While such information was largely publicly available — none of it was provided to the BCCI before the CCI proceeded to rely on it for the determination of the relevant market.

Finally, the COMPAT also noted that the CCI’s analysis in certain grounds suffered from lack of sound reasoning, resulting not only in the violation of principles of natural justice but also a complete failure of justice and non-application of mind.

In Interglobe Aviation Ltd. (IndiGo Airlines) v. Competition Commission of India 14 and Shri Sunil Bansal v. Jaiprakash Associates Ltd.,15 (Jaiprakash case) identical questions were raised before the COMPAT. The COMPAT observed that as the CCI did not record its disagreement with the findings and conclusions recorded by the DG, the parties did not have an opportunity to controvert the same. Accordingly, the COMPAT remanded the matters to the CCI for a fresh decision.

In Alkem Laboratories Limited and Ors. v. Competition Commission of India and Ors.16 the COMPAT held that there was a violation of the principles of natural justice as the appellants did not get an opportunity to disprove the allegations against them as regards to contravention of Section 48(1) of the Competition Act. Accordingly, the COMPAT set aside the penalty imposed on them under the Act.


Conclusion The strength of a judicial system depends on the efficacy of the court of first instance. The above-mentioned conduct of the CCI is a major impediment in its quest of being an efficient regulator as such conduct not only increases the burden on the parties, the CCI and the COMPAT but also imposes undue strain on their limited time and finances.

The COMPAT in Jaiprakash case censured CCI for its practices and made a similar deduction, finding that “It is high time for the Commission to realise that by enacting Section 36(1), Parliament has unequivocally declared that in the discharge of its functions, the Commission shall be guided by the principles of natural justice.

The Commission should also take cognisance of the law laid down by the Tribunal, High Courts and the Supreme Court. Any delay in that regard will only add to unnecessary litigations in the form of appeal under Section 53B(2) of the Act and further appeals under Section 53T of the Act and also petitions under Articles 226 and 227 of the Constitution.”

Therefore for a veracious and vibrant competition law regime in India, the CCI must adhere to due process, so that the COMPAT is seized only with challenges involving the merits of the case.

10 Appeal Nos. 88, 89, 90, 91, 102 and 103/2015.11 Appeal Nos. 01, 44-47, 49, 70/2014 and 52/2015.12 Appeal No. 73/2014, I.A. No. 110/2014, Appeal No. 74/2014, I.A. No. 111/2014, Appeal No. 75/2014, I.A. No. 112/201, Appeal No. 76/2014, I.A. No. 113/2014, Appeal No. 77/2014, I.A. No. 114/2014, Appeal No. 78/2014, I.A. No. 115/2014, Appeal No. 83/2014, I.A. No. 120/2014, Appeal No. 84/2014, I.A. No. 121/2014, Appeal No. 85/2014, I.A. No. 122/2014, Appeal No. 86/2014, I.A. No. 125/2014, Appeal No. 87/2014, I.A. No. 126/2014, Appeal No. 88/2014, I.A. No. 127/2014, Appeal No. 08/2015, I.A. No. 27/2015, Appeal No. 09/2015, I.A. No. 28/2015, Appeal No. 10/2015, I.A. No. 29/2015, Appeal No. 11/2015, I.A. No. 30/2015, Appeal No. 12/2015, I.A. No. 31/2015, Appeal No. 13/2015, I.A. No. 32/2015, Appeal No. 14/2015, I.A. No. 33/2015 and Appeal No. 15/2015, I.A. No. 34/2015.13 Appeal No. 17 of 2013 and I.A. No. 26 of 2013.14 Appeal No. 07/2016.15 Appeal No. 21 of 2016.16 Appeal Nos. 09, 14 and 15 of 2016.


INDIVIDUAL LIABILITY: ARE WE THERE YET?


Introduction The Competition Commission of India (CCI) is entrusted with wide powers to impose stringent penalties under the Competition Act, 2002 (Competition Act). The maximum penalty for a cartel violation is set at three times the profit of the cartel member or 10 per cent of its turnover, whichever is higher, for each year of cartelisation. For other anti-competitive agreements and abuse of dominance, the fines are capped at a maximum of 10 per cent of the average turnover of the last three preceding financial years. The other sanctions that can be imposed by the CCI include, cease and desist orders, modifications to agreements, division of enterprises in case of abuse of dominance, etc.

In addition to the above, the Competition Act allows the CCI to proceed against and penalize individuals who are responsible for the conduct of a company’s business (such as, directors, managers, secretaries or other officers). In this regard, Section 48 of the Competition Act provides that in case of a contravention by a company, every person who, at the time the contravention was committed, was in charge, and responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of contravention and shall be liable to be proceeded against and punished. Further, the director(s), manager(s), secretaries or other officers of the company, with whose consent or

connivance or due to whose negligence the contravention was caused, would also be liable to be proceeded against and punished under Section 48 of the Competition Act.


Individual culpability: When it all started Over the last two years, the CCI has resorted to Section 48 of the Competition Act in several of its decisions. In Varca Druggist & Chemist & Ors v. Chemists and Druggists Association1, one of the first cases where the CCI dealt with individual liability under Section 48 of the Competition Act, the CCI held that an anti-competitive decision or the practice could be attributed to the members who were responsible for running the affairs of the association and actively participated in giving effect to the anti-competitive decision or practice of the association. Based on this principle, the CCI has imposed monetary penalties on the directors/office bearers in-charge of the business of the company/entity (in addition to the penalty imposed on such company) found guilty of contravention of the Competition Act in quite a few cases including In re: Bengal Chemists and Druggist Association2, Indian Sugar Mills Association v. Indian Jute Mills Association & Ors3 and Swastik Stevedores Private Limited v. Dumper Owner’s Association4.

The trend of invoking Section 48 of the Competition Act has become increasingly common as the CCI has started to direct the Director General (DG) (the investigative arm of the CCI) in its prima facie orders under Section 26(1) of the Competition Act to investigate into the role of individuals in-charge of the business of the company/entity simultaneously. However, the endeavour of the CCI to commence proceedings against and impose fines on individuals contemporaneously with finding a contravention by the company has met with serious challenges. Questions have been raised on whether the CCI can legitimately proceed with investigating the role of individuals without having first found the company in contravention or whether such an investigation is simply premature. The issue found itself mired in controversy more so on account of the established principles of jurisprudence under other legislations and statutes which nearly mirror provisions similar to Section 48 of the Competition Act, such as the Negotiable Instruments Act, 1881, etc.

1 MRTP C-127/2009/DGIR4/28.2 Suo moto Case No. 02 of 2012 and Ref. Case No. 01 of 2013. 3 Case No. 38 of 2011. 4 Case No. 42 of 2012.


Before the Competition Appellate Tribunal (COMPAT) pronounced its orders on this issue, it was first agitated in the High Court of Delhi (Delhi High Court) in the case of Pran Mehra & Ors v. Competition Commission of India & Anr5 (Pran Mehra Case), where the Delhi High Court observed that individuals can only be held liable if the CCI were to come to a conclusion that they were the key-persons, who were in-charge and responsible for the conduct of the business of the company. However, the Delhi High Court noted that there cannot be two separate proceedings in respect of the company and the key-persons, as the scheme of the Competition Act did not contemplate such a procedure.

However, recently in the matter of Arun

Kumar Bajoria v. Competition Commission of India and Anr.6, the Delhi High Court, remanded a challenge by the petitioner, in relation to Section 48 of the Competition Act, to the CCI with clear and specific directions that the CCI must first hear the issue of maintainability and applicability of Section 48 of the Competition Act to the petitioner before proceeding with any other issue. In this case, the CCI had directed individuals identified in the DG’s investigation report as key persons of the parties to appear before the CCI for oral hearing and the petitioner had argued that a final determination of contravention under Section 27 of the Competition Act against a company is a necessary and essential pre-requisite for commencement of any proceedings against the petitioner under Section 48 of the Competition Act.

The Tussle: CCI v. COMPAT In the absence of certainty, the issue has been re-agitated in several cases before the CCI, the COMPAT as well as some High Courts. In M/s Alkem Laboratories Ltd v. CCI & Other Connected Appeals7 (Alkem Order), the COMPAT set aside the order of the CCI (which had imposed a penalty at the rate of 3 per cent of the average income of the two office bearers who were allegedly involved in the contravention in accordance with the provisions of Section 48(1) of the Competition Act), in its entirety and also observed violation of the principles of natural justice by the CCI since no opportunity was

extended to the office bearers to present their defense and, accordingly, reversed the penalty order imposed on them. Bringing much awaited clarity on the interpretation of Section 48(1) of the Competition Act, the COMPAT observed that the use of the word ‘committed’ in Section 48 of the Competition Act necessarily implies that before any person in charge of and responsible to the company or director, manager etc. of the company can be proceeded against and punished by invoking the deeming provisions contained in Section 48(1) or (2) of the Competition Act, there must


exist an affirmative finding by some competent authority that the company has contravened the provisions of the Competition Act or any rule, regulation etc.

The COMPAT went on to state that under the scheme of the Competition Act, final determination on the issue of contravention of the provisions of the Competition Act can be made only by the CCI (and not by the DG) and in the absence of a determination by the CCI that the company has committed contravention of any of the provisions of the Competition Act, the deeming clause contained in Section 48(1) of the Competition Act cannot be invoked for punishing the person in charge of and responsible to the company for the conduct of its business.

The above principles were reiterated by the COMPAT in A.N. Mohana Kurup & Anr v. CCI & Ors8, where the COMPAT once again overruled the CCI’s order and reversed the fine imposed by the CCI on grounds similar to the Alkem Order. Interestingly, the CCI in this case had also directed delinquent association (i.e., All Kerala Chemists and Druggists Association) to stop associating with the

office-bearers who were penalised with its affairs for a period of two years, however the COMPAT noted that reducing the tenure of the elected office-bearers is ultra-vires the powers of the CCI under the Competition Act.

Unlike the two cases discussed above, in Swapan Kumar Karak v. CCI9, the COMPAT, overturned the findings of the CCI based on the merits of the case and concluded that the officer-bearer could not be penalized under Section 48(1) of the Competition Act since he had already resigned at the time of contravention. The COMPAT also noted that Section 48(1) of the Competition Act can be invoked only if a person, at the time of contravention committed by company, was in charge of and was responsible to the company for the conduct of the business and if the individual was not associated with the offending decision, then the CCI cannot not penalize him under Section 27 read with Section 48(1) of the Competition Act.

However, despite the precedent set by the COMPAT, the CCI disagreed with the COMPAT’s views and in the matter of Ministry of Agriculture and Farmers Welfare & Others v. M/s Mahyco Monsanto

5 W.Ps.(C) 6258/2014, 6259/2014 & 6669/2014.6 W.P.(C) 2471/2016, order dated 21 March 2016.7 Appeal No. 09, 14 and 15 of 2016.8 Appeal No. 05/2016. 9 Appeal No. 42/2014.


Biotech (India) Limited & Others10 observing that the proceedings against the company in contravention of the Competition Act and the office bearers can run simultaneously as the direction to cause an investigation into the matter, under Section 26(1) of the Competition Act, to the DG does not qualify the term ‘matter’ with any suffix, prefix, proviso, explanation or a caveat. Additionally, it held that irrespective of whether the order under Section 26(1) of the Competition Act directs the DG to investigate the role of any person in-charge of and responsible for the conduct of the business of the business, the DG is duty bound to look into it. This conclusion was primarily

based on the judgment of the Delhi High Court in the Pran Mehra Case and several other judgments of the Supreme Court and High Courts in relation to comparable provisions contained in other statutes wherein the courts had proceeded simultaneously against the company being prosecuted and the persons-in-charge.

In a recent turn of events, Mahyco Monsanto Biotech (India) Limited and others have approached the Delhi High Court11 against the order passed by the CCI objecting to a probe against persons-in-charge until the company was found in contravention of the competition norms.

Kerala High Court: Unsettling COMPAT’s precedents In a similar vein and in stark contrast to the aforementioned orders of the COMPAT, the Kerala High Court in B. Unnikrishnan and Ors. v. The Competition Commission of India and Ors12 held that the statute does not contemplate two separate proceedings against the office bearers and the enterprise, who are liable to be proceeded against under Section 48 of the Competition Act.

Rejecting the contention of the petitioner that proceedings against the office bearers can be initiated only after it is established that the company has contravened the provisions of the Competition Act, the court observed:

“The scheme of the Act does not contemplate two separate proceedings against the opposite parties as also against

10 Reference Case No: 02/2015.11 Writ Petitions No. 7578/2016 and 7583/2016 and CM Nos. 31231-34/2016, 31242-43/2016 and 31245/2016.12 WP (C) No. 22534 of 2016 (N).


the office bearers of the opposite parties who are liable to be proceeded under Section 48 of the Act. The proceedings under the Act, going by its scheme, is a composite one. As such, the guilt, if any,

of the persons who come under Section 48 of the Act also needs to be examined simultaneous to the guilt of the opposite parties.”

Conclusion In light of the divergent interpretations of Section 48 by the CCI, the COMPAT and the High Courts, the debate over the imputation of personal liability continues to baffle all stakeholders and is evidently far from over. However, until this issue attains certainty, officers of an enterprise facing allegations for anti-competitive practices must tread with caution as they run the risk of suffering severe financial and reputational implications. Another

ancillary issue which equally awaits settlement is whether an investigation by the DG into the role of the persons in default, absent a specific direction by the CCI, would be regarded as ultra vires the order under Section 26(1) of the Competition Act, as the order defines the contours of the scope of the DG’s investigation. Until the adjudicatory bodies arrive at a consensus on the subject, all we can do is wait and watch!


ABUSE OF DOMINANCE - EVOLVING LAW AND PRACTICE


Introduction Section 4 of the Competition Act, 2002 (Competition Act) prohibits the abuse of a dominant position by any ‘enterprise’ or ‘group’. It stipulates that practices such as imposition of unfair or discriminatory conditions on price in purchase or sale

(including predatory pricing), limiting or restricting the production of goods, denial of market access, and leveraging market position in one relevant market to enter into another relevant market, amount to abuse of dominance.

Determination of abusive conduct under the Competition Act Abuse of dominance requires an analysis of the level of dominance of the concerned enterprise in the relevant market and its abusive conduct. While determining the abusive conduct of a dominant enterprise or group, the Competition Commission of India (CCI) scrutinises the abusive practices by way of the following three steps:

a. determination of the relevant market; b. assessment of dominance of such

enterprise or group; and c. assessment of its abusive conduct.

Determination of the relevant marketThe dominance of an enterprise is always determined with respect to a particular relevant market. The concept of the ‘relevant market’ is critical to competition law, and in the case of an abuse of dominance investigation, this sets the parameters for the determination of ‘dominance’. The relevant market is determined on the basis of relevant product or service market1 and relevant geographic market.2

1The relevant product market is defined as all those products or services which are regarded as interchangeable or substitutable by the consumer, on the basis of product characteristics, prices and end-use. Section 19(4) of the Competition Act, as amended by the Competition (Amendment) Act, 2007 (Competition Amendment Act, 2007) provides the factors to be examined and the definition of relevant product market is there under section 2(t) of the Competition Act, as amended by the Competition Amendment Act, 2007. Apart from such demand-side factors, the Competition Commission of India (CCI) considers supply-side factors such as switching costs for producers, et seq. in defining the relevant product or service market.2The relevant geographic market is defined as a market comprising the area in which there exist distinct homogenous competitive conditions in terms of demand and supply of goods or services, which can be distinguished from the conditions prevailing in neighbouring areas. Section 2(s) of the Competition Act, as amended by the Competition Amendment Act, 2007 defines relevant geographic market.3 Appeal No.106 of 2015.


In practice, there is no set formula for defining a relevant market and the CCI defines the relevant market on the facts and circumstances of each case. For example, in a case involving a real estate enterprise, in the matter of DLF Home Developers Limited v. Competition Commission of India3 (DLF Case), the relevant market was defined as narrowly as the market for providing services’ provided by developers for providing high-end apartments to the customers in Gurgaon. In the energy and infrastructure sector, the matter of Maharashtra State Power Generation Limited v. Coal India Limited and others4 (Coal India Case), the relevant market was defined as the market for non-coking coal in the whole of India.

Assessment of dominanceSection 4 of the Competition Act defines dominant position as a position of strength enjoyed by an enterprise in the relevant market in India that enables it to operate independently of the competitive forces prevailing in such relevant market or affect its competitors or consumers or the relevant market in its favour. While determining dominance, the CCI is required to consider the factors listed under Section 19(4) of the Competition Act, which among other things include market share, size and resources of

the enterprise, size and importance of competitors, economic power of the enterprise, including commercial advantages over competitors, vertical integration of the enterprises or sale or service network of such enterprises and entry barriers, including regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale and high switching costs.

While assessing dominance, a bone of contention in various cases is whether a substantial market share in itself is indicative of dominance or not. The CCI maintains that market share is only one of the parameters and in itself does not provide for the existence of dominance in the market. In a case involving Intel 5 while assessing the dominance of Intel in the relevant market of microprocessors, in addition to its market share, the CCI assessed the level of Intel’s dominance based on other relevant factors, such as (a) consumer preference owing to the brand name; (b) the existence of strong entry barriers in the relevant market; (c) the significant intellectual property rights of Intel; and (d) the scale and scope enjoyed by Intel. However, interestingly, the Competition Appellate Tribunal (COMPAT) in the matter of Schott Glass India Private

4 Case No. 03/2012, 11/2012, 59/2012.5 Re M/s ESYS Information Technologies Private Limited and Intel Corporation (Intel Inc) and Others (Case No. 48 of 2011).


Limited v. Competition Commission of India6 relied on the decisions of European Commission to conclude that existence ofamarketshareabove50%canbeconsidered to be an evidence of dominance.

Assessment of abusive conductAbusive conduct by a dominant enterprise can be broadly categorised into exclusionary abuses and exploitative abuses. Exclusionary abuses refer to such practices/behaviour on the part of a dominant enterprise, which are likely to result in foreclosure of the market, i.e., which are likely to completely or partially deny access to an actual or a potential competitor to the market, thereby harming consumers. Denying access to the market, refusal to deal, entering into exclusive agreements are examples of exclusionary abuses.

On the other hand, exploitative abuses refer to such practices undertaken by a dominant enterprise which avails the opportunities, offered by its strength in the relevant market by virtue of its dominant position, which tends to harm consumers directly. Such practices distort competition, by not working in tandem with the competitive forces in the market. The dominant enterprise tends to exploit its dominant position by imposing unfair restrictions on other players or consumers in the relevant market. Such practices, inter alia, include imposition of unfair purchase or sale price or other unfair trading conditions. If the conduct of a dominant enterprise leads to any of the abusive practices (exclusionary and exploitative) as enumerated above, then such a conduct would be construed as an abuse of dominant position.

‘Per se’ violation’ or ‘Effects based test’: Varying standards of the CCI The CCI has not been consistent with its approach on interpreting the provisions under the Section 4 of the Competition Act. Often the CCI has considered the practices such as conduct of the parties or terms of the agreements, which appears to be or are exclusionary or exploitative in the nature as per se violative of the provision under the Competition Act

and at times have considered the effects which these practice or agreements may have. The effects test was read into the statute in Dhanraj Pillai v. Hockey India7, wherein the Commission had held that the practice of sanctioning of events by Hockey India could not held to be abusive per se and its discriminatory/ unjust effect

6 Appeal No. 91 of 2012.7 Case No.73 of 2011.8 Case No. 71 of 2012.


needs to be proved. To a stark contrast, Adani Gas Limited was penalized in Faridabad Industries Association v. M/s Adani Gas Limited8 irrespective of its conduct benefitting consumers and other ostensible clauses not being enforced.

In the Coal India Case, the CCI had analysed the conditions imposed by Coal India Limited on power generation companies. The effect of these conditions

was analysed, thereby, scrutinizing the effects of the practice followed by the dominant enterprise. The dominance of the enterprise has been a result of the government policy. Irrespective of this, it was penalized for abusing its dominant position by imposing unfair and discriminatory conditions in its agreements with power generation companies.

Penalties and Sanctions imposed: Decisional practice of the CCI The CCI has the powers of inquiry and enforcement and may also impose heavy penalties for non-compliance with the provisions of the Competition Act. If the CCI finds breach of Section 4 of the Competition Act, it can impose a penalty of up to 10 per cent of the average turnover for the last three preceding financial years upon each person or

enterprise, which is party to such abuse of dominance. Further, the CCI has the power to direct division of an enterprise enjoying dominant position to ensure that such enterprise does not abuse its dominant position. Further, CCI can restrain a party from continuing with an abuse of dominant position, modify anticompetitive agreements to the extent


and in the manner CCI deems fit or direct division of a dominant enterprise in case of abuse of dominant position to ensure that such enterprise does not abuse its dominant position in future.

Since its inception in May 2009, the CCI and the COMPAT have passed several important orders across sectors interpreting the provisions under Section 4 of the Competition Act. Some of the important decisions are discussed below.

One of the most important decisions of the CCI setting the abuse of dominance jurisprudence in India is the Coal India Case relating to anti-competitive practices adopted by Coal India Limited (CIL) and its subsidiaries. Based on the market share of the CCI in the relevant market for production and sale of non-coking coal to thermal power generators the CCI prima facie concluded that CIL was in a dominant position in the relevant market. Based on the investigation conducted by the Director General (investigating arm

of the CCI) (DG), the CCI noted that the contracting terms used in the agreements with the thermal power generators were in violation of Section 4(2)(a)(i) of the Competition Act for imposing unfair and discriminatory terms on power producers and for the first time imposed fine of INR 1,773 crore on a public sector enterprise (PSE).9

In the same spirit in the DLF Case, the CCI imposed a penalty of INR 630 crore on DLF Limited (DLF) for abusing its dominant position vis-a-vis the flat owners at the DLF’s Bellaire, Magnolia and Park Place residential projects in the relevant market for “high end residential accommodation in Gurgaon” and ordered DLF for amending the provisions of its Apartment Buyer’s Agreement. The order of the CCI was upheld by the COMPAT. However, the COMPAT diluted the powers of the CCI and held that the CCI has the specific power to modify the agreement only in the limited circumstances where it finds

9 CCI noted that CIL abused its dominant position on account of certain clauses in its agreements were in violation of the Competition Act. These included among other things:

(a) providing for sampling and testing only at loading end (i.e., at CIL’s end); (b) imposing cost of ungraded coal on buyers and absolving CIL of cost of supplying coal at less than

agreed quality; (c) cappingofcompensationto0.75%oftotalquantityofcoalforoversizedcoal/stones;(d) adopting different terms for PSEs and private power companies; and(e) force majeure clauses which were widely framed to enable the dominant party to dilute its

commitment. However, the COMPAT vide its order dated 17 May 2016 set aside the penalty of INR 1,773 crore penalty imposed on CIL by the CCI on account of violation of the principles of natural justice. It also remitted the cases back to the CCI, for afresh hearing and passing a judgment within two months. The CCI’s order is awaited.

10 Shri Shamsher Kataria v. Honda Siel Cars India Limited and others (Case No. 03/2011).


that such agreements are violative of Section 3 (Prohibition of anti-competitive agreements) and not Section 4. The CCI has appealed this order of the COMPAT before the Supreme Court.

In the Auto Parts Case10, the CCI imposed a fine totalling INR 2,544 crore on 14 car manufacturers (OEMs) for restricting the sale and supply of genuine spare parts in open market thereby violating Section 3(4) and Section 4 of the Competition Act. CCI noted that the

agreements between OEMs and dealers which restricted the supply of spares and diagnostic tools in the open market resulted in denial of market access to independent repairers, which hampered their ability to provide services in the ‘aftermarket’ for repair and maintenance of cars and this restrictions on supply in the market coupled with high margins on spares were anti-competitive. The OEMs have appealed before the COMPAT and the matter is sub judice.

Epilogue

During the first seven years of its functioning, the CCI has been successful in developing a sound body of competition law jurisprudence in India which has been benefitted from the competition law developments in some of the mature jurisdictions. The CCI’s practice of being a neutral regulator, applying the principle of competition laws equally to the PSEs and the private enterprises has given confidence to the domestic and foreign enterprises reflecting the robustness of the system and the determination of the CCI to effectively deal with the anti-competitive practices. The development of competition laws in India is still in the evolutionary

phase and several of the CCI’s orders have been appealed against before the COMPAT and various high courts across the country, and their orders before the Supreme Court. Till such time, Indian competition law jurisprudence is settled, the enterprises may take guidance from the orders of the CCI, COMPAT and the international best practices followed in some of the mature jurisdictions and develop for themselves a tailor-made competition law compliance framework and practices for being on the right side of the competition law in India.


TO CONTROL OR NOT TO CONTROL - THAT IS THE QUESTION


The year 2016 marks five years of enforcement of the Indian merger control regime. Over the last five years, the decisions of the Competition Commission of India (CCI) have gradually shaped the merger control landscape in India and it is safe to say that the concept of ‘control’ under the Competition Act, 2002 (Competition Act) is the one that has evolved most significantly. Since the introduction of the Competition Act, the concept of ‘control’ has and continues to garner considerable attention given its pivotal position in the merger control regime.

The definition of ‘control’ forms the core of the Competition Act predominantly on account of the following reasons: (i) the Competition Act inter alia requires prior notification of a transaction which involves an acquisition of control; (ii) key exemptions under Schedule I of the

Competition Commission (Procedure in regard to the transaction of business relating to combinations) Regulations, 20111 (Combination Regulations) require notifying parties to determine whether the transaction leads to an acquisition of control/change in control; (iii) the concept of ‘group’ under the Competition Act is intrinsically linked to that of control; and (iv) acquisition of control prior to the CCI’s approval can expose the acquirer to stringent penalties.2

As such, given that ‘control’ is common to several key concepts under the Competition Act, understanding the same is imperative, particularly for industry and the legal fraternity. This article traces the evolution of the concept of ‘control’ under the Competition Act and highlights key issues and implications that notifying parties ought to consider in M&A transactions.

Evolution of ‘control’ under the Competition Act Under Explanation (a) to section 5 of the Competition Act, the term ‘control’ has been defined to include controlling the affairs or management by: (i) one or more enterprises, either jointly or singly, over another enterprise or group; (ii) one or more groups, either jointly or singly,

over another group or enterprise. This definition of control is circular in nature given that control has been defined as control over the affairs or management of another enterprise without defining ‘control’ per se.

1 Schedule I of the Combination Regulations enlists various transactions which do not normally require to be notified to the CCI as they are presumed to not cause any appreciable adverse effect on competition (AAEC) in the market. 2 TheCompetitionActimposesapenaltyofupto1%ofthecombinedassetsorturnoverofthepartiestothecombination, whichever is higher.


Given that the Competition Act does not provide a clear definition or thresholds in relation to what amounts to an acquisition of control, it became necessary for the CCI to provide much-needed clarity on its stance in relation to the concept of control by way of its precedents. As early as 2012, in the case

of Independent Media Trust/Network 183, the CCI clarified ‘control’ to mean “the ability to exercise decisive influence over the management/affairs”. Further, in the case of Alok Industries/Grabal Alok Impex4, the existence of common promoter group, directors and management was said to constitute common control.

Negative Control and Joint Control Thereafter, the CCI has progressively taken a stance consistent with that adopted by mature antitrust jurisdictions and interpreted the term ‘control’ to include negative control. In the case of MSM India/SPE Holdings/SPE Mauritius 5(MSM Case), the CCI concluded that the right to block special resolutions (throughamorethan26%equitystake) amounts to exercising negative control which constitutes control for the purposes of the Competition Act. The CCI also developed the concept of “joint control” to state that “ joint control over an enterprise implies control over the strategic commercial operations of the enterprise by two or more persons. In such a case, each of the persons in joint control would have the right to veto/block the strategic

commercial decision(s) of the enterprise which could result in a deadlock situation.” Pertinently, 4 of the 10 categories of transactions which are exempt under Schedule I of the Combination Regulations revolve around the concept of “joint control”.

In addition to clarifying the meaning of “joint control”, the CCI in the MSM Case also noted that actions, such as engaging in any new business, opening locations in new cities, hiring and termination of key personnel, etc., for which consent/approval of the minority shareholders was required, “were “strategic commercial decisions of MSM India and the same cannot be considered as mere minority investor protection rights.”

3 C-2012/03/47.4 C-2012/01/28.5 C-2012/06/63.


Subsequently, the CCI’s decisions were focused on the bucket list of veto rights/

affirmative rights, which constituted control in terms of the Competition Act.

Investor protection rights v. Rights amounting to an acquisition of control In line with the European Union’s position, the CCI in Century Tokyo Leasing Corporation/Tata Capital Financial Services Limited6, concluded that affirmative rights in relation to the approval of business plans, annual operating plan (including the annual budget plan), commencing a new line of activity and discontinuing any existing line of activity or business, appointment of key managerial personnel and their compensation would also constitute ‘control’ for the purposes of the Competition Act. The CCI recognized the aforesaid rights to be strategic commercial decisions and not mere investor protection rights. The above cases made it clear that a careful scrutiny of the facts in each case would be necessitated to differentiate between mere minority investor protection rights and rights amounting to an actual acquisition of ‘control’. Moreover, it was also evident

that the CCI was tending towards the position adopted in the European Union Consolidated Jurisdictional Notice (ECJN), wherein the main test is whether the transaction will lead to a lasting change in control (direct or indirect) over one or more undertakings, which implies the possibility of exercising decisive influence over the other company.

However, while the ECJN clarifies that veto rights that merely protect financial investments are not sufficient to establish control, the CCI has gone a step further in its approach in cases such as Etihad Airways PJSC/Jet Airways (India) Limited7, Alpha TC Holdings Pte Limited/Tata Capital Growth Fund I8, Caladium Investment Pte. Ltd./Bandhan Financial Services Limited 9 and AXA India Holdings/Bharti AXA10 to significantly lower the threshold for ‘control’ for the purposes of the Competition Act, thereby

6 C-2012/09/78.7 C-2013/05/122, wherein the CCI held that acquisition of a minority interest devoid of any veto/quorum rights would still amount to an acquisition of ‘control’, based on the effect of definitive documents. 8 C-2014/07/192, wherein the CCI held that veto rights in relation to: (a) appointment/ removal of the managing director or the chief financial officer; (b) the composition of the board of directors or any committees thereof; (c) the annual budget and business plan; (d) emoluments / bonuses paid to promoters or directors; and (e) amendments to the memorandum of association or articles of association, constituted ‘control’ under the Competition Act.9 C-2015/01/243. 10 C-2015/04/267.


having blurred the distinction between mere investment protection rights and rights conferring control.

In light of the above decisions, the current position is that an acquisition of affirmative voting rights inter alia in relation to: (i) changes/amendments to memorandum and/or articles of association; (ii) appointment or change of auditors; (iii) appointment or removal of any nominee director; (iv) changes in the capital structure, including through new issues of equity or equity linked securities, buy back, rights issue, bonus issue, stock/share split, sweat equity shares, redemption of securities, capital reductions etc.; (v) significant changes to the incentive structure of the senior

management and appointment or removal of any member of the senior management; (vi) reorganization or change in the nature of current business or launch of any new business or businesses; (vii) changes to the dividend policy, would amount to an acquisition of ‘control’ for the purposes of the Competition Act.

This increasingly expansive approach adopted by the CCI vis-a-vis the list of veto rights conferring control has posed substantial difficulties for notifying parties, particularly private equity investors who typically include such rights in order to protect the value of their investment as opposed to exercising decisive influence over the target enterprise. Moreover, the CCI has


maintained that an acquisition of one or more of such veto rights would amount to an acquisition of control, thereby

making almost all acquisitions with bare minimum affirmative rights, notifiable to the CCI.

Item I Exemption Item 1 of Schedule I exempts the acquisition of shares or voting rights of less than 25 per cent, provided that:

a. the acquisition is not a strategic investment and has been made purely for investment purposes; and

b. the acquisition does not amount to an acquisition of control. (Item 1 Exemption)

Parties are required to assess the veto and affirmative rights being acquired in case of acquisition of a minority stake, while determining the notifiability of the acquisition. The CCI has observed that the phrase “solely as an investment” indicates mere “passive investment” as opposed to “strategic intent” and would not include acquisitions made with an intention of participating in the formulation, determination or direction of the basic business decisions of the target


(by way of voting rights, agreements, representation on the board of target or affiliates, affirmative/veto rights, etc.)11 This stand was further clarified by Explanation to Item 1 of Schedule I to the Combination Regulations (introduced by way of an amendment in January 2016)

which provides guidance in relation to the concept of “solely as an investment”. As such, rights being acquired in acquisitions made solely as a financial investment will need to be assessed in order to ensure that it does not lead to an acquisition of control.12

Intra-group Exemption Another consequence of the expansive approach of the CCI, is that notifying parties are often unable to avail of the benefit of key exemptions such as Item 813 and 914 of Schedule I to the Combination Regulations. The intra-group acquisition exemption requires that the acquired enterprise is not “jointly controlled” by enterprises that are not part of the same ‘group’ and the intra-group merger exemption requires that the transaction

does not result in transfer from “joint control” to “sole control”.

Typically, ‘control’ in the proviso to these Items is construed to include both positive as well as negative control. By virtue of such interpretation and the expansive scope of control, internal restructurings where there is no effective or ultimate change in control for the purposes of other laws or regulators, also require a merger filing with the CCI.

11 C-2014/05/175- SCM Soilfert/ Mangalore Fertilizers. 12 Theexplanationinrelationtoacquisitionsoflessthan10%ofthetotalsharesorvotingrightsexemptsthe notification requirement for acquisitions which are made solely as an investment subject to the following conditions: (a) the acquirer has the ability to exercise only such rights that are exercisable by the ordinary shareholders in the target enterprise whose shares or voting rights are being acquired in relation to their respective shareholding; and (b) the acquirer is not a member of the board of directors of the target enterprise whose shares or voting rights are being acquired and does not have a right or intention to nominate a director on the board of directors of the target enterprise whose shares or voting rights are being acquired and does not intend to participate in the affairs or management of the enterprise whose shares or voting rights being acquired.13 Item 8 of Schedule I of Combination Regulations exempts “an acquisition of shares or voting rights or assets, by one person or enterprise, of another person or enterprise within the same group, except in cases where the acquired enterprise is jointly controlled by enterprises that are not part of the same group.”


Differing concepts of ‘control’

Since there is no brightline test to determine ‘control’, different regulators have adopted varying thresholds at different times in their determination of ‘control’. While under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 Takeover Regulations , regulation 2(1)(e) defines ‘control’ as inclusive of: (i) the right to appoint a majority of directors; (ii) the right to control the management; (ii) the right to control the policy decision, the Companies Act, 2013 stipulates that ‘control’ shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner.

A quintessential example of how control was dealt with by different regulators is the Etihad/Jet case, wherein the CCI observed that in addition to the acquisitionofaminority24%equitystake by Etihad in Jet, Etihad’s right to nominate two out of six shareholder directors was significant in terms of Etihad’s ability to participate in the managerial affairs of Jet. The CCI further observed that the effect of the transaction documents along with the governance structure envisaged under a commercial

co-operation agreement entered into between the parties, established Etihad’s joint control over Jet and particularly the assets and operations of Jet.

The observation of the CCI in relation to “joint control” exposed Etihad to the ambiguities in relation to the interpretational approach adopted by various regulators regarding the concept of ‘control’. Interestingly, the SEBI re-investigated the case in order to determine if the requirement to make an open offer had in fact been triggered. In this regard, SEBI held that Etihad has not acquired control over Jet under regulation 2(1)(e) of the Takeover Regulations. In arriving at this conclusion, SEBI observed that the definition of “control” for the purposes of Section 5 of the Competition Act, is markedly different from that in regulation 2(1)(e) of the Takeover Regulations, in its meaning, scope, and purpose. In this context, SEBI observed that “while under the Takeover Regulations controlling the ‘management or policy decisions’ is the relevant factor, under the Competition Act controlling ‘the affairs and management’ is the relevant factor. The expression ‘affairs and management’ is of much wider connotation than the expression ‘management or policy decisions’.” SEBI further observed that one regulatory agency may be guided by the findings of another regulatory agency on a particular issue only if the two laws are pari materia


in their substance and are being applied on the same set of facts and circumstance.

Such differing interpretations of control by different regulators in a multi-regulator regime have several consequences for transacting parties. In addition to creating multiple yardsticks, it also leads to inconsistency, thereby, affecting

deal certainty, as each regulator may be influenced by the other’s definition of control as was done in the Etihad/Jet transaction. Further, in complex transactions, involving multiple regulators, this may result in extended transaction timelines, thereby offsetting the commercial advantage and rational for entering into the proposed transaction.

Conclusion The CCI has thus far proven to be an enabling regulator. While the CCI has undoubtedly contributed significantly to the development of the concept of ‘control’ under the Competition Act, it is imperative for the CCI to re-evaluate the need for such an expansive definition of ‘control’ in light of whether the exercise of such rights affect the entity’s behaviour in the market. For instance, while a right in relation to future entry into new lines of business is significant since it may potentially impact the entity’s behaviour in the market, a right in relation to the appointment of an auditor can certainly not be conceived as having the same effect. It is desirable that the CCI,

consistent with its previous stance in streamlining the merger review process, addresses this vital issue, which will not only ensure certainty, consistency and increased administrative efficiencies but also further the “ease of doing business in India”.

14 Item 9 of Schedule I of the Combination Regulations exempts “a merger or amalgamation of two enterpriseswhereoneoftheenterpriseshasmorethanfifty(50%)sharesorvotingrightsoftheotherenterprise,and/ormergeroramalgamationofenterprisesinwhichmorethanfifty(50%)sharesorvotingrights in each of such enterprises are held by the enterprise(s) within the same group. Provided that the transaction does not result in transfer from joint control to sole control”.


IMPOSITION OF PENALTY FOR BELATED/NON-NOTIFICATION - TRENDS IN MERGER CONTROL


Under the Competition Act, 2002 (Competition Act), the Competition Commission of India (CCI) has been bestowed with the power to regulate transactions in the country and outside, which cause or are likely to cause an appreciable adverse effect on competition (AAEC) in India.1 The Competition Act, read with the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations) and notifications issued from time to time, by the Ministry of Corporate Affairs govern the legal framework in relation to the merger control regime in India.

The Indian merger control regime provides that an enterprise2, proposing to enter into a transaction in which the

parties meet the prescribed financial thresholds, is mandatorily required to seek the approval of the CCI prior to giving effect to the combination.3 The merger notification has to be filed within 30 days of the approval of the proposal by the board of directors (in case of a merger or amalgamation) or execution of any agreement or any other document4 (in case of an acquisition of control, shares, voting rights or assets). No combination can be consummated before the approval of the CCI or on expiry of 210 days from the date of notification of the combination to the CCI, whichever is earlier.5

This article traces the evolution of jurisprudence on imposition of penalty for belated or non-notification of combinations in India.

1 Section 32 of the Competition Act. 2 Defined under Section 2(h) of the Competition Act. 3 Section 6 of the Competition Act. 4 Regulation 5(8) of the Combination Regulations provides: The reference to the other document’ in clause (b) of sub-section (2) of section 6 of the Act shall mean any binding document, by whatever name called, conveying an agreement or decision to acquire control, shares, voting rights or assets :Provided that if the acquisition is without the consent of the enterprise being acquired, any document executed by the acquiring enterprise, by whatever name called, conveying a decision to acquire control, shares or voting rights shall be the other document:Provided further that where a public announcement has been made in terms of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, for acquisition of shares, voting rights or control, such public announcement shall be deemed to be the ”other document”.5 Section 6(2A) of the Competition Act.


Legal background to imposition of penalty The Competition Act provides that an enterprise which fails to file a merger notification, in respect of a notifiable transaction within the 30 day period, shall be penalized.6 There have been a number of cases, wherein the CCI has initiated penalty proceedings on account of a belated notification or a default on the part of the notifying parties to notify the transaction to the CCI.

The CCI can inquire into whether a notifiable transaction, which was not notified, causes or is likely to cause an AAEC in India.7 However, it cannot initiate an inquiry after the expiration of a period of one year from the date of that transaction having taken effect.8 Further, the Combination Regulations provide that the CCI has the power to initiate an inquiry in a notifiable combination which was not notified.9 When the CCI decides to commence an inquiry into a notifiable transaction which was not notified, it can also direct the parties to file a notice in

Form I or II, as decided by the CCI10, and the parties would be required to file the notice within 30 days from the date of communication from the CCI.

Under the procedure prescribed under Regulation 48 of the Competition Commission of India (General) Regulations, 2009, a show cause notice is required to be issued to the defaulting party. Subsequently, an opportunity is required to be afforded to the party to present its case before the CCI. This is in compliance with the principle of natural justice, i.e., audi alteram partem, which provides that a party should be afforded an opportunity to present its case. As mentioned above, the CCI is required to scrutinize whether the combination is likely to have an AAEC in the relevant market.11 These proceedings do not have a bearing on the proceedings under Section 43A of the Competition Act. The CCI’s order on the likelihood of the combination causing an AAEC is passed before an order under Section 43A of the

6 Section 43A of the Competition Act.7 Section 20(1) of the Competition Act.8 Section 20(1) of the Competition Act.9 Regulation 8 of the Combination Regulations.10 Prior to the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations in 2015, notified on 1 July 2015, a Form II was required to be filed in case a notifiable transaction was not notified by the parties. Subsequent to the amendment, the CCI has the discretion to direct the parties to file either a Form I or a Form II.11 Section 6(2) of the Competition Act,


Competition Act. As such, the Section 43A proceedings are separate from the assessment of the combination and

typically, the Section 43A proceedings commence subsequent to the CCI’s assessment of the combination.

Relevant Precedents A maximum penalty of one per cent. of the total turnover or assets (whichever is higher) of the parties to the combination can be imposed for belated notification of the transaction.12 Given the nascency of the merger control regime in India, there are no formal guidelines in place to direct

the CCI on the determination of the quantum of penalty to be imposed on the defaulting parties. As such, considerable discretion has been provided to the CCI.

In the first year of enforcement of Sections 5 and 6 of the Competition

12 Section 43A of the Competition Act.


Act (i.e., from 1 June 2011), no penalty was imposed under Section 43A of the Competition Act on the defaulting parties as it was considered to be the sunrise period of implementation of the enforcement provisions relating to combinations under the Competition Act. Post the first year, until October 2016, penalties have been levied in the range of INR 1 lakh to INR 5 crore. The quantum of penalty has varied from 0.00001766 per cent. to 0.005 per cent. of the combined turnover or assets of the enterprises, whichever is higher.

In Temasek Holdings (Private) Limited/ DBS Group Holdings Limited13, the CCI had emphasized that the parties had notified the transaction after the expiry of the prescribed 30 day timeline14, the penalty was limited to INR 50 lakhs, which amounted to 0.00001766 per cent. of the total assets of the parties.

In Thomas Cook (India) Limited, Thomas Cook Insurance Services (India) Limited/ Sterling Holiday Resorts (India) Limited15, the CCI had taken the conduct of the parties, whereby a full disclosure was made by them without any effort to conceal any information from the CCI, into consideration and had limited the penalty to INR 1 crore. However, this decision of the CCI was overruled by

the Competition Appellate Tribunal (COMPAT) on the grounds that an enterprise can structure a transaction in a manner that reduces the brunt of the laws and it must not be interpreted to impute an intention to flout the provisions of the statute.

In SCM Soilfert Limited, Deepak Fertilizers and Petrochemicals Corporation Limited16, investments made by Deepak Fertilizers and Petrochemicals Corporation Limited (DFPCL) and SCM Soilfert Limited (SCM) in Mangalore Chemicals and Fertilizers Limited was not held to be an investment under Explanation to Item 1 of Schedule I to the Combination Regulations. Thereby, a penalty of INR 2 crore was imposed on the defaulting parties for notifying the two acquisitions post the expiration of the prescribed time. The disclosure of requisite information by the parties was considered to be a mitigating factor and therefore, a nominal penalty was imposed. The CCI’s order was appealed before the COMPAT. The COMPAT maintained the CCI’s view and held that the acquisition was a strategic investment by relying on various factors, which, inter alia, included press releases wherein the parties had specified it to be a strategic investment, low returns on investment and the takeover bid between DFPCL,

13 Combination Registration No. C- 2013/06/124. 14 Section 6(2) of the Competition Act. 15 Combination Registration No. C-2014/02/153.16 Combination Registration No. C-2014/05/175.


SCM and the Zuari Group.

In Clariant Chemicals India Limited/ Lanxess India Pvt. Ltd17, a penalty of INR 1 lakh, which amounted to 0.00002 per cent. of the combined assets of the parties, was imposed for belated notification of a notifiable transaction. The parties had consummated the transaction on the date of signing, under the impression that the same was exempt under the de minimis threshold.

In General Electric Company, GE Industrial France SAS and GE Energy Europe B.V./ Alstom India Limited18, the term ‘other document’19 as specified in the Section 6(2) of the Competition Act was interpreted to include any document which conveys the intention

of the parties to consummate the transaction and it was held to include a unilateral communication, for example: public announcement under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The public announcement was held to constitute a trigger under Section 6(2) of the Competition Act. However, mitigating factors such as bona fide conduct of the parties to notify the transaction to the CCI, post the expiry of the allowed time limit under the Competition Act and non-consummation of the transaction without the approval of the CCI, were taken into account while imposing a penalty of INR 5 crore which amounted to 0.0001 per cent. of the total assets of the parties.

Mitigating Factors A number of mitigating factors have been brought before the CCI during penalty proceedings. Several factors including bona fide conduct of the parties, complete disclosure of information, non-consummation of the transaction have been considered to be mitigating factors by the CCI while determining the quantum of penalty. Various aggravating

factors including non-notification of the transaction have also been taken into consideration.

Additionally, under the European Union merger control regime, factors such as voluntary disclosure20 and size of the undertaking21 have been considered while determining the quantum of penalty

17 Combination Registration No. C-2016/02/373. 18 Combination Registration No. C-2015/01/241.19 Regulation 5(8) of the Combination Regulations. 20 Electrabel /Compagnie Nationale Du Rhone (Case No COMP/M.4994).21Marine Harvest/ Morpol (Case No COMP/M.7184).


for non-notification of a notifiable transaction. Hence, it is evident that mitigating factors act as a defence to the imposition of higher penalty on the defaulting party and is a significant factor

which the competition authorities take cognisance of, while determining the quantum of penalty.

Penalty Guidelines – Need of the hour The varying penalty imposed by the CCI is primarily due to the lack of formal guidelines on the subject. In fact, even in the more developed jurisdictions such as, European Union, there are no penalty guidelines for merger control cases on the determination of the quantum of penalty. The European Commission also has the discretion to determine the exact quantum of penalty on a case to case basis.

Since India follows the common law system, substantial value is ascribed to precedents. It calls for uniformity in precedents for prospective consistency. However, there is an overall lack of uniformity in the penalty that has been imposed under Section 43A of the Competition Act in various cases and the CCI should either bring in penalty guidelines or be consistent with their precedents.


PRIVATE EQUITY AND MERGER CONTROL - AN INTERPLAY


Introduction Ever since the merger control provisions of the Competition Act, 2002 (Competition Act) were notified in June 2011, the Competition Commission of India (CCI) has been actively pursuing its mandate to regulate mergers and acquisitions which could potentially have a market distorting design.

Interestingly, over the last five years, competition law has featured and transformed into an increasingly important consideration for investments contemplated by private equity (PE) houses. While the significance of merger control is often underestimated in the context of PE transactions as it is believed that there is generally no strategic intent behind PE investments and, thus, would not lead to an adverse impact on the competitive landscape1, treading on the wrong side of the law can lead to heavy penalties (up to a maximum of 1 per cent of the combined assets or turnover of the parties, whichever is higher). Therefore, from a practical perspective it is necessary for the investor to be familiar with the evolving jurisprudence on competition law that directly impacts the PE industry.

This article attempts to briefly highlight certain topical issues and challenges

affecting the PE sector and explores the potential repercussions/challenges that the investment industry would face if these issues remain unaddressed, particularly in light of the views discussed in this piece and equally efficacious alternatives that the CCI is equipped with to check the issues that it seems to be targeting.

An OverviewCertain transactions meeting specified financial thresholds are referred to as “combinations” under the Competition Act. An enterprise proposing to enter into any combination is required to give pre-merger notification to the CCI in the specified format unless the transaction can avail of any exemption stipulated under the Competition Act read with the notifications issued thereunder or the CCI (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (as amended) Combinations Regulations, respectively. Under the Combination Regulations, the relaxation for not filing the notice has been provided to certain categories of combinations on the basis that those combinations are ordinarily not likely to cause an appreciable adverse effect on competition (AAEC) in India and therefore, need not normally be filed.

1Please refer to paragraphs 14 and 15 of the European Commission’s Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (2008/C 95/01) dealing with acquisition of control by investment funds.


The beauty of these exemptions lie in the fact that these relate to transactions which qualify as “combinations” allowing the CCI to exercise its jurisdiction “but for” the exemptions available under the Combination Regulations. One such transaction is the direct or indirect acquisition entitling the acquirer to hold less than 25 per cent of the shares or voting rights of a target company

provided that the acquisition is solely for investment purposes or in the ordinary course of business not leading to acquisition of “control” of the target enterprise (Item I Exemption). A typical PE transaction often endeavours to take benefit of the Item I Exemption which, based on the CCI’s decisional practice, is trickier to secure than it seems, in most instances.

Elusive concept of “Control”: Conflict between Control and Minority Protection Rights The Competition Act defines control as the ability to control the affairs or management by (i) one or more enterprises, either jointly or singly, over another enterprise or group, or (ii) one or more groups, either jointly or singly, over another group or enterprise.2 This definition is rather nebulous and the Combination Regulations do not provide any additional guidance on it.

In the absence of clarity on the exact contours that would define “control”, let us reflect upon the guidance emanating from the CCI’s decisional practice so far. The CCI takes a holistic approach in

arriving at any conclusion on control and has very often found control to include negative control aside from positive control.

The CCI’s decisional practice reveals that it considers the “ability to exercise decisive influence3 over the management or affairs” of a target enterprise as “control” over such enterprise.4 The CCI has also noted that joint control over an enterprise arises “where each company has control over the “strategic commercial operations” of the enterprise by two or more persons”.5 Affirmative voting rights including the right to

2Explanation to Section 5 of the Competition Act.3The CCI’s practice appears to draw parallels or is at least in line with the European Union’s (EU) test for control. The EU Merger Regulation states that “control shall be constituted by rights, contracts or any other means which, either separately or in combination and having regard to the considerations of fact or law involved, confer the possibility of exercising “decisive influence” on an undertaking, in particular by: (a)…; (b)… rights or contracts which confer decisive influence on the composition, voting or decisions of the organs of an undertaking.”4 Independent Media Trust, (C-2012/03/47).5MSM India/SPE Holdings/SPE Investments/Grandway/Atlas (C-2012/06/63).


appoint a director6, having common promoters/shareholders and the majority of directors7, have also been regarded as conferring control over the acquirer by the CCI. The CCI has recently concluded that veto rights in relation to approval of business plans, annual operating/budget plan, entry or exit from lines of business, appointment of removal of any key managerial personnel, etc. would tantamount to control.8 In a string of subsequent decisions, the CCI radically reduced the threshold of rights that would constitute “control” for the purposes of the Competition Act by observing that affirmative rights including, changes to memorandum and articles of association; changes in the capital structure, appointment or change of auditors; etc. would be regarded as strategic commercial decisions, effectively amounting to acquisition of control and not mere minority protection rights9.

As can be inferred from the discussion above, it is significant to note that

acquisition of “control” whether sole or joint is crucial to assessing the notifiability of minority share/voting rights acquisition. Consequently, assuming that the other incidental conditions are satisfied (i.e., acquisition should be in the ordinary course or business or for the sole purpose of investment), the determination to file in case of minority acquisitions would solely turn on whether there has been an acquisition of “control”.

Typically, a PE investor would prefer to retain a few rights in order to ensure that the target company does not take any step that can potentially jeopardise or dilute the value of its investments in the target company rather than acquisition of rights that would allow a PE investor to influence the business operations of the target. However, the decisional practice of the CCI is hitherto obscure on what could be regarded as a safe harbour (or pure investor protection rights) as opposed to control rights.

Muddying the waters and subsequent paradigm shift In September 2014, the CCI approved Kotak Mahindra’s acquisition of a non-controlling equity interest of 15

per cent in the Multi Commodity Exchange (MCX)10. In another order issued in November 2014, the CCI on

6 SAAB/Pipapav (C-2012/11/95).7 Alok Industries (C-2012-01-28). 8 Century Tokyo Leasing Corp./Tata Capital Financial Services (C-2012/09/78).9 Alpha TC Holdings Pte Ltd/Tata Capital Growth Fund I (C-2014/07/192) and Caladium Investment Pte. Ltd./Bandhan Financial Services Limited (C-2015/01/243).10 Kotak Mahindra/MCX (C-2014/08/197).


the applicability of the Item I Exemption observed that an acquisition of shares or voting rights, even if it was of less than 25 per cent, may raise competition concerns if the acquirer and the target are either engaged in business of substitutable products/services or are engaged in activities at different stages or levels of the production chain indicating that such acquisitions may not necessarily be acquisitions made solely as investments or in the ordinary course of business. The above decisions were followed by similar statements made by the CCI in various public forums, encouraging the PE investors to “err on the side of caution”11 and notify the CCI when acquiring strategic minority interests in multiple companies within the same sector. In a few subsequent decisions,12, the CCI reiterated its earlier view on the interpretation and scope of the Item I Exemption stating that categories of combinations listed in Schedule I as “normally not notifiable” ought not to include combinations which envisage or are likely to cause a change in control or are of the nature of strategic combinations including those between competing enterprises or enterprises active in vertical markets. It has further noted that the expression “solely as an investment” indicates “passive investment”. Any

11 Source: Interview of the CCI Chairman available at:http: //www.moneycontrol.com/news/business/one-more-cci-hurdle-for-private-equity-firms_1255570.html 12 Zuari/MCFL (C-2014/06/181) and SCM Solifert/MCFL (C-2014/05/175). The Competition Appellate Tribunal, in appeal in SCM Solifert/MCFL, upheld the order of the CCI and opined that the acquisition was a strategic in nature and rendered Item I Exemption inapplicable.

http://www.moneycontrol.com/news/business/one-more-cci-hurdle-for-private-equity-firms_1255570.html

http://www.moneycontrol.com/news/business/one-more-cci-hurdle-for-private-equity-firms_1255570.html


investment in a target enterprise which is done with a strategic intent cannot be treated as “solely as an investment”.

Taken as a whole, these pronouncements by the CCI had the PE industry on their tenterhooks in view of the potential ramifications that would ensue if this were to be actually followed. However, the PE industry applauded the CCI’s efforts when it introduced an explanation to Item I Exemption, by way of amendments to the Combination Regulations dated 7 January 2016 (2016 Amendment), clarifying that an acquisition of less than 10 per cent of shares or voting rights will be presumed to be made solely as an investment provided that (i) the acquisition does not provide special rights to the acquirer and the acquirer can only exercise ordinary shareholder rights to the extent of its shareholding; (ii) the acquisition does not grant the right to appoint a member on the board of the target; and (iii) the acquirer does not intend to participate in the affairs or management of the target.

The majority of the PE funds, as noted above, are engaged purely in the business of financial investments lacking a strategic intent. In fact, in terms of financial

reporting, most of the PE investors account their income as income through “investments” rather than income generated from operating a business of a company in which such PE investor has invested.13

It is possible that the CCI is being cautious with respect to minority acquisitions in view of the European Commission’s White Paper dated 9 July 2014 (EC White Paper) on non-controlling minority acquisitions. According to the EC White Paper, several types of competition concerns can arise when a minority shareholding is acquired. For instance, acquiring a minority shareholding in a competitor may lead to non-coordinated anticompetitive effects as such a shareholding may increase the acquirer’s incentive and ability to unilaterally raise prices or restrict output.14 However, in the Indian context, such concerns are strictly within the domain of Section 3 of the Act which is aimed to curb such anti-competitive agreements. Further, utilizing merger control regime to tackle potential and distant possibilities of anti competitive agreements can also become an impediment to India Inc.’s growth story. Further, the EC White Paper is currently


under debate and therefore, it is prudent to adopt an independent approach

conducive to the Indian economic and investment climate.

Conclusion The vigor and the ability to boost industrial expansion, which the PE industry is characterized by, remains unparalled. It is therefore crucial that to the extent regulatory hurdles exist, they are spelled in black and white. Although the 2016 Amendment has brought much needed clarity in relation to investments belowthe10%threshold,thereisstillscope for further clarity and precise guidance on the subject. The need for greater clarity becomes more relevant as the jurisprudence on the concept of “control” continues to evolve, with additional rights being caught under the ambit of being considered as rights granting “control”. This is simply because a given set of rights may not amount to “control” today but may constitute “control” tomorrow, and this uncertainty may make the regulatory framework ambiguous and result in dampening the attractiveness of investments in India.

Further, for a financial investor, the primary focus is to invest in a company which has the potential to generate profitable returns on its investment within a specified time span. Beyond this, a financial investor typically has no other interest in the target company, much less “controlling” the target’s business operations and, thus, in ordinary circumstances, would not have any adverse impact on competition in a given relevant market.15 If the CCI were to have jurisdiction over all acquisitions of non-controlling minority shareholdings, a pre-merger notification system may impose a heavy burden on businesses as unproblematic transactions would also be captured and would render the exemption available in the Combination Regulations redundant.

13 Please refer to paragraphs 189, 190 and 191 of the Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (2008/C 95/01) dealing with acquisition of control by investment funds.14 Page 9, EC White Paper available at http://ec.europa.eu/competition/consultations/2014_merger_control/mergers_white_paper_en.pdf15 Please refer to paragraphs 14 and 15 of the Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (2008/C 95/01) dealing with acquisition of control by investment funds.

http://ec.europa.eu/competition/consultations/2014_merger_control/mergers_white_paper_en.pdf

http://ec.europa.eu/competition/consultations/2014_merger_control/mergers_white_paper_en.pdf


CCI’S PROWESS IN THE PHARMACEUTICAL SECTOR


The pharmaceutical industry in India is the third largest in the world in terms of volume and is thirteenth in terms of value as of September 2016.1 In terms of generic drugs, India is the world’s largest provider accounting for 20 per cent of global exports in terms of volume.2 Given

the mammoth size of this industry, the sector has been rapidly consolidating and evolving. In such a context, the role of the Competition Commission of India (CCI) in the pharmaceutical industry is one of paramount importance.

Amplified importance of the CCI in the pharmaceutical sector In 2011, the Arun Maira Committee, while recommending that Foreign Direct Investment (FDI) in the pharmaceutical sector should be allowed up to 100 per cent through the automatic route, additionally stated that the scope of the CCI’s powers should be expanded to mandate the review of all transactions in the pharmaceutical sector irrespective of whether the transactions meet the jurisdictional thresholds (AMC Report).3 Although the AMC Report was not accepted in its entirety, the aforementioned recommendation clearly delineates the immense burden that rests on the Indian antitrust regulator while assessing any matter in the pharmaceutical sector.4

Under the present merger control provisions of the Competition Act, 2002 (Competition Act), the CCI in its assessment of transactions in this sector, has employed an array of methods which are in accordance with its pro-active stance. The CCI is essentially guided by (a) the extent of the parties’ presence in India; (b) the extent of horizontal overlaps between the parties; (c) the degree of vertical integration between the parties; and (d) the scope and duration of the non-compete covenants in the transaction, in its assessment of whether a particular transaction could cause appreciable adverse effect on competition (AAEC) in the market.

1 Available at: http://www.ibef.org/industry/pharmaceutical-india.aspx 2 Ibid.3 Available at: http://pharmaceuticals.gov.in/arun-miara-committee-report.4 Currently, the consolidated FDI policy permits investments on an automatic route up to 100 per cent in greenfield investments and 74 per cent in brownfield investments. In brownfield investments, FDI above 74 per cent requires government approval.5 Orchid Research Laboratories Limited/Orchid Chemicals and Pharmaceuticals Limited, (C-2012/02/31).

http://pharmaceuticals.gov.in/arun-miara-committee-report


Combinations in the pharmaceutical sector: A case of heightened vigilance

The first merger notification in this sector related to the merger of Orchid Research Laboratories Limited (ORLL) and Orchid Chemicals and Pharmaceuticals Limited (OCPL). In its assessment of the transaction, the CCI observed that both the parties were engaged in different activities and the ultimate control over the activities of both parties would not change post the combination.5

Another relevant transaction was the acquisition of Hospira, Inc. (Hospira) by Pfizer, Inc. (Pfizer).6 The CCI, while approving the transaction, observed that the parties operated in two different markets, i.e., the market for Active Pharmaceutical Ingredients (APIs) and the market for final formulations in India and thus, arrived at the conclusion that there exists no horizontal overlap between the parties. The CCI also took into consideration the fact that the vertical relationship between the parties was insignificant.

In relation to non-compete obligations and the subsequent behavioral commitments imposed by the CCI in the pharmaceutical sector, reference may be drawn to the matter of Orchid/Hospira,7 where the CCI reduced the duration of the non-compete arrangement from eight years to four years and directed the parties to restrict the product scope to cover only existing products. Subsequently, in Mylan/Agila,8 the duration of the non-compete was reduced from six years to four years and the CCI further held that the non-compete should only cover products which are either being presently manufactured/sold or are under development. Thereafter, in Torrent/Elder,9 the CCI directed the parties to reduce the product scope of the non-compete obligations to cover only those products and therapeutic sub-groups envisaged under the proposed transaction. Additionally, the duration of the non-compete covenant was also reduced from five years to four years.

6 Pfizer, Inc./Hospira, Inc., (C-2015/03/255).7Orchid Chemicals and Pharmaceutical Limited/Hospira Healthcare India Private Limited, (C-2012/09/79).8Mylan Inc./Agila Specialities Private Limited, (C-2013/04/116).9Torrent Pharmaceuticals Limited/Elder Pharmaceuticals Limited, (C-2014/01/148).


It is interesting to note that the CCI, in keeping with its stringent assessment of the pharmaceutical sector, has held that non-compete covenants should be reasonable in nature with respect to the duration, scope and the persons on whom such non-compete obligations would be applicable.10 This approach is in accordance with the European Union notice on ancillary restraints.11 Also, the principles set by the CCI in these cases are now seen as precedents not only for the pharmaceutical sector but across other sectors as well.

Till date, the Sun Pharmaceuticals/Ranbaxy12 transaction is the only instance in the pharmaceutical space wherein a structural remedy has been imposed. The CCI vide its investigation found that there are horizontal overlaps between the products of Sun Pharmaceuticals Industries Limited (Sun Pharmaceuticals) and Ranbaxy Laboratories Limited (Ranbaxy) in relation to forty nine molecular markets. Post the Phase II investigation, the CCI observed that the transaction was likely to have AAEC in seven out of these 49 markets and accordingly, directed Sun Pharmaceuticals to divest one brand and Ranbaxy to divest six brands.

10 See generally, Paragraph 6.6, Notes to Form I.11 Official Journal of the European Union, C-56/24, Commission Notice on restrictions directly related and necessary to concentrations, (2005/C 56/03).12 Sun Pharmaceuticals Industries Limited/Ranbaxy Laboratories Limited, (C-2014/05/170).


CCI crackdown on anti-competitive agreements In relation to enforcement of the provisions of the Competition Act dealing with anti-competitive agreements in the pharmaceutical sector, the CCI has majorly focused on the anticompetitive agreements by trade associations of chemists and druggists at the national, state and city wise levels.

In the Bengal Chemist and Druggist Association (BCDA) case,13 the CCI observed that the BCDA was employing a vigilance committee by the association to ensure compliance by the members to sell medicines at the Maximum Retail Price (MRP) and refrain from providing any sort of discount to the consumers. The CCI observed that such behavior is a textbook definition of an act aimed at protecting the margins of the stockists and thereby amounts to price fixing. The CCI observed that concerting to maintain the price by the members of BCDA causes restraint of trade, stifles competition and harms the consumers, thereby contravening Section 3 of the Competition Act.

Another issue that has been deliberated upon by the CCI in several instances is the practice of the All India Organisation of Chemists and Druggists14 (AIOCD) and multiple state associations of chemists and druggists15 imposing strict requirements of acquiring no objection certificates (NOC) and product information service (PIS) approvals by chemists and druggists. The CCI held that the NOC requirement was used as a mechanism by the AIOCD to restrict market supply of drugs, resulting in willing enterprises becoming unable to supply and sell drugs, as the AIOCD could easily bar members from participating in the market by denying them NOC. This was found to be limiting the supply in the market and forming barriers to entry, in contravention of Section 3 of the Competition Act. The CCI further held that the PIS approval requirement was operating as an impediment for the drugs to reach the consumers in time. The PIS being sine qua non for drugs to be supplied in the market, the CCI found that delaying and

13 In Re: Bengal Chemist and Druggist Association, (Suo motu Case No. 02 of 2012 and Reference Case No. 1 of 2013) (Bengal Chemist).14 M/s Santuka Associates Pvt. Ltd. v. AIOCD and Ors, (Case No. 20 of 2011); M/s Peeveear Medical Agencies, Kerala v. AIOCD and Ors, (Case No. 30 of 2011) (Peeveear).15 M/s Arora Medical Hall, Ferozepur v. Chemists and Druggists Association, Ferozepur (CDAF) and Ors, (Case No. 60 of 2012) (Arora Medical Hall); Varca Druggist & Chemist and Ors v. Chemists & Druggists Association, Goa, (Case No. C-127/2009/MRTPC) (Varca); Vedant Bio Sciences v. Chemists & Druggists Association of Baroda, (C-87/2009/DGIR); M/s Sandhya Drug Agency, Barpeta, Assam v. Assam Drug Dealers Association and Ors, (Case No. 41 of 2011).


withholding PIS approval amounts to limiting and/or controlling the supply of drugs in the market and hence, should be treated as a boycott, attracting provisions of Section 3 of the Competition Act.16

In M/s Peeveear Medical Agencies, Kerala v. AIOCD17, the CCI found that the agreement in relation to “fixed trade margins” to the wholesalers and the retailers had the effect of directly or indirectly determining the purchase or sale prices of the drugs in the market. The CCI noted that in the absence of such “fixed trade margins”, competition amongst the retailers would have forced them to reduce their trade margins resulting in sale of drugs at prices even below the MRP. The CCI found that the practice by AIOCD and its affiliated associations of boycotting pharmaceutical companies and/or their products to enforce the requirement of NOC, PIS approval and “fixed trade margins” resulted in limiting and controlling the supply of drugs in the market.

Besides penalizing chemists and druggists associations, the CCI also held Alkem Laboratories Limited (Alkem) a leading pharmaceutical supplier, in violation of Section 3 for denying supply of drugs to the informant who was not holding an NOC from the Kerala Chemists and Druggists Association (KCDA).18 However, the Competition Appellate Tribunal (COMPAT),19 set aside the fine imposed on Alkem as the COMPAT

found that the CCI acted on wholly factual erroneous assumption in relation to certain facts presented by the informant.

In the aforementioned chemists and druggists association cases, another contentious issue that has been considered by the CCI is whether individual office bearers could be held liable in their individual capacities for actions in violation of the Competition Act.20 The CCI to this effect held that the anti-competitive practice of the associations can be attributed to their members who were running the affairs of the association and actively participated in bringing into effect the anti-competitive design of the associations.21 In this regard, the office bearers have consistently argued that the associations being non-profit associations in nature, Section 48 of the Competition Act was inapplicable. However, the CCI held that irrespective of the applicability of Section 48, the provisions of Section 27 of the Competition Act are sufficient to make office bearers liable for contraventions of the Competition Act. 22

Among the extensive enforcement litigation centered around chemist and druggist associations, the Hiranandani case23 stands out. In the said case, Hiranandani Hospital and Cryobanks, a stem cells provider entered into an agreement to give exclusive right to LifeCell to collect stem cells from those desirous of availing the benefits of


stem cell banking. The CCI found this agreement to be anti-competitive and causing AAEC in the market for stem cell banking. However, the COMPAT

reversed this ruling, on the basis that the arrangement did not restrict the choice of the service provider in the market for stem cell banking services.24

Conclusion It is amply clear that the CCI’s focus does not only extend to maintain healthy competition in this key sector but has also expanded to maintaining and protecting consumer welfare. Consequently, while looking into the combinations in the pharmaceutical sector, the CCI has managed to overcome the price quality paradox by maintaining a high level

of innovation, while ensuring that competitive and beneficially priced drugs are available to consumers. However, the interplay between compulsory licensing, refusals to deal and protection afforded by the Patents Act, 1970 and the manner with which the competition regulator will view other collusive and anti-competitive practices, remains to be seen.

16 Supra note 14 (Peeveear).17 Ibid.18 Mr. P. K. Krishnan v. Mr. Paul Madavana, Divisional Sales Manager, M/s Alkem Laboratories Limited and Ors, (Case No. 28 of 2014).19M/s. Alkem Laboratories Limited v. Competition Commission of India and Anr, (Appeal No. 09, 14 and 15 of 2016).20 Section 48 of the Competition Act.21 Supra note 15 (Varca).22 Supra note 13 (Bengal Chemist) and note 15 (Arora Medical Hall).23 Mr. Ramakant Kini v. Dr. L.H. Hiranandani Hospital, Powai, Mumbai, (Case No. 39 of 2012).24 Dr. L.H. Hiranandani Hospital, Powai, Mumbai v. Competition Commission of India and Ors, (Appeal No. 19 of 2014).


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