Keeping up with Competition - August 2024
A monthly newsletter by Axiom5
Greetings and welcome to the eleventh edition of our monthly newsletter, Keeping up with Competition. In this issue, we comprehensively recap the key events that shaped the Indian competition law and policy landscape in July 2024.
Comprehensive summaries of all rulings issued by the Competition Commission of India (CCI) are accessible via this link.
NCLAT Reduces Penalty in Toyfort Bid-Rigging Case, Affirms CCI Findings
In Toyfort v. Competition Commission of India, Toyfort challenged a CCI ruling that found them guilty of bid rigging and cartelisation. The CCI had imposed a penalty based on Toyfort's average annual turnover.
Toyfort asserted their innocence, arguing that there was no evidence of their involvement in bid-rigging and that familial or business connections alone were insufficient to establish a breach of Section 3. They also claimed that the penalty should be based on relevant turnover, and given their lack of income from soil testing they should receive a zero penalty.
The National Company Law Appellate Tribunal (NCLAT) upheld the CCI's decision, noting Toyfort's lack of expertise in soil testing, their submission of cover bids, and their clear business and familial ties to other implicated parties. NCLAT agreed with the CCI that using total turnover for penalty calculation was appropriate in this instance, as relying on the principle of relevant turnover would have resulted in no penalty for Toyfort. However, the NCLAT reduced the penalty from 5% to 3% due to Toyfort's supporting role in the cartel.
A detailed summary of the order can be accessed here.
DHC Upholds the CCI’s Dismissal of Tata-Air India Merger Challenge
In a challenge to the CCI’s approval of the merger between Tata SIA Airlines Limited and Air India Limited, Captain Deepak Kumar alleged cartelisation and bid rigging. However, both the CCI and the Delhi High Court (DHC) dismissed his claims due to a lack of evidence.
Undeterred, Kumar filed a subsequent petition with the DHC, this time making unsubstantiated allegations against the judge and the DHC Registry. The court noted a pattern of baseless and malicious allegations by Kumar, deeming his claims manipulative and misleading.
Consequently, the DHC dismissed the petition, emphasizing the significance of substantiated claims in legal proceedings. This decision reflects the court's commitment to curbing vexatious litigation and upholding the integrity of the judicial system.
A detailed summary of the order can be accessed here.
Merger control - a snapshot
The CCI approved 9 combinations and published 10 detailed orders in July (the summaries of these orders are available here). The CCI received 4 new notices, of which 1 notice was under the green channel.
Behavioural cases
The CCI issued closure orders in 7 cases. In Balbir Singh, Col. Arvind Kumar and Gubba Cold Private Ltd., the CCI noted that the issues were in the nature of inter se disputes between the parties and that it did not give rise to any competition concerns. The CCI dealt with two bid-rigging cases, including India Glycols and Integral Coach Factory.
In Saint Gobain, the informant alleged that Saint Gobain engaged in anti-competitive behaviour in its dealings with processors, fabricators, and distributors. These allegations included exclusive supply obligations, forced co-branding, refusal to deal, and resale price maintenance.
The CCI evaluated each allegation thoroughly and reached the following conclusions:
Exclusive Supply: The CCI determined that the exclusive supply obligation was objectively justified due to the need for technical and marketing training, which ultimately benefited consumers.
Forced Co-Branding: The CCI found that co-branding did not raise competition concerns because OP-1 allowed processors to use their own trademarks.
Refusal to Deal and Discounts: The CCI concluded that the refusal to deal allegations were unsubstantiated and clarified that offering volume-based discounts is not inherently anti-competitive.
Resale Price Maintenance (RPM): The CCI dismissed the RPM claims because processors were free to set their own prices, and there was no evidence that OP-1 controlled final prices.
Abuse of Dominance: The CCI determined that while OP-1 had substantial market power, it did not meet the criteria for dominance.
In Anil Bansal, the CCI passed a closure order noting that an anticompetitive vertical agreement does not include agreements with an end consumer.