Keeping up with Competition - January 2025
A monthly newsletter by Axiom5
Welcome to the sixteenth edition of our monthly newsletter, Keeping Up With Competition. The month of December witnessed a flurry of activity from the Supreme Court (SC), National Company Law Appellate Tribunal (NCLAT), and the Competition Commission of India (CCI), with decisions that have significant implications for competition law in India. These rulings touch upon critical issues, including:
Pricing Strategies of Dominant Firms: How should companies with high market shares approach pricing decisions to avoid allegations of abuse of dominance?
Anti-Competitive Practices in Sports: Can quasi-government sporting federations restrict player movement and participation to control competition?
CCI's Jurisdiction in Settled Disputes: Does the CCI retain jurisdiction to examine cases where parties have already reached a settlement outside the framework of the Competition Act, 2002 (Competition Act)?
This newsletter provides summaries of the cases that address these questions, highlighting the core issues.
Key Cases:
Coal India Limited (CIL): The CCI examined the fairness of CIL’s e-auction scheme, raising questions about pricing practices for dominant firms.
Ghaziabad Development Authority (GDA): The NCLAT upheld the CCI's ruling against GDA for exploitative pricing of affordable housing, emphasizing that government bodies engaged in commercial activities are subject to competition law.
Table Tennis Federation of India (TTFI): The CCI found the TTFI and its affiliates guilty of anti-competitive practices by restricting player participation in unsanctioned tournaments.
JCB-Bull Machines Dispute: The SC upheld a settlement between JCB Limited (JCB) and Bull Machines Private Ltd. (Bull Machines), raising questions about the CCI's jurisdiction in cases resolved through private agreements.
Flipkart & Amazon Antitrust Case: The SC consolidated and transferred all petitions related to the ongoing antitrust probe against Flipkart and Amazon to the Karnataka High Court.
Let's delve into the details of these important developments.
CCI dismisses complaint against Coal India Limited concerning its 2022 e-auction scheme (order available here)
The CCI recently addressed concerns regarding CIL’s new e-auction scheme for coal sales. The Informant, Bijay Poddar, argued that the 2022 scheme unfairly favored CIL and disadvantaged bidders compared to the previous 2007 scheme.
The CCI defined the relevant market as the "production and sale of non-coking coal to bidders under the e-auction scheme in India" while reinforcing the distinction between coking and non-coking coal (relying on its past decision in Case No. 59 of 2013) and emphasizing the domestic nature of the market.
Despite CIL's arguments about governmental control and social obligations, the CCI found CIL to be dominant in the relevant market due to its significant market share (over 79% of India’s coal production and 90% in coal e-auctions) and commercial independence. The CCI concluded that the 2022 scheme's clauses were generally reasonable, standard practice, and did not demonstrate an abuse of dominance by CIL. The CCI highlighted CIL's responsiveness to concerns, such as reducing the bid security amount, and emphasized the scheme's fairness and transparency.
NCLAT Upholds CCI's Ruling Against GDA for Exploitative Pricing of EWS Flats (judgement available here)
The NCLAT recently upheld a CCI order against the GDA, finding that GDA abused its dominant position by significantly increasing the price of flats intended for the Economically Weaker Section (EWS).
The NCLAT confirmed that GDA, despite being a statutory body, qualified as an "enterprise" under the Competition Act. This was because it engaged in commercial activities like land acquisition and property sales, similar to private entities, which reinforced the principle that government bodies can be subject to competition law if they engage in commercial ventures. It agreed with the CCI's assessment that GDA held a dominant position in the relevant market of "market for provision of services for development and sale of low-cost residential flats under affordable housing schemes for the economically weaker sections in the district of Ghaziabad". This was due to its significant market share and exclusive development power in Ghaziabad, making it the primary source of EWS housing in the area. Crucially, the NCLAT emphasized that GDA's actions were exploitative and detrimental to a vulnerable section of society. It highlighted the following aspects of GDA's conduct that constituted abuse:
Lack of Transparency: The price increase was not communicated effectively to the allottees, nor was it justified by any reasonable explanation or cost analysis.
Unfair Terms: The imposition of interest on allottees for delayed payments, without a corresponding obligation on GDA for delayed possession, was considered unfair and discriminatory.
Disregard for Consumer Welfare: GDA's actions demonstrated a disregard for the welfare of EWS consumers, who rely on affordable housing schemes to secure basic shelter.
The NCLAT affirmed that GDA abused its dominant position by unilaterally increasing the price of EWS flats from INR 200,000 to INR 700,000 without justification. This substantial price hike, coupled with the imposition of one-sided interest charges on allottees, was deemed anti-competitive. It supported the CCI's imposition of a 5% penalty on GDA's relevant turnover while emphasizing that the penalty was reasonable and necessary to discourage similar conduct in the future. It also highlighted the fact that GDA did not provide any compelling reasons to reduce the penalty amount.
CCI Finds TTFI and Affiliates Guilty of Anti-Competitive Practices in Table Tennis (order available here)
The CCI recently concluded an investigation into TTFI and its affiliated state and district associations, finding them guilty of anti-competitive practices. The case was initiated by the TT Friendly Super League Association (TTFSL), which alleged that the TTFI and its affiliates were stifling competition by restricting players from participating in unsanctioned tournaments.
The CCI reiterated its stance that sports federations, even if non-profit, qualify as "enterprises" under the Competition Act if they engage in commercial activities. The CCI defined two relevant markets: (a) market for organizing table tennis leagues/events/tournaments in India and (b) market for the provision of services by players for table tennis leagues/events/tournaments in India. The CCI found the TTFI and its state and district affiliates to be dominant in the relevant markets. This was due to their exclusive regulatory powers and pyramidal structure, which allowed them to control all aspects of the sport from the district to the national level.
The CCI found that the TTFI and its affiliates abused their dominance through various anti-competitive practices, including:
Restrictive Clauses in Memorandum of Association (MoA) and Bylaws: Clauses that prohibited the organization of and participation in unauthorized tournaments, restricted player choices, and limited competition.
Restrictive Communications: Issuing notices and advisories that threatened players with suspension or non-acceptance of their entries in tournaments if they participated in unsanctioned events.
Misrepresentation: Promoting events as affiliated with TTFI when they were not.
The CCI acknowledged that the TTFI and its affiliates had taken corrective measures by withdrawing restrictive communications, amending their MoA and bylaws, and issuing clarificatory circulars. As a result, the CCI imposed a cease-and-desist order but refrained from imposing monetary penalties. However, the CCI warned that any future anti-competitive conduct would be treated as recidivism with severe consequences.
Supreme Court Ends JCB-Bull Machines Dispute, Upholding Settlement (order available here)
The SC dismissed an appeal by the CCI against a Delhi High Court (DHC) decision that quashed an inquiry into UK-based JCB and its Indian subsidiary. The CCI had been investigating allegations that JCB abused its dominant position in the backhoe loader market.
The case arose in 2011 when JCB accused Bull Machines of infringing its backhoe loader designs. Bull Machines subsequently filed a complaint with the CCI in 2018, alleging that JCB was using litigation to stifle competition. However, the two companies reached a settlement, and Bull Machines withdrew its complaint.
In August 2024, the DHC quashed the CCI's inquiry, stating that regulatory bodies should respect the outcomes of mediation. The SC’s decision to dismiss the CCI's appeal further strengthens the principle that settlements reached through mediation should be final and binding. This ruling has significant implications for the Indian regulatory landscape, highlighting the role of mediation as a key dispute-resolution mechanism.
For detailed background on this case, please refer to the September edition of "Keeping Up with Competition" (available here).
Supreme Court Transfers Flipkart & Amazon Antitrust Case to Karnataka High Court (order available here)
On 5 January 2025, the SC transferred all petitions related to the CCI’s antitrust probe against Flipkart and Amazon to the Karnataka High Court (KHC). The order was passed after the CCI had filed a plea seeking the consolidation of all petitions challenging the investigation into Amazon and Flipkart, and the transfer of these cases to a single high court. In December, during an SC hearing, the court orally indicated its preference for the KHC as the sole venue for the case. However, the SC held back on issuing a final order at that time and stayed the proceedings in the KHC pending a definitive decision. On 5 January 2025, the SC finally issued its official order, transferring all related pleas to the KHC.
Case History: The case arose from CCI directing an investigation (order available here) into a 2019 complaint filed by the Delhi Vyapar Mahasangh, associated with the Confederation of All India Traders, which lodged allegations of anti-competitive practices by the e-commerce giants, including preferential treatment of sellers, deep discounting, and exclusive launches. Both Amazon and Flipkart, along with several sellers on their platforms, challenged the CCI probe in various high courts across India. In February 2020, the KHC temporarily halted the CCI's investigation when Amazon and Flipkart contested the CCI's authority. However, the court allowed the investigation to proceed in June 2021. Amazon and Flipkart then took their pleas to the Supreme Court, but the court dismissed them in August 2021, giving the green light for the investigation to continue. The CCI contended that the sellers filed their petitions to hinder the CCI's investigative powers. On the other hand, the sellers argued that the CCI changed their designation in the investigation from "third parties" to "opposite parties" in July 2024 without any prior notice or the opportunity for a hearing.
Next Steps: The SC chose the KHC to hear the case since it was already presiding over a related matter. Although the KHC was scheduled to hear all petitions on January 15, 2025, it was adjourned. In the coming weeks, we can expect greater clarity on the status of the case.