Keeping up with Competition - November 2024
A monthly newsletter by Axiom5
Welcome to the fourteenth edition of our monthly newsletter, Keeping up with Competition. In this issue, we recap the key events that shaped the Indian competition law and policy landscape in October 2024.
Detailed summaries of orders passed by the Competition Commission of India (CCI) can be accessed here.
CCI Approves Reliance-Disney Merger with Modifications
The CCI published its order approving the merger of the entertainment businesses of Viacom18 (a RIL group company), and The Walt Disney Company.
The CCI's assessment found horizontal overlaps in TV channels, AV content licensing, film production, and OTT streaming. To address potential competition concerns, the parties offered voluntary modifications, including divesting certain TV channels and committing to not bundling sports broadcasting rights.
Notably, the CCI observed that the sports broadcasting market is already highly concentrated, with the combined entity holding a significant share. To mitigate this, the Parties provided further commitments, such as not increasing advertisement rates unreasonably and ensuring fair access to sports content.
To ensure compliance with the commitments, the CCI has appointed an independent monitoring agency. The monitoring agency will oversee and ensure the viability and marketability of the divested TV channels. It will also review the progress of the divestment process and verify that potential purchasers receive sufficient information.
NCLAT Upholds CCI Penalty in Amreesh Neon Case
In Amreesh Neon, an appeal was filed challenging the CCI’s imposition of penalties on various companies for contravening the Competition Act, 2002’s (Act) provisions relating to cartelization and bid-rigging.
The appellants argued that the penalties were disproportionate, particularly given their limited role in the alleged misconduct. However, the National Company Law Appellate Tribunal (NCLAT) upheld the CCI's decision, by distinguishing between the present case and the Supreme Court’s (SC) judgment in Excel Crop Care Ltd. vs CCI. It noted that the principle of proportionality laid down by the SC was in the context of multi-product companies, whereas in the current case, the Opposite Parties (OPs) were engaged in the business of supplying printed advertising and marketing materials, including various types of signages. The NCLAT agreed with the CCI that the different types of signages were not distinct product lines but rather varieties of the same core product offering, thus distinguishing the case from Excel Crop Care.
Government travel policies don't violate competition law, says NCLAT
The NCLAT recently upheld the CCI's dismissal of allegations by the Travel Agents Association of India (TAAI) that the government's exclusive arrangements with Balmer Lawrie & Co. Ltd and Ashok Travels and Tours for booking air tickets were anti-competitive. TAAI claimed this practice violated competition law by denying market access to other travel agents. However, the NCLAT dismissed these allegations, reiterating the CCI’s position that the government, as a consumer, is free to book air tickets through its authorised travel agents.
Crucially, the NCLAT confirmed that the government department responsible for travel policies is not an "enterprise" under the Act, as its activities are primarily non-commercial and focused on policy formulations. It further clarified that Internal administrative decisions of the government, such as office memoranda, did not constitute an “agreement” as understood under the Competition Act.
This decision clarifies that government procurement, even when exclusive, does not automatically fall under the purview of competition law if driven by non-commercial objectives. TAAI was penalised an amount of INR 5,00,000 for filing multiple complaints with the CCI on the same set of facts.
CCI seeks comments on amendments to the CCI (Manner of Recovery of Monetary Penalty) Regulations, 2011
On 7 November 2024, the CCI published its proposed amendments to the penalty recovery regulations for companies contravening the provisions of the Act for public consultation. The proposed amendments align the regulations with the Act, and now provide a time-bound penalty recovery mechanism even for individuals penalised by the CCI. The proposed amendments introduce concepts such as “enterprise in default”, “person in default” and “legal heir” to identify specific entities/individuals who are required to pay a penalty. Additionally, the proposed amendments introduce significant changes to the penalty recovery timelines. Previously, the CCI could issue demand notices at its discretion after a specified period. Now, these notices will be issued concurrently with the CCI’s penalty orders. Further, the CCI now has the authority to determine the payment timeframe on a case-by-case basis, replacing the previous thirty-day window, and the interest rate on delayed payments has been reduced from 1.5% to 1%. Furthermore, where the penalty amount has been reduced by the NCLAT or a High Court or the SC, interest will only be levied on the remaining penalty amount.
With the 2023 amendments to the Act, an appeal under Section 53B of the Act must be filed within sixty days accompanied by a 25% deposit of the penalty. Now that the CCI has the discretion to determine the payment timeframe, parties could consider timing their appeals to secure a hearing from the NCLAT before the sixty-day deadline. If the NCLAT hasn't granted a hearing nearing the deadline (e.g., day fifty), parties can request the CCI to extend the payment deadline, citing the pending appeal. The proposed amendments are intended to bring a more effective penalty enforcement mechanism which may ensure better recovery rates and encourage compliance.
Merger Control - a snapshot
The CCI approved nine combinations and published sixteen detailed orders in October 2024 (the summaries of these orders are available here). The CCI received fourteen new notices, of which two notices were through the Green Channel route.
Behavioural cases
The CCI issued one closure order. In Kalpit Sultania, the CCI dismissed a complaint alleging abuse of dominance by Indian Rare Earth Limited (IREL). They found that IREL's pricing was influenced by market factors, was competitively priced, and lacked consumer complaints. The CCI also determined that any differences in pricing or conditions for micro, small, & medium enterprises were based on commercial considerations, not discrimination.