CASES ON COMPETITION LAW

Shri Shamsher Kataria v. Honda Siel and Others (Decided by CCI on 27/7/2015)

Complaints were filed against Honda Siel Cars India Ltd., Volkswagen India Pvt. Ltd. and
Fiat India Automobiles Ltd., alleging anti-competitive practices on the part of these three car
manufacturers, whereby the genuine spare parts of automobiles manufactured by them were
not made freely available in the open market. Commission found prima facie and referred to
DG for investigation. DG opined that the companies indulged in restrictive trade practice
after sales service, procurement and sale of spare parts from the Original Equipment
Suppliers, setting up of dealerships etc. and opined that the investigation should be expanded
to all car manufacturers in India. On approval of CCI DG investigated the matter against 14
other OEMs operating in India and 3 manufacturers mentioned in the original complaint.
Market definition: The DG identified two separate markets for the passenger vehicle sector
in India—the primary market, consisting of the manufacture and sale of passenger vehicles
and the secondary market (After-Sales Markets) comprising of the complementary products
or secondary products which is complementary to and derived from the primary product (i.e.,
spare parts for passenger vehicles). The DG report also identified the two sub segments of the
aftermarket for passenger vehicles in India, as (a) Supply of spare parts, including diagnostic
tools, technical manuals, catalogues etc for the aftermarket usage and (b) Provision of
aftersale services, including servicing of vehicles, maintenance and repair services.
After conducting detailed analysis the DG concluded that the spare parts market for each
brand of cars comprising of vehicle body parts (manufactured by each OEM, spare parts
sourced from the local OESs or overseas suppliers), specialized tools, diagnostic tools,
technical manuals for the aftermarket service together formed a distinct relevant product
market, repair services of the products in the primary market constitute a separate relevant
market and after sale repair and maintenance services constitute a distinct relevant product
market.
Abuse of dominant position:
Considering the restrictions on the supply of genuine spare parts to the independent repairers,
CCI has found that the practice of the OEMs in denying the availability of its genuine spare
parts severely limits the independent repairers and other multi brand service providers in
effectively competing with the authorized dealers of the OEMs in the aftermarket and
amounts to denial of market access by the OEMs under section 4(2)(c) of the Act.
Exemption claim:
All the present Opposite Parties have claimed IPR exemptions but rejected by Commission
on lack of documentary evidence to show grant of IPRs in India and failure to establish
restriction amounted to reasonable condition as mentioned in section 3 (5) (i).

Dr L. H. Hiaranandani Hospitals v. CCI (Decided by COMPAT on18/12/2015 )

Dr. L.H. Hiranandani Hospital (‘the appellant’) is a public charitable hospital established at
Powai (Mumbai). It provides various healthcare services including Obstetrics and
Gynaecology/Maternity. It has an agreement with International India stem cell banking
services but one of its patient entered in to an agreement with LifeCell International Private
Limited to collect stem cells. Hospital mentioned to the patient about its arrangement with
Cryobanks and LifeCell cannot be permitted to provide its services. On appellant’s refusal to
allow LifeCell to provide stem cell banking services had forced her to avail maternity
services in another hospital at the eleventh hour an information under Section 19(1)(a) of the
Competition Act, 2002 about alleged abuse of dominant position by the appellant and anti-
competitive agreement entered into between the appellant and Cryobanks and prayed that an
investigation may be conducted under the Act and the appellant be penalised for abuse of its
dominant position and violation of free and fair competition. Investigation initiated by DG on
vertical agreement between the Hospital and Cord Stem Cell Bank Service Provider and
found that The tie-in arrangement between Hiranandani Hospital and M/s. Cryobanks is an
agreement in contravention of section 3(1) read with section 3(4) of the Act.
Market definition: The DG’s product market definition as“Super Speciality Hospitals” is not
accepted by COMPAT and held that all factors under section 19 (7) should be considered in
defining relevant market

Interpretation of Sec 3: A plain reading of Section 3 makes it clear that sub-section(1)

thereof can be invoked only if the agreement in respect of production, supply, distribution,
storage, acquisition or control of goods or provision of services causes or is likely to cause an
appreciable adverse effect on competition within India. Sub-section (2) of Section 3 is
declaratory in nature. It provides that any agreement entered into in contravention of the
provisions of Section 3(1) shall be void. Sub-section (3) contains a presumption of an
appreciable adverse effect on competition if the agreement has any of the
effects/consequences enumerated in clauses (a) to (d). Sub-section (4) lays down that any
agreement amongst nterprises or persons at different stages or levels of the production chain
in different markets, in respect of production, supply, distribution, storage, sale or price of, or
trade in goods or provisions of services including those specified in clauses (a) to (e) shall be
an agreement in contravention of sub-section (1) if such agreement causes or is likely to
cause an appreciable adverse effect on competition in India.

Decision Market is health care market and no evidence is produced to show that any
operating entities had exited the market on account of operation of the impugned agreement.
Hence no violation of section 3 and no dominant position and abuse of dominant position
under section 4.

Shri Sonam Sharma vs Apple Inc. USA & Ors. (Case No: 24/2011, decided by SC on
19 March, 2013)
Apple iPhone 3G and 3GS were launched in India in August 2008 and March 2010,
respectively. Apple India did not own or operate retail stores in India but its marketing
activities for iPhones were done by Mobile Network Operators (MNOs) or through
Authorized Premium Resellers (APRs) through non-exclusive distribution agreements with
tenure of two to three years. On the basis of data submitted by Apple India, DG has quoted
volume-wise sales of iPhones 3G/3GS made by MNOs and authorized re-sellers during FY
2008-09, FY 2009-10 and FY 2010-11 as 41590, 23080 and 16180, respectively.
DG investigated on the OPs exclusive agreement of undisclosed duration under Section 3.
Commission examined the investigation and the data and opined that the OPs are not in a
dominant position in their respective relevant market to establish violation of Section
4(2),(a),(b),(c),(d) and (e). Also held that the agreements have no appreciable adverse effect
on competition in the market of smart-phones and/or mobile service has been established,
there is no contravention of Section 3 (4) of the Act.

Shivashakti Sugars Limited vs . Shree Renuka Sugar Limited and Ors . ( Decided
by SC on 9/5/2017)

Using principles of competition law in dealing with matters having economic relevance: The
moot question involved in this appeal was whether the establishment of the sugar mill by
Shivashakti Sugar Mills and its activity to crush sugarcane since 2011 may be permitted to
continue. The bench, on the facts of the case, observed that no purpose is going to be served
in getting the unit closed and rather the public purpose demands that the factory remains in
operation and continue to function.

It has been recognised for quite some time now that law is an inter disciplinary subject where
interface between law and other sciences (social sciences as well as natural/physical sciences)
come into play and the impact of other disciplines of law is to be necessarily kept in mind
while taking a decision (of course, within the parameters of legal provisions). Interface
between law and economics is much more relevant in today's time when the country has been
ushered into the era of economic liberalization, which is also termed as 'globalisation' of
economy. India is on the road of economic growth. It has been a developing economy for
number of decades and all efforts are made, at all levels, to ensure that it becomes a fully
developed economy. Various measures are taken on this behalf by the policy makers. The
judicial wing, while undertaking the task of performing its judicial function, is also required
to perform its role in this direction. It calls for an economic analysis of law approach, most
commonly referred to as 'Law and Economics'. In fact, in certain branches of law there is a
direct impact of economics and economic considerations play predominant role, which are
even recognised as legal principles. Monopoly laws (popularly known as 'Antitrust Laws' in
USA) have been transformed by economics. The issues arising in competition laws (which
has replaced monopoly laws) are decided primarily on economic analysis of various
provisions of the Competition Act. Similar approach is to be necessarily adopted while
interpreting bankruptcy laws or even matters relating to corporate finance, etc. The
impression of economics is strong while examining various facets of the issues arising under
the aforesaid laws. In fact, economic evidence plays a big role even while deciding
environmental issues. There is a growing role of economics in contract, labour, tax, corporate
and other laws. Courts are increasingly receptive to economic arguments while deciding these
issues. In such an environment it becomes the bounden duty of the Court to have the
economic analysis and economic impact of its decisions. We may hasten to add that it is by
no means suggested that while taking into account these considerations specific provisions of
law are to be ignored. First duty of the Court is to decide the case by applying the statutory
provisions. However, on the application of law and while interpreting a particular provision,
economic impact/effect of a decision, wherever warranted, has to be kept in mind. Likewise,
in a situation where two views are possible or wherever there is a discretion given to the
Court by law, the Court needs to lean in favour of a particular view which subserves the
economic interest of the nation. Conversely, the Court needs to avoid that particular outcome
which has a potential to create an adverse effect on employment, growth of infrastructure or
economy or the revenue of the State. It is in this context that economic analysis of the impact
of the decision becomes imperative

Excel Crop . Care Limited vs . Competition Commission of India and Ors (

Decided by SC on 8/5/2017)

In consonance of established jurisprudence, the principle of proportionality needs to be

imbibed into any penalty imposed Under Section 27 of the Act. Otherwise excessively high
fines may over-deter, by discouraging potential investors, which is not the intention of the
Act. Therefore the fine Under Section 27(b) of the Act should be determined on the basis of
the relevant turnover. In light of the above discussion a two step calculation has to be
followed while imposing the penalty Under Section 27 of the Act.

STEP 1: DETERMINATION of RELEVANT TURNOVER.

At this point of time it needs to be clarified that relevant turnover is the entity's turnover
pertaining to products and services that have been affected by such contravention. The
aforesaid definition is not exhaustive. The authority should have regard to the entity's audited
financial statements. Where audited financial statements are not available, the Commission
may consider any other reliable records reflecting the entity's relevant turnover or estimate
the relevant turnover based on available information. However the Tribunal is free to
consider facts and circumstances of a particular case to calculate relevant turnover as and
when it is seized with such matter.

STEP 2: DETERMINATION of APPROPRIATE PERCENTAGE of PENALTY BASED

ON AGGRAVATING AND MITIGATING CIRCUMSTANCES.

After such initial determination of relevant turnover, commission may consider appropriate
percentage, as the case may be, by taking into consideration nature, gravity, extent of the
contravention, role played by the infringer (ringleader? Follower?), the duration of
participation, the intensity of participation, loss or damage suffered as a result of such
contravention, market circumstances in which the contravention took place, nature of the
product, market share of the entity, barriers to entry in the market, nature of involvement of
the company, bona fides of the company, profit derived from the contravention etc. These
factors are only illustrative for the tribunal to take into consideration while imposing
appropriate percentage of penalty.

At the cost of repetition it should be noted that starting point of determination of appropriate
penalty should be to determine relevant turnover and thereafter the tribunal should calculate
appropriate percentage of penalty based on facts and circumstances of the case taking into
consideration various factors while determining the quantum. But such penalty should not be
more than the overall cap of 10% of the entity's relevant turnover. Such interpretation of
Section 27 (b) of the Act, wherein the discretion of the commission is guided by principles
established by law would sub-serve the intention of the enactment.

Competition Commission of India vs . Co - ordination Committee of Artists and

Technicians of W . B . Film and Television and Ors . (decided by SC on 7/3/2017)

On 7 March 2017, the Supreme Court of India (SC) upheld an appeal by the Competition
Commission of India (CCI) against an order of the Competition Appellate Tribunal
(COMPAT) in a case of alleged cartelisation by members of a film and television artists’
trade union in the state of West Bengal. This order of the SC (Order) is arguably the first of
the apex court on substantive issues arising under the provisions relating to anti-competitive
agreements under the Competition Act, 2002 (Competition Act). The matter arose out of
information filed by a distributor and telecaster of regional serials in Eastern India, including
the state of West Bengal (Informant). The Informant alleged that he had been assigned the
rights to dub and telecast the television serial ‘Mahabharat’ in Bengali and had entered into
agreements to telecast it on two television channels. However, under opposition and pressure
from two associations, namely the Eastern India Motion Picture Association (EIMPA) and
the Committee of Artists and Technicians of West Bengal Film and Television Investors (Co-
ordination Committee), one of the two channels decided to not proceed with the telecast. The
Co-ordination Committee is a joint platform comprising the Federation of Cine Technicians
and Workers of Eastern India, and West Bengal Motion Pictures Artists Forum. Upon one
channel deciding to not telecast the dubbed serial, the Informant decided to approach the CCI
and filed an information alleging that the restrictive acts of EIMPA and the Co-ordination
Committee were in violation of the provisions of the Competition Act. The Director General
(DG), upon investigation, found that the Co-ordination Committee and EIMPA restricted the
telecast of the dubbed television serial in the market for ‘film and television industry in West
Bengal’. The DG also found that the persons or association of persons who were the
constituents of the Co-ordination Committee were active in this market and thus any joint
action to restrict such telecast amounted to an anti-competitive agreement within the meaning
of Section 3(3)(b) of the Competition Act. In response to the DG’s report, the Co-ordination
Committee argued that they were a trade union of artists and technicians of West Bengal and,
as such, were not an ‘enterprise’. Accordingly, their acts were merely industrial actions
protected under Article 19(1)(a) of the Constitution of India. The CCI agreed with the
findings of the DG that, by their conduct, the Co-ordination Committee and EIMPA had
restricted the telecast of the dubbed television serial. Further, while the CCI agreed that they
were trade unions and thus not enterprises, it held that this only absolved them from
adjudication under Section 4 of the Competition Act, which deals with unilateral conduct.
The CCI held that trade unions are not exempt under Section 3 and went on to hold that by
restricting the telecast of the serial, the Co-ordination Committee and EIMPA has violated the
provisions of Section 3(3)(b) of the Competition Act. This prohibits agreements between
competing enterprises, which limits or controls production, supply, market, technical
development, investment or provision of services. On appeal, the COMPAT, agreeing with a
dissenting minority order of the CCI, narrowed the relevant market to the market for
‘telecasting of dubbed serials on the television in West Bengal’. The COMPAT also agreed
with the minority order in holding that the scope of Section 3(3)(b) covered only agreements
between competitors which, inter alia, restricted the production and/or distribution of goods
or services. In the present case, the members of the trade unions, being artists, technicians,
etc, were not competitors in the market for ‘telecasting of dubbed serials on the television in
West Bengal’ (which would ideally be direct to home/cable operators). Further, since one of
the two channels continued to telecast the serial in spite of the industrial action by the trade
unions, there was no evidence to suggest that the industrial action in question actually limited
or controlled the production, supply, markets, technical development and investment or
provision of services. Accordingly, the COMPAT allowed the appeal and held that the Co-
ordination Committee was not guilty of a contravention under Section 3(3)(b) of the
Competition Act. No order was passed with respect to EIMPA since they chose not to
challenge the CCI order. The above order of the COMPAT was challenged before the SC. At
the very outset, the SC widened the scope of the relevant market to include the entire film and
television industry of West Bengal. The reasoning was that the cause for which the trade
unions had called for industrial action did not restrict itself to the market for dubbed
television serials in West Bengal but was with respect to the entire film and television
industry of West Bengal. On the issue of trade unions, the SC opined that any entity engaging
in an economic activity constitutes an enterprise within the meaning of Section 3 of the
Competition Act.In the present instance, the SC held that the Co-ordination Committee did
not act as pure trade unionists. The constituent members of the Co-ordination Committee
(or EIMPA for that matter) were engaged in the production, distribution and exhibition
of films. Accordingly, the SC held that the acts of the Co-ordination Committee
deprived consumers from exercising their choice and hindered competition in the
market by barring dubbed television serials from exhibition on television channels in
West Bengal, thus violating the provisions of Section 3(3)(b) of the Competition Act.