Question: A Ltd. is a cement manufacturing company in India.

It approached CCI under

Section 46 read with Rule 5 of the CCI (Lesser Penalty) Regulations stating that from 2011 –
Feb 2015, A Ltd. had an agreement with B Ltd (another cement company) for the sale of
cement. Under this agreement A Ltd. used to supply cement to B Ltd. as part of its institutional
sales. A Ltd. had another agreement with C Ltd. and D Ltd. through which they coordinated
the sales price of cement. Therefore, since A Ltd. has beforehand knowledge of the time of
price increase, it used the same to negotiate and increase the price of cement sold by it to B
Ltd. Further both A Ltd. and B Ltd. used to agree on the market price of cement sold by them
so as to maintain parity in the market.
Based on the above, you are required to answer the following –
a. Whether, the agreement between A Ltd. and B Ltd. can be termed as Anti – Competitive? If
yes, why?
b. Whether A Ltd. is eligible for the benefits under Lesser Penalty provisions? If yes, what are
the benefits?
c. Mention case laws to support your answer to the questions.

Answer:
a) In this case the agreement between A Ltd. & B Ltd. is Anti-Competitive. The agreement
between a manufacturer and providers or between producers and distributors are vertical
agreements and according to sec 3(3)(i) of The Competition Act, 2002, these kinds of
agreements will have an appreciable adverse effect on competition, if they Directly or
indirectly determine sale or purchase prices. In this case the A Ltd. already has an
agreement with C Ltd. & D Ltd., where it co-ordinated the selling price of cements, thus,
indirectly making the agreement between A Ltd. and B Ltd. Anti-Competitive, where A
Ltd. was negotiating the price with a prior knowledge of increase in price.
b) Sec 46 of The Competition Act, 2002 read with Rule 3(1) of Competition Commission of
India (Lesser Penalty) Regulations, 2009 deals with the eligibility for being given benefits
of lesser penalty provisions. In this case as A Ltd. is not a part of the cartel any more and
has provided all the relevant documents and evidences without any malicious or
fraudulent intent, they are eligible for benefits under lesser penalty provisions. Now,
according to the Rule 4 of Competition Commission of India (Lesser Penalty)
Regulations, 2009 if the applicant is the first to make a vital disclosure and submits the
details about cartel, providing relevant evidences in support of it, they may be granted
benefit of reduction in penalty up to or equal to one hundred percent. As in this case A
 Ltd. was the first one in the cartel to make a vital disclosure about it, they may be given
benefit of reduction in penalty up to or equal to one hundred percent.
c) In Builders Association of India vs. Cement Manufacturers Association & Ors. ("BAI
case") and Re: Alleged Cartelization by Cement Manufacturers ("Cement case"), the facts
were almost similar and the commission after due investigation found that there was a
cartel of cement manufacturers which use to colluded to hike cement prices, created an
artificial scarcity of cement in the market and exchanged sensitive price, production and
dispatch related information to this end, the commission also relied on the T-mobile
case where European Court of Justice had held that, in an oligopolistic market13 (like
cement industry) the exchange of such information that increases the predictability of
market operations between competitors leads to restricted scope for competition. The
commission declared such agreements and activities as Anti-Competitive.
In Re: Cartelisation in respect of zinc carbon dry cell batteries market in India the reduce
the penalty imposed upon Panasonic, Eveready and Nippo by 100 percent, 30 percent and
20 percent respectively as they were the first three, respectively in the cartel to disclose
the vital information about it.