Birbal’s Update
October 2018
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Publications / Accolades / Media

Key Updates

Recent Judgements

Hyundai Motors India Limited v Competition Commission of India

In Hyundai Motors India Limited v Competition Commission of India (CCI), the tribunal discussed the level of reliance that needs to be placed on the report of the Director General (DG) under the Competition Act, 2002 while adjudicating a matter. In the said case, the NCLAT (which holds the appelate jurisdiction for orders of the CCI) set aside the penalty imposed on Hyundai Motor India Limited by the CCI. The CCI had found Hyundai guilty for arrangements which resulted in Resale Price Maintenance and for mandating its dealers to use recommended lubricants and oils through tying-in arrangements.

The NCLAT observed that the CCI without appreciating evidence on record had merely restated what the DG had submitted in its report. The tribunal went on to criticize the manner in which the CCI decided the matter and emphasized on the non-binding nature of the report of the DG. It stated that there was no evidence placed on record to establish that Hyundai had forced upon dealers the use of favoured products. The Commission also failed to take note that car dealers, as a matter of business practice, recommend use of a particular quality of lubricants and oils which are mere suggestions as per the requirement of its vehicles.

The NCLAT reasoned that application of judicial mind in appreciation of relevant evidence is the ‘sine qua non’ for the process of inquiry by the Commission under Section 19 and Section 26 of the Act. The report of the DG cannot assume a primary role in the investigation by the CCI and is limited to assist it for appreciation of evidence.

In Re: Anticompetitive conduct in the Dry-Cell Batteries Market in India

In Re: Anticompetitive conduct in the Dry-Cell Batteries Market in India the issue that arose before the commission was whether unilateral receipt of sensitive information could result in the recipient of such information being held liable for cartelization.
The CCI initiated an investigation on the basis of a leniency application filed by Panasonic Corporation, Japan (Panasonic Japan) on behalf of itself and its Indian subsidiary. Panasonic disclosed existence of a cartel between Panasonic India and Geep Industries Pvt. Ltd. Panasonic India was already part of a cartel with Eveready Industries India Ltd. and Indo National Limited wherein price parallelism was maintained by the participants. Being a member of this cartel, Panasonic India would further disclose such information to Geep and leverage it to increase prices of their batteries.

A cartel refers to an agreement between competing companies in a market to act in concert to gain an uncompetitive advantage. One way of gaining such advantage is to decide amongst themselves the price at which they will sell their product, thereby, disadvantaging customers of receiving competitive prices. This was the allegation in the present case against Geep. However, Geep contended that it was a mere recipient of information on pricing of a ‘larger cartel’ passed on from Panasonic India and that such disclosure of sensitive information was solely a unilateral act of Panasonic India.

The commission, citing Guidelines of European Union on applicability of Article 101 of TFEU to Horizontal Co-operation Agreements, 2010, rejected this contention and held that even in such a scenario it can be held to be concerted practice by the competing parties and the recipient of such information cannot escape liability. However, it further went on to say that had Geep refused to enter into an agreement based on such information and did not maintain price co-ordination with the cartel, it would not have been deemed to be an active participant of the cartel and could have evaded liability.

Policy Updates

Constitution of the Competition Law Review Committee

The Government of India has constituted the ‘Competition Law Review Committee’ in order to review and bring necessary changes in the legislation. the Competition Act, 2002 in view of the changing business environment.
The official press release dated 30th September, 2018, stated that since the inception of the commission, the size of the economy has grown immensely making it the one of the fifth largest economies in the world. The Competition Act was passed in the year 2002 and the Competition Commission of India was set up in pursuance of the same. The Commission started functioning in right earnest from 2009 and has contributed immensely towards the development of competition and fair play practices in the Indian market

According to the official press release the Committee will also look into the international best practices in competition field, especially anti-trust laws, merger guidelines and handling cross border competition issues. The Committee will also study the other regulatory regimes, institutional mechanism and government policies, which overlap with the Competition Act. The committee will submit the report within three months of the date of its first meeting.

Emphasis was also laid on the strengthening the Competition Law and further re-calibrating to promote best practices, resulting in the citizens of this country achieving their aspirations and value for money. The review committee comprises the Secretary, Ministry of Corporate Affairs (MCA), Chairperson of CCI, Chairperson of Insolvency and Bankruptcy Board of India, Haigreve Khaitan from Khaitan & Co, Harsha Vardhana Singh, IKDHVAJ Advisers LLP, Pallavi Shardul Shroff, Advocate from law firm Shardul Amarchand Mangaldas & Co, S. Chakravarthy, IAS (Retd.), Aditya Bhattacharjea, Professor of Economics, Delhi School of Economics and Joint Secretary (Competition), MCA.

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