The Quarterly Newsletter of Competition Commission of India (CCI)

VOLUME 9 : APRIL - JUNE 2014

Fair competition for greater good

Advocacy Initiatives with State Governments IN FOCUS

IN THIS ISSUE... FROM THE DESK OF THE CHAIRPERSON

Many developing countries, including India, have only recently moved from a government controlled economy to the market economy. The culture of competition is, therefore, weak. This is true not merely of the private sector but also of the government enterprises and government departments acting in a commercial capacity. For this reason, compliance with the competition law is poor.

To address this situation, competition laws usually mandate the competition authority to undertake advocacy measures. Such efforts can raise the level of compliance and also reduce the need for direct intervention by competition authorities in individual cases.

Advocacy can focus on multiple stakeholders business, trade associations, legal community, judges, government departments, to name a few prominent target groups. In countries such as India, emerging slowly from the shadows of a statist regime, advocacy with governments is crucial. The old world laws and regulations need to be looked at through a new prism and modified or repealed.

The Indian Competition Act specifically provides for advocacy under S.49(3). It also has a provision for reference by the Central Government or State Governments to the Competition Commission of India to seek its opinion on a policy or matter which could have a bearing on competition. The Commission is duty bound to offer its view within 60 days.

The Competition Commission has been pro-active in the area of advocacy generally and, more recently, with Central government departments and State governments. With a view to making optimum use of the limited resources at our disposal, the Commission is focussing intensively on advocacy with 12 key economic ministries. Similarly, it is specially addressing 12 State governments in which the level of economic activity is relatively more robust. Members of the Commission, assisted by senior professional staff, engage on a continuous basis with representatives of government(s). Sensitisation about competition matters is now moving ahead towards identification of specific areas in which competition distortions exist with a view to encouraging the policy makers to reform the landscape.

Needless to say, advocacy is most effective when it is complemented by vigorous enforcement of the competition law. It need hardly be underscored that advocacy and enforcement have a common aim : to ensure that competition is not distorted.

Ashok ChawlaVolume 9 : April - 2014 June Fair PlayFair Play Volume 9 : April - June 2014

Editor-in-Chief : Dr. Sadhna ShankerEditor: Sukesh MishraSub Editor: Ashok Raj Gupta

2 3

FROM THE DESK OF THE CHAIRPERSON

3

IN FOCUS - ADVOCACY INITIATIVES WITH STATE GOVERNMENTS

4

SECTION 3 & 4 ORDERS

11

KNOW YOUR COMPETITION ACT

23

13

SECTION 5 & 6 ORDERS

INVESTIGATIONSINITIATED

15

ADVOCACY INITIATIVES

17

ANNUAL DAY

9

19

EVENTS

21

DEVELOPMENTS IN OTHER JURISDICTIONS

IN THIS ISSUE... FROM THE DESK OF THE CHAIRPERSON

Many developing countries, including India, have only recently moved from a government controlled economy to the market economy. The culture of competition is, therefore, weak. This is true not merely of the private sector but also of the government enterprises and government departments acting in a commercial capacity. For this reason, compliance with the competition law is poor.

To address this situation, competition laws usually mandate the competition authority to undertake advocacy measures. Such efforts can raise the level of compliance and also reduce the need for direct intervention by competition authorities in individual cases.

Advocacy can focus on multiple stakeholders business, trade associations, legal community, judges, government departments, to name a few prominent target groups. In countries such as India, emerging slowly from the shadows of a statist regime, advocacy with governments is crucial. The old world laws and regulations need to be looked at through a new prism and modified or repealed.

The Indian Competition Act specifically provides for advocacy under S.49(3). It also has a provision for reference by the Central Government or State Governments to the Competition Commission of India to seek its opinion on a policy or matter which could have a bearing on competition. The Commission is duty bound to offer its view within 60 days.

The Competition Commission has been pro-active in the area of advocacy generally and, more recently, with Central government departments and State governments. With a view to making optimum use of the limited resources at our disposal, the Commission is focussing intensively on advocacy with 12 key economic ministries. Similarly, it is specially addressing 12 State governments in which the level of economic activity is relatively more robust. Members of the Commission, assisted by senior professional staff, engage on a continuous basis with representatives of government(s). Sensitisation about competition matters is now moving ahead towards identification of specific areas in which competition distortions exist with a view to encouraging the policy makers to reform the landscape.

Needless to say, advocacy is most effective when it is complemented by vigorous enforcement of the competition law. It need hardly be underscored that advocacy and enforcement have a common aim : to ensure that competition is not distorted.

Ashok ChawlaVolume 9 : April - 2014 June Fair PlayFair Play Volume 9 : April - June 2014

Editor-in-Chief : Dr. Sadhna ShankerEditor: Sukesh MishraSub Editor: Ashok Raj Gupta

2 3

FROM THE DESK OF THE CHAIRPERSON

3

IN FOCUS - ADVOCACY INITIATIVES WITH STATE GOVERNMENTS

4

SECTION 3 & 4 ORDERS

11

KNOW YOUR COMPETITION ACT

23

13

SECTION 5 & 6 ORDERS

INVESTIGATIONSINITIATED

15

ADVOCACY INITIATIVES

17

ANNUAL DAY

9

19

EVENTS

21

DEVELOPMENTS IN OTHER JURISDICTIONS

Competition is an essential ingredient of a liberalized economy. It is a powerful instrument to help in achieving the macroeconomic policy goals of a nation. It is the key to attain allocative, productive and dynamic efficiencies, which in the government context are important for maximising the overall welfare of society. Government and markets are inextricably linked. Governments set the legal and institutional frameworks within which markets operate. They have an interest in market outcomes and the way these are distributed between different groups in society.

Increased competition can improve a countrys economic performance, open business opportunities to its citizens and reduce the cost of goods and services. However, often many legislations, public policies and regulations may inhibit competition in markets. The distortions caused by government may emanate from policies in the area of trade, labour market, procurement, infrastructure development, investment etc. that may sometimes favour public agencies or create entry barriers thereby compromising a competitive environment.

Section 49 of the Competition Act, 2002 (the Act) empowers Competition Commission of India (CCI) to take suitable measures for the promotion of competition advocacy, creating awareness and imparting training on competition issues, not only for the private bodies, but also for government and policy makers. CCI, as a regulatory authority, in terms of the advocacy provisions of the Act, is enabled to participate in the formulation of the countrys economic policies and to participate in reviewing of laws related to competition.

The Central/State Government, while formulating a policy on competition including review of laws related to competition, or on any other matter, may make a reference to the Commission for its opinion on possible effect of such policy on competition. It is pertinent to mention that the opinion given by the Commission is not binding upon the Central/State Government. Further, under Sec 21 of the Act, statutory authorities may make a reference to CCI on competition issues; however, the

role of the Commission is advisory only.

Why advocacy with State Governments? The Monopolies and Restrictive Trade Practices Act (MRTP), 1969, exempted State owned enterprises (SOEs) from its purview. However, to embrace the needs and challenges of the new economic order, the competition law regime underwent a paradigm shift. The MRTP Act gave a way to the new competition law, the Competition Act, 2002. The ambit of this law extends to enterprises and departments of the government, as long as they are engaged in the production, storage, supply and distribution of goods or services in a commercial manner.

The Act defines the term enterprise in section 2(h) as

Hence, the Act does not make any distinction between the public and private sector in enforcement. In the last few years a large number of cases have come against both Central and State governments and their public sector undertakings before CCI. Keeping this in view, for the last one year the focus of advocacy efforts of CCI has been

a person or a department of the Government, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space

IN FOCUS

Advocacy Initiatives with State Governments Some of the most harmful effects to the economy do not stem from anticompetitive conduct by commercial actors but from unintended consequences of government policies.

Frank Maier-Rigaurd (OECD)

Understanding Competition Law And Policy

Chief Guest : Sri Alok Ranjan, IIDC, Uttar PradeshOrganized By : U.P. Academy of Administration & Management, Lucknow

WORK SHOPWORK SHOPUnderstanding Competition Law And Policy

May 23, 2014Chief Guest : Sri Alok Ranjan, IIDC, Uttar PradeshOrganized By : U.P. Academy of Administration & Management, Lucknow

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 4 5

Competition is an essential ingredient of a liberalized economy. It is a powerful instrument to help in achieving the macroeconomic policy goals of a nation. It is the key to attain allocative, productive and dynamic efficiencies, which in the government context are important for maximising the overall welfare of society. Government and markets are inextricably linked. Governments set the legal and institutional frameworks within which markets operate. They have an interest in market outcomes and the way these are distributed between different groups in society.

Increased competition can improve a countrys economic performance, open business opportunities to its citizens and reduce the cost of goods and services. However, often many legislations, public policies and regulations may inhibit competition in markets. The distortions caused by government may emanate from policies in the area of trade, labour market, procurement, infrastructure development, investment etc. that may sometimes favour public agencies or create entry barriers thereby compromising a competitive environment.

Section 49 of the Competition Act, 2002 (the Act) empowers Competition Commission of India (CCI) to take suitable measures for the promotion of competition advocacy, creating awareness and imparting training on competition issues, not only for the private bodies, but also for government and policy makers. CCI, as a regulatory authority, in terms of the advocacy provisions of the Act, is enabled to participate in the formulation of the countrys economic policies and to participate in reviewing of laws related to competition.

The Central/State Government, while formulating a policy on competition including review of laws related to competition, or on any other matter, may make a reference to the Commission for its opinion on possible effect of such policy on competition. It is pertinent to mention that the opinion given by the Commission is not binding upon the Central/State Government. Further, under Sec 21 of the Act, statutory authorities may make a reference to CCI on competition issues; however, the

role of the Commission is advisory only.

Why advocacy with State Governments? The Monopolies and Restrictive Trade Practices Act (MRTP), 1969, exempted State owned enterprises (SOEs) from its purview. However, to embrace the needs and challenges of the new economic order, the competition law regime underwent a paradigm shift. The MRTP Act gave a way to the new competition law, the Competition Act, 2002. The ambit of this law extends to enterprises and departments of the government, as long as they are engaged in the production, storage, supply and distribution of goods or services in a commercial manner.

The Act defines the term enterprise in section 2(h) as

Hence, the Act does not make any distinction between the public and private sector in enforcement. In the last few years a large number of cases have come against both Central and State governments and their public sector undertakings before CCI. Keeping this in view, for the last one year the focus of advocacy efforts of CCI has been

a person or a department of the Government, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space

IN FOCUS

Advocacy Initiatives with State Governments Some of the most harmful effects to the economy do not stem from anticompetitive conduct by commercial actors but from unintended consequences of government policies.

Frank Maier-Rigaurd (OECD)

Understanding Competition Law And Policy

Chief Guest : Sri Alok Ranjan, IIDC, Uttar PradeshOrganized By : U.P. Academy of Administration & Management, Lucknow

WORK SHOPWORK SHOPUnderstanding Competition Law And Policy

May 23, 2014Chief Guest : Sri Alok Ranjan, IIDC, Uttar PradeshOrganized By : U.P. Academy of Administration & Management, Lucknow

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 4 5

prices) namely Maharashtra, Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Gujarat, West Bengal, Karnataka, Rajasthan, Kerala, Madhya Pradesh, Haryana and Punjab were identified for focused advocacy interventions.

As a first step, Chief Secretaries of the states were requested to appoint a nodal officer; with an objective to facilitate interaction and disseminate the information on competition law among various stakeholders in that state. Within the Commission itself, nodal officers were appointed for each state to facilitate coordination and cooperation.

Thereafter, Members of the Commission were requested to adopt a handful of states for advocacy engagement and thereafter the Chief Secretaries were approached to have a first meeting in the state along with their senior officers. To conduct

Government; both Central and State.

State Governments proactively engage in areas like public health and sanitation; communication; roads; bridges; agriculture; including agricultural education and research; water supplies; transportation, gas and gas works etc. Effective implementation of competition law would not only improve the efficiency of the above mentioned activities but also help the states in reducing their fiscal and revenue deficits through efficiency gains and savings of public money.

Approach In order to utilize resources and manpower effectively, and work towards a long term partnership it was decided to focus on a few states on priority. Accordingly, twelve states (based on high Gross State Domestic Product at 2004-05

advocacy events with state governments the CCI team comprising a Member of CCI, one Adviser and the nodal officer of the state was constituted. The team identified key areas of interest and the sectors that exhibited prevalence of anticompetitive practices in the concerned state. As a result of these efforts the following interactions have taken place

>A workshop was organized in Department of Industry, Govt. of NCT of Delhi in April 2013, to sensitize them about the need to adopt competition friendly policies and comply with the provisions of the Act. Two presentations were made in the workshop; Overview of Competition Law and Public Procurement & Competition Law.

>After a meeting with the Chief Secretary, Kerala and other

senior officer of State of Kerala in July 2013, two workshops on competition issues were organised by Government of Kerala in January, 2014 at Thiruvananthapuram and Kochi respectively.

>After meeting with Chief Secretary and other senior officer of State of U.P. in July 2013, a Workshop on Exploiting Benefits of Competition was organised with Government of Uttar Pradesh at Lucknow in January 2014. This was followed by a programme on "Understanding of Competition law and policy" organised by the Utter Pradesh Academy of Public Administration and Management, Lucknow for the senior government officials of the State.

>A workshop on Application of Competition law was organized in Mumbai in October 2013. The participants of the workshop included Chief

What progress has been made? In order to provide impetus to the initiative, the following steps have been suggested by CCI

>

The Committee may have following objectives:-

a) To disseminate information of competition and to inculcate a culture of competition among various stakeholders in that state.

b) To conduct assessment of laws and policies in the light of competition and to suggest suitable amendments to

Constitution of a State level Steering Committee on competition issues comprising secretaries, representative of state PSEs, state training institutions etc. The Steering Committee would guide the overall strategy and review the implementation of the initiative periodically.

Secretary and senior officers of Government of Maharashtra. Two presentations were made in the workshop; Scheme of the Competition Act, 2002 including Powers, Functions & Duties of CCI and Potential Anti-Competitive Conduct of Firms by way of Bid-rigging/Cartelization. This was followed by a workshop held at Yashwantrao Chavan Academy of Development and Administration (YASHADA), Pune in May, 2014 on Competition law and public procurement. Around 60 senior officials from various departments of Maharashtra participated.

>After a meeting with Chief Secretary West Bengal and his team, a workshop was held on Competition law at Kolkata in June, 2014 that was attended by the senior government officials of the State of West Bengal.

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 6 7

prices) namely Maharashtra, Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Gujarat, West Bengal, Karnataka, Rajasthan, Kerala, Madhya Pradesh, Haryana and Punjab were identified for focused advocacy interventions.

As a first step, Chief Secretaries of the states were requested to appoint a nodal officer; with an objective to facilitate interaction and disseminate the information on competition law among various stakeholders in that state. Within the Commission itself, nodal officers were appointed for each state to facilitate coordination and cooperation.

Thereafter, Members of the Commission were requested to adopt a handful of states for advocacy engagement and thereafter the Chief Secretaries were approached to have a first meeting in the state along with their senior officers. To conduct

Government; both Central and State.

State Governments proactively engage in areas like public health and sanitation; communication; roads; bridges; agriculture; including agricultural education and research; water supplies; transportation, gas and gas works etc. Effective implementation of competition law would not only improve the efficiency of the above mentioned activities but also help the states in reducing their fiscal and revenue deficits through efficiency gains and savings of public money.

Approach In order to utilize resources and manpower effectively, and work towards a long term partnership it was decided to focus on a few states on priority. Accordingly, twelve states (based on high Gross State Domestic Product at 2004-05

advocacy events with state governments the CCI team comprising a Member of CCI, one Adviser and the nodal officer of the state was constituted. The team identified key areas of interest and the sectors that exhibited prevalence of anticompetitive practices in the concerned state. As a result of these efforts the following interactions have taken place

>A workshop was organized in Department of Industry, Govt. of NCT of Delhi in April 2013, to sensitize them about the need to adopt competition friendly policies and comply with the provisions of the Act. Two presentations were made in the workshop; Overview of Competition Law and Public Procurement & Competition Law.

>After a meeting with the Chief Secretary, Kerala and other

senior officer of State of Kerala in July 2013, two workshops on competition issues were organised by Government of Kerala in January, 2014 at Thiruvananthapuram and Kochi respectively.

>After meeting with Chief Secretary and other senior officer of State of U.P. in July 2013, a Workshop on Exploiting Benefits of Competition was organised with Government of Uttar Pradesh at Lucknow in January 2014. This was followed by a programme on "Understanding of Competition law and policy" organised by the Utter Pradesh Academy of Public Administration and Management, Lucknow for the senior government officials of the State.

>A workshop on Application of Competition law was organized in Mumbai in October 2013. The participants of the workshop included Chief

What progress has been made? In order to provide impetus to the initiative, the following steps have been suggested by CCI

>

The Committee may have following objectives:-

a) To disseminate information of competition and to inculcate a culture of competition among various stakeholders in that state.

b) To conduct assessment of laws and policies in the light of competition and to suggest suitable amendments to

Constitution of a State level Steering Committee on competition issues comprising secretaries, representative of state PSEs, state training institutions etc. The Steering Committee would guide the overall strategy and review the implementation of the initiative periodically.

Secretary and senior officers of Government of Maharashtra. Two presentations were made in the workshop; Scheme of the Competition Act, 2002 including Powers, Functions & Duties of CCI and Potential Anti-Competitive Conduct of Firms by way of Bid-rigging/Cartelization. This was followed by a workshop held at Yashwantrao Chavan Academy of Development and Administration (YASHADA), Pune in May, 2014 on Competition law and public procurement. Around 60 senior officials from various departments of Maharashtra participated.

>After a meeting with Chief Secretary West Bengal and his team, a workshop was held on Competition law at Kolkata in June, 2014 that was attended by the senior government officials of the State of West Bengal.

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 6 7

ANNUAL DAY 2014

It was on May 20, 2009 that enforcement of all provisions of the Competition Act 2002 (except sections 5 & 6) came into effect. Every year since then, 20 May is commemorated as the Annual Day in CCI. In this sequence CCI celebrated its 5th Annual Day on 20th, May 2014. The highlight of

the event was the Annual Day Lecture delivered by Dr. Raghuram Rajan, Honble Governor of Reserve Bank of India (RBI). As Chief Guest he also released seven newly designed Advocacy booklets brought out by the Commission.

To celebrate the Annual Day more

than three hundred fifty guests representing stakeholders, competition law practitioners, diplomats, government, media and the banking sector were present. After a welcome address by Mr Ashok Chawla, Chairperson CCI, Dr Rajan spoke on Competition in the banking sector: Opportunities and Challenges.

rectify provisions of the legislation and policies that impede competition.

c) To conduct state specific market research with an objective to understand and identify the prevailing anti-competitive practices.

>

>Partner with a State Government institution (e.g. State Training Academy). The institution would be responsible for transfer of knowledge from CCI, organizing training programs/workshops (including training of trainers), identification of possible areas of reference to CCI for its intervention, action, research, etc.

A Core Group on Competition with 7-8 members, including a representative of CCI, to be constituted at state level, which would be responsible

for promoting competition and work under the guidance of the Steering Committee.

The above recommendations have been put in place by the State governments of Maharashtra, Uttar Pradesh and Kerala. The experience of these engagements has clearly indicated that State Governments are keen to partner with CCI in an endeavour to reap the benefits of competition law. In the next few months interactions are planned with the other focus states.

Conclusion It is hoped that over time this partnership would start working towards assessment of existing policies, regulations and legislations in States that have the capacity to impact the markets adversely. Such an approach would yield strong economic benefits as it would make way for policy alternatives that would continue to meet socio-economic goals, while promoting and fostering a competition culture.

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 8 9

ANNUAL DAY 2014

It was on May 20, 2009 that enforcement of all provisions of the Competition Act 2002 (except sections 5 & 6) came into effect. Every year since then, 20 May is commemorated as the Annual Day in CCI. In this sequence CCI celebrated its 5th Annual Day on 20th, May 2014. The highlight of

the event was the Annual Day Lecture delivered by Dr. Raghuram Rajan, Honble Governor of Reserve Bank of India (RBI). As Chief Guest he also released seven newly designed Advocacy booklets brought out by the Commission.

To celebrate the Annual Day more

than three hundred fifty guests representing stakeholders, competition law practitioners, diplomats, government, media and the banking sector were present. After a welcome address by Mr Ashok Chawla, Chairperson CCI, Dr Rajan spoke on Competition in the banking sector: Opportunities and Challenges.

rectify provisions of the legislation and policies that impede competition.

c) To conduct state specific market research with an objective to understand and identify the prevailing anti-competitive practices.

>

>Partner with a State Government institution (e.g. State Training Academy). The institution would be responsible for transfer of knowledge from CCI, organizing training programs/workshops (including training of trainers), identification of possible areas of reference to CCI for its intervention, action, research, etc.

A Core Group on Competition with 7-8 members, including a representative of CCI, to be constituted at state level, which would be responsible

for promoting competition and work under the guidance of the Steering Committee.

The above recommendations have been put in place by the State governments of Maharashtra, Uttar Pradesh and Kerala. The experience of these engagements has clearly indicated that State Governments are keen to partner with CCI in an endeavour to reap the benefits of competition law. In the next few months interactions are planned with the other focus states.

Conclusion It is hoped that over time this partnership would start working towards assessment of existing policies, regulations and legislations in States that have the capacity to impact the markets adversely. Such an approach would yield strong economic benefits as it would make way for policy alternatives that would continue to meet socio-economic goals, while promoting and fostering a competition culture.

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 8 9

Dr Rajan opened his address by acknowledging that Competition is the life force of a modern economy and highlighted the role of Competition Commission of India as a central player contributing to sustainable economic growth in India. He then analyzed competition in Indias banking sector in detail. He highlighted that the Reserve Bank of India is committed to freeing entry into the banking sector, as was evident from the grant of two new banking licenses in the recent past. He pointed out that although priority sector lending would continue in a developing country like India, there needs to a continuous rethink on what constitutes the priority sector as the economy evolves.

Focusing on public sector banks, the Governor was of the view that a change in governance, management, and operational and compensation flexibility was needed to improve their functioning. Maintaining that the banking sector is on the cusp of revolutionary change, he felt public sector banks should venture into areas hitherto unexplored by them without compromising on their Public character.

The lecture was followed by an enthusiastic question and answer session. The eclectic nature of the audience was on display in the range of questions fielded by Dr Raghuram Rajan.

Secretary, Ministry of Company Affairs, Government of India, Shri Naved Masood concluded the function by proposing a vote of thanks.

SECTION 3 & 4 ORDERS

M/s Coal India Limited found to Abuse its Dominant Position

In Case No. 44 of 2013, the Commission held M/s Coal India Limited (CIL) responsible for abusing its dominant position. CIL, along with its subsidiaries, was alleged to be enjoying a virtual monopoly over the production and supply of coal and was able to force its consumers i.e., companies involved in manufacturing of Sponge Iron, Steel and dependent upon it, to enter into one-sided anti-competitive Fuel Supply Agreement (FSA) and Memorandum of Understandings (MoUs) under which these buyers had no bargaining power. Bereft of any alternative option, these buyers had no choice but to accept the terms and conditions laid down under the FSA and MoUs. Further, despite such unfair terms and conditions under the FSA and

MoUs, there was no guarantee for the buyers that the quality or the quantity of coal being supplied will be in conformity with the terms and conditions as mandated therein. On various occasions, these buyers rejected the poor-quality coal supplied by the opposite parties, but CIL regarded it as a case of deemed delivery under FSA and declared that the buyer was liable to pay for the rejected coal.

After perusing the material on record and hearing the parties, the Commission held that CIL and its subsidiaries enjoy undisputed dominance in the relevant markets of supply of non-coking coal to the sponge iron manufacturers in India. It was observed that various clauses such as grading of coal and procedure for declaration of grade,

sample collection and assessment of quality of coal, oversized coal/stones and compensation, issue of supply through MOU etc., are unfair. The Commission held M/S CIL to be in contravention of the provisions of section 4(2) (a) (i) of the Act for imposing unfair/ discriminatory conditions in supply of non-coking coal to the informant and other consumers. Accordingly, the Commission directed them to cease and desist from indulging in such conduct. However, since a penalty was imposed in an earlier case to the tune of INR 1773.05 Crores on CIL, the Commission decided not to impose further penalty in this case. The Commission, however, ordered that the FSA be modified in light of the observations and findings made in the order.

premium sports goods for retailing.

As per the information, the Informant was appointed as a franchisee of OP 3 in Noida on 27.08.2003 through a franchise agreement initially for three years, subject to renewal. On oral assurance of OP 3, the Informant continued to carry on the business as per the Agreement till February, 2009 without further renewal. It was alleged that the OP 3 had failed to fulfil several of its obligations such as to pay the amount due under the Agreement, to collect the unsold stocks/goods

etc., which caused financial loss to the informant and amounted to imposition of unfair terms and conditions in contravention of the provisions of Section 4(2) (a) (i) of the Act. Further, OP 3 was practising differential discount policy vis-a-vis other franchisees which was discriminatory and infringed the provisions of Section 4(2) (a) (ii) of the Act. The Informant contended that though the Agreement was executed prior to the Act coming into force, however, the Adidas AG Group become liable since the anti-competitive effects of the

No Abuse of Dominance by Adidas AG Group

In Case No. 10 of 2014, the informant Mr. Om Datt Sharma alleged that M/s Adidas AG, Germany (OP 1), M/s Reebok International Limited, USA (OP 2) and M/s Reebok India Company, New Delhi (OP 3), as a group, infringed the provisions of Section 4 of the Competition Act, 2002 (the Act) with respect to sale of

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 10 11

Dr Rajan opened his address by acknowledging that Competition is the life force of a modern economy and highlighted the role of Competition Commission of India as a central player contributing to sustainable economic growth in India. He then analyzed competition in Indias banking sector in detail. He highlighted that the Reserve Bank of India is committed to freeing entry into the banking sector, as was evident from the grant of two new banking licenses in the recent past. He pointed out that although priority sector lending would continue in a developing country like India, there needs to a continuous rethink on what constitutes the priority sector as the economy evolves.

Focusing on public sector banks, the Governor was of the view that a change in governance, management, and operational and compensation flexibility was needed to improve their functioning. Maintaining that the banking sector is on the cusp of revolutionary change, he felt public sector banks should venture into areas hitherto unexplored by them without compromising on their Public character.

The lecture was followed by an enthusiastic question and answer session. The eclectic nature of the audience was on display in the range of questions fielded by Dr Raghuram Rajan.

Secretary, Ministry of Company Affairs, Government of India, Shri Naved Masood concluded the function by proposing a vote of thanks.

SECTION 3 & 4 ORDERS

M/s Coal India Limited found to Abuse its Dominant Position

In Case No. 44 of 2013, the Commission held M/s Coal India Limited (CIL) responsible for abusing its dominant position. CIL, along with its subsidiaries, was alleged to be enjoying a virtual monopoly over the production and supply of coal and was able to force its consumers i.e., companies involved in manufacturing of Sponge Iron, Steel and dependent upon it, to enter into one-sided anti-competitive Fuel Supply Agreement (FSA) and Memorandum of Understandings (MoUs) under which these buyers had no bargaining power. Bereft of any alternative option, these buyers had no choice but to accept the terms and conditions laid down under the FSA and MoUs. Further, despite such unfair terms and conditions under the FSA and

MoUs, there was no guarantee for the buyers that the quality or the quantity of coal being supplied will be in conformity with the terms and conditions as mandated therein. On various occasions, these buyers rejected the poor-quality coal supplied by the opposite parties, but CIL regarded it as a case of deemed delivery under FSA and declared that the buyer was liable to pay for the rejected coal.

After perusing the material on record and hearing the parties, the Commission held that CIL and its subsidiaries enjoy undisputed dominance in the relevant markets of supply of non-coking coal to the sponge iron manufacturers in India. It was observed that various clauses such as grading of coal and procedure for declaration of grade,

sample collection and assessment of quality of coal, oversized coal/stones and compensation, issue of supply through MOU etc., are unfair. The Commission held M/S CIL to be in contravention of the provisions of section 4(2) (a) (i) of the Act for imposing unfair/ discriminatory conditions in supply of non-coking coal to the informant and other consumers. Accordingly, the Commission directed them to cease and desist from indulging in such conduct. However, since a penalty was imposed in an earlier case to the tune of INR 1773.05 Crores on CIL, the Commission decided not to impose further penalty in this case. The Commission, however, ordered that the FSA be modified in light of the observations and findings made in the order.

premium sports goods for retailing.

As per the information, the Informant was appointed as a franchisee of OP 3 in Noida on 27.08.2003 through a franchise agreement initially for three years, subject to renewal. On oral assurance of OP 3, the Informant continued to carry on the business as per the Agreement till February, 2009 without further renewal. It was alleged that the OP 3 had failed to fulfil several of its obligations such as to pay the amount due under the Agreement, to collect the unsold stocks/goods

etc., which caused financial loss to the informant and amounted to imposition of unfair terms and conditions in contravention of the provisions of Section 4(2) (a) (i) of the Act. Further, OP 3 was practising differential discount policy vis-a-vis other franchisees which was discriminatory and infringed the provisions of Section 4(2) (a) (ii) of the Act. The Informant contended that though the Agreement was executed prior to the Act coming into force, however, the Adidas AG Group become liable since the anti-competitive effects of the

No Abuse of Dominance by Adidas AG Group

In Case No. 10 of 2014, the informant Mr. Om Datt Sharma alleged that M/s Adidas AG, Germany (OP 1), M/s Reebok International Limited, USA (OP 2) and M/s Reebok India Company, New Delhi (OP 3), as a group, infringed the provisions of Section 4 of the Competition Act, 2002 (the Act) with respect to sale of

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 10 11

In case no. 17/2014 the Informant, Mr. Ashish Ahuja had alleged that Snapdeal.com (OP 1) and SanDisk Corporation (OP 2) had violated the provisions of Sections 3 and 4 of the Act in respect to online sale of small-sized consumer storage devices produced by OP 2 . The Informant had entered into an online agreement with OP 1 for sale of goods through its online website portal. It was alleged that OP 1 took off the Informants products from its online portal and asked the Informant to sell the products of OP 2 only or of the authorized dealers of OP 2. Further, OP 1 asked the Informant

Conduct of Ms Snapdeal.com and Ms SanDisk Corporation not found to be Abusive

to produce a No Objection Certificate (NOC) from OP 2 for sale of its products on its web portal. It was also alleged that OP 1 and OP 2, in agreement with each other, were compelling the informant to become the authorized dealer of OP 2.

The market for portable small-sized consumer storage devices such as USB pen drives, SD Memory Cards and Micro SD Cards in India was considered as the relevant market by the Commission. It was observed that such devices are offered by firms such as Transcend, Kingston, HP and others with different capacities indicating that the market is not concentrated. It was observed that in the overall consumer storage flash memory market OP 2 is a market leader followed by Transcend and Kingston. The Commission was of the view that the insistence by OP 2 that the storage devices sold through the online portals should be bought from its authorised distributors by itself cannot be considered as abusive as it is within its rights to protect the sanctity of its distribution channel. Further, in a quality-driven market, brand

SECTION 5 & 6 ORDERS

Tesco Overseas Investments Limited (TOIL), a wholly owned subsidiary of Tesco Plc, UK, filed a notice for the acquisition of 50 percent of the issued and paid-up equity share capital of Trent Hypermarket Limited (THL) pursuant to the execution of a Joint Venture Agreement and a Share Purchase Agreement between TOIL, THL and Trent Limited (Trent).

TOIL is the holding company for several of the Tesco Groups overseas retail businesses in various countries, primarily engaged in the retail trading of grocery and general merchandise through various formats including hypermarkets, supermarkets, convenience stores and franchised stores. Trent is engaged in the business of retail of ready-made garments and accessories, footwear, cosmetics, accessories, gift items and household items, in

Commission Approves the Combination Between Trent Hypermarket Limited and Tesco Overseas Investments Limited.

India. THL, a wholly owned subsidiary of Trent, is engaged in the business of multi-format retail trading in India including hypermarkets, supermarkets and smaller convenience stores. The Commission observed that while THL is engaged in the business of multi-format retail trading in India including hypermarkets, supermarkets and smaller convenience stores, TOIL is not present in the retail market in India and therefore, there is no horizontal overlap between the business activities of THL and TOIL in the retail market in India.

The Commission also observed that the retail market in India comprises both organised and unorganised retailing. The organized retailing includes the hypermarkets, supermarkets, departmental stores etc. The retail market in India is dominated by a large number of unorganized retailers consisting of

the local kirana shops, owner-manned or self-owned general stores and shops, hawkers, pavement vendors etc. Further, due to increased internet penetration and changing lifestyles, the Indian retail market has also witnessed a surge in online retailers which has widened the choice for the consumers. Further, the total revenue of THL was also considered insignificant as compared to the size of the overall retail market as well as the organised retail market in India.

The Commission approved the combination under sub-section (1) of Section 31 of the Act. However, the Commission imposed a penalty of INR three crores on TOIL as the notice of the combination was not given by TOIL within the time prescribed under sub-section (2) of Section 6 of the Act.

Agreement continued after the enforcement of the relevant provisions.

The Commission considered the relevant market as the market of premium sports-goods in Noida. Based on the information provided, it was observed that all the Opposite Parties could be treated as a group for the purpose assessing dominance of the Opposite Parties in the relevant market. The Commission was of

the view that the Adidas AG Group was in a dominant position in the relevant market. It was observed that the Agreement which was alleged as unfair was entered into in 2003 when the Group had not even come into existence. Further, the Commission was of the view that although there were certain differences between the two franchisee agreements the differences cannot be termed as abusive unless they are discriminatory within the meaning

of section 4(2) (a) (ii) of the Act. Also, a manufacturer is not obligated to follow a single template agreement throughout its existence. Accordingly, the Commission was of the opinion that the conduct of the Adidas AG Group, prima facie, did not amount to contravention of the provisions of Section 4 of the Act and accordingly, the Commission closed the matter under the provisions of 26 (2) of the Act.

image and goodwill are important concerns and it appears a prudent business policy that sale of products emanating from unknown/ unverified/unauthorised sources are not encouraged/allowed.

With regard to the alleged conduct of OP 1, the Commission observed that it is operating in the e-commerce market wherein players like FlipKart, Amazon, eBay, ShopClues, Yebhi, jungle.com, rediff.com, indiatimes.com etc. are competitors of OP 1. With the presence of large players as stated above, OP 1 prima facie cannot be termed as a dominant player in the e-commerce market. In the absence of dominance, the conduct of OP 1 cannot be considered as abusive in terms of the provisions of Section 4 of the Act. Further, the Commission noted that the conduct of OP 2 in restricting the market to its authorised sellers alone, prima facie, does not appear to be in violation of Section 3 of the Act. Accordingly, the Commission closed the matter in terms of Section 26(2) of the Act.

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 12 13

In case no. 17/2014 the Informant, Mr. Ashish Ahuja had alleged that Snapdeal.com (OP 1) and SanDisk Corporation (OP 2) had violated the provisions of Sections 3 and 4 of the Act in respect to online sale of small-sized consumer storage devices produced by OP 2 . The Informant had entered into an online agreement with OP 1 for sale of goods through its online website portal. It was alleged that OP 1 took off the Informants products from its online portal and asked the Informant to sell the products of OP 2 only or of the authorized dealers of OP 2. Further, OP 1 asked the Informant

Conduct of Ms Snapdeal.com and Ms SanDisk Corporation not found to be Abusive

to produce a No Objection Certificate (NOC) from OP 2 for sale of its products on its web portal. It was also alleged that OP 1 and OP 2, in agreement with each other, were compelling the informant to become the authorized dealer of OP 2.

The market for portable small-sized consumer storage devices such as USB pen drives, SD Memory Cards and Micro SD Cards in India was considered as the relevant market by the Commission. It was observed that such devices are offered by firms such as Transcend, Kingston, HP and others with different capacities indicating that the market is not concentrated. It was observed that in the overall consumer storage flash memory market OP 2 is a market leader followed by Transcend and Kingston. The Commission was of the view that the insistence by OP 2 that the storage devices sold through the online portals should be bought from its authorised distributors by itself cannot be considered as abusive as it is within its rights to protect the sanctity of its distribution channel. Further, in a quality-driven market, brand

SECTION 5 & 6 ORDERS

Tesco Overseas Investments Limited (TOIL), a wholly owned subsidiary of Tesco Plc, UK, filed a notice for the acquisition of 50 percent of the issued and paid-up equity share capital of Trent Hypermarket Limited (THL) pursuant to the execution of a Joint Venture Agreement and a Share Purchase Agreement between TOIL, THL and Trent Limited (Trent).

TOIL is the holding company for several of the Tesco Groups overseas retail businesses in various countries, primarily engaged in the retail trading of grocery and general merchandise through various formats including hypermarkets, supermarkets, convenience stores and franchised stores. Trent is engaged in the business of retail of ready-made garments and accessories, footwear, cosmetics, accessories, gift items and household items, in

Commission Approves the Combination Between Trent Hypermarket Limited and Tesco Overseas Investments Limited.

India. THL, a wholly owned subsidiary of Trent, is engaged in the business of multi-format retail trading in India including hypermarkets, supermarkets and smaller convenience stores. The Commission observed that while THL is engaged in the business of multi-format retail trading in India including hypermarkets, supermarkets and smaller convenience stores, TOIL is not present in the retail market in India and therefore, there is no horizontal overlap between the business activities of THL and TOIL in the retail market in India.

The Commission also observed that the retail market in India comprises both organised and unorganised retailing. The organized retailing includes the hypermarkets, supermarkets, departmental stores etc. The retail market in India is dominated by a large number of unorganized retailers consisting of

the local kirana shops, owner-manned or self-owned general stores and shops, hawkers, pavement vendors etc. Further, due to increased internet penetration and changing lifestyles, the Indian retail market has also witnessed a surge in online retailers which has widened the choice for the consumers. Further, the total revenue of THL was also considered insignificant as compared to the size of the overall retail market as well as the organised retail market in India.

The Commission approved the combination under sub-section (1) of Section 31 of the Act. However, the Commission imposed a penalty of INR three crores on TOIL as the notice of the combination was not given by TOIL within the time prescribed under sub-section (2) of Section 6 of the Act.

Agreement continued after the enforcement of the relevant provisions.

The Commission considered the relevant market as the market of premium sports-goods in Noida. Based on the information provided, it was observed that all the Opposite Parties could be treated as a group for the purpose assessing dominance of the Opposite Parties in the relevant market. The Commission was of

the view that the Adidas AG Group was in a dominant position in the relevant market. It was observed that the Agreement which was alleged as unfair was entered into in 2003 when the Group had not even come into existence. Further, the Commission was of the view that although there were certain differences between the two franchisee agreements the differences cannot be termed as abusive unless they are discriminatory within the meaning

of section 4(2) (a) (ii) of the Act. Also, a manufacturer is not obligated to follow a single template agreement throughout its existence. Accordingly, the Commission was of the opinion that the conduct of the Adidas AG Group, prima facie, did not amount to contravention of the provisions of Section 4 of the Act and accordingly, the Commission closed the matter under the provisions of 26 (2) of the Act.

image and goodwill are important concerns and it appears a prudent business policy that sale of products emanating from unknown/ unverified/unauthorised sources are not encouraged/allowed.

With regard to the alleged conduct of OP 1, the Commission observed that it is operating in the e-commerce market wherein players like FlipKart, Amazon, eBay, ShopClues, Yebhi, jungle.com, rediff.com, indiatimes.com etc. are competitors of OP 1. With the presence of large players as stated above, OP 1 prima facie cannot be termed as a dominant player in the e-commerce market. In the absence of dominance, the conduct of OP 1 cannot be considered as abusive in terms of the provisions of Section 4 of the Act. Further, the Commission noted that the conduct of OP 2 in restricting the market to its authorised sellers alone, prima facie, does not appear to be in violation of Section 3 of the Act. Accordingly, the Commission closed the matter in terms of Section 26(2) of the Act.

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 12 13

Thomas Cook (India) Limited (TCIL), Thomas Cook Insurance Services (India) Limited (TCISIL), a subsidiary of TCIL, and Sterling Holiday Resorts (India) Limited (SHRIL) filed a notice, whereby, the resorts and time share business of SHRIL was proposed to be transferred by way of a demerger from SHRIL to TCISIL and SHRIL, with its residual business, was proposed to be amalgamated into TCIL.

TCIL was stated to be engaged in travel and travel related services including leisure travel services, corporate travel services and foreign exchange services. TCISIL, was stated to be an Insurance Regulatory and Development Authority (IRDA) registered corporate agent of Bajaj Allianz General Insurance Company Limited, engaged in the business of selling insurance to outbound travellers as well as, though in a very small proportion, health

insurance, home insurance, motor insurance, personal accident insurance, fire insurance and marine insurance. SHRIL was stated to be engaged in the business of providing premium hotel services, vacation ownership services or the timeshare services, normal hotel services like renting of rooms, restaurants, holiday activities, etc. as well as providing corporate clients with MICE (meetings, incentives, conference & events) services.

The combination concerned the travel and hotel related services in and from India. As per the details provided in the notice, the Parties were not engaged in similar business. The business of TCIL offering holiday package/other travel related services and the business of SHRIL providing resort and hotel services were related to each other at different stages/levels of the production chain. However, it was stated by the parties that the

Commission approves the combination between Thomas Cook India Limited and Sterling Holiday Resorts (India) Limited

vertical arrangements between SHRIL and TCIL were insignificant.

The Commission observed that SHRIL is primarily engaged in the vacation ownership services where, in general, the customers are stated to directly deal with the service provider. It was further observed that the business of hotel services across India is relatively fragmented and there are different channels for availing the hotel services along with the presence of large number of big players as well as intermediaries/agents.

The Commission approved the combination under sub-section (1) of Section 31 of the Act. However, the Commission imposed a penalty of INR 1 crore under Section 43A of the Act on the parties, for consummating the market purchases of equity shares of SHRIL before giving notice to the Commission for the proposed transaction.

INVESTIGATIONS INITIATED

Association of Third Party Administrators vs. General Insurers' (Public Sector) Association of India.

The Commission has recently ordered an investigation by the Director General, CCI under Section 26 (1) of the Act against General Insurers (Public Sector) Association of India (GIPSA) and other Public Sector General Insurance Companies for alleged anti-competitive practices.

It was alleged that the Public Sector General Insurance Companies namely New India Insurance, Oriental Insurance, United Insurance and National Insurance dealing in health insurance business were not allowing Third Party Administrators (TPAs) to function independently

and on the contrary have created in-house TPAs to settle any insurance claims. The aforesaid conduct of the opposite parties was against the prevailing world wide practice to keep TPAs independent from the insurance companies. It was also alleged that the GIPSA which is an ad-hoc unregistered body is providing a platform to the insurance companies to share sensitive information with each other, which not only affects competition in the market, but also provides space to them for exchanging information regarding claims ratio, marketing efforts, terms and condition of TPAs etc.

The Commission after considering the matter was prima facie satisfied that a case was made out under Section 3 of the Act. It was observed that the Opposite Parties have floated in house TPAs to reduce their claim ratio which may potentially result into rejection of claims on ad-hoc basis. The said practice was found by the Commission to not be in alignment with prevailing global practices where the TPAs and insurers are operating independently.

Fair Play Volume 9 : April - June 2014 14 Volume 9 : April - June 2014 Fair Play15

Thomas Cook (India) Limited (TCIL), Thomas Cook Insurance Services (India) Limited (TCISIL), a subsidiary of TCIL, and Sterling Holiday Resorts (India) Limited (SHRIL) filed a notice, whereby, the resorts and time share business of SHRIL was proposed to be transferred by way of a demerger from SHRIL to TCISIL and SHRIL, with its residual business, was proposed to be amalgamated into TCIL.

TCIL was stated to be engaged in travel and travel related services including leisure travel services, corporate travel services and foreign exchange services. TCISIL, was stated to be an Insurance Regulatory and Development Authority (IRDA) registered corporate agent of Bajaj Allianz General Insurance Company Limited, engaged in the business of selling insurance to outbound travellers as well as, though in a very small proportion, health

insurance, home insurance, motor insurance, personal accident insurance, fire insurance and marine insurance. SHRIL was stated to be engaged in the business of providing premium hotel services, vacation ownership services or the timeshare services, normal hotel services like renting of rooms, restaurants, holiday activities, etc. as well as providing corporate clients with MICE (meetings, incentives, conference & events) services.

The combination concerned the travel and hotel related services in and from India. As per the details provided in the notice, the Parties were not engaged in similar business. The business of TCIL offering holiday package/other travel related services and the business of SHRIL providing resort and hotel services were related to each other at different stages/levels of the production chain. However, it was stated by the parties that the

Commission approves the combination between Thomas Cook India Limited and Sterling Holiday Resorts (India) Limited

vertical arrangements between SHRIL and TCIL were insignificant.

The Commission observed that SHRIL is primarily engaged in the vacation ownership services where, in general, the customers are stated to directly deal with the service provider. It was further observed that the business of hotel services across India is relatively fragmented and there are different channels for availing the hotel services along with the presence of large number of big players as well as intermediaries/agents.

The Commission approved the combination under sub-section (1) of Section 31 of the Act. However, the Commission imposed a penalty of INR 1 crore under Section 43A of the Act on the parties, for consummating the market purchases of equity shares of SHRIL before giving notice to the Commission for the proposed transaction.

INVESTIGATIONS INITIATED

Association of Third Party Administrators vs. General Insurers' (Public Sector) Association of India.

The Commission has recently ordered an investigation by the Director General, CCI under Section 26 (1) of the Act against General Insurers (Public Sector) Association of India (GIPSA) and other Public Sector General Insurance Companies for alleged anti-competitive practices.

It was alleged that the Public Sector General Insurance Companies namely New India Insurance, Oriental Insurance, United Insurance and National Insurance dealing in health insurance business were not allowing Third Party Administrators (TPAs) to function independently

and on the contrary have created in-house TPAs to settle any insurance claims. The aforesaid conduct of the opposite parties was against the prevailing world wide practice to keep TPAs independent from the insurance companies. It was also alleged that the GIPSA which is an ad-hoc unregistered body is providing a platform to the insurance companies to share sensitive information with each other, which not only affects competition in the market, but also provides space to them for exchanging information regarding claims ratio, marketing efforts, terms and condition of TPAs etc.

The Commission after considering the matter was prima facie satisfied that a case was made out under Section 3 of the Act. It was observed that the Opposite Parties have floated in house TPAs to reduce their claim ratio which may potentially result into rejection of claims on ad-hoc basis. The said practice was found by the Commission to not be in alignment with prevailing global practices where the TPAs and insurers are operating independently.

Fair Play Volume 9 : April - June 2014 14 Volume 9 : April - June 2014 Fair Play15

ADVOCACY INITIATIVES

Trade Associations

Professional/Management InstitutesOfficers of the Commission addressed IIM Lucknow- NOIDA Campus in May 2014 on Competition policy in India, which was attended by participants of the executive program.

Members of ICAI-EIRC were addressed on Scope for Chartered Accountants under the Competition Act at Kolkata in June, 2014.

Shri Ashok Chawla, Chairperson, CCI inaugurated a conference on Boosting Competition Compliance Tackling Challenges organized by Confederation of Indian Industry at Mumbai in June 2014. Shri Augustine Peter, Member, CCI chaired a technical session on Merger Regulations at the same conference

Officers of CCI held a session on Competition Compliance in ASSOCHAMs Seminar on Compliance & Complications under Companies Act 2013 in June 2014 at New Delhi.

Chief Materials Manager, North Western Railways vs. Milton Industries Limited and 04 ors.

The Commission has acted in the matter on the basis of information filed by the Chief Materials Manager, North Western Railways alleging a cartel between Opposite Parties in the tender process for supply of Fire Retardant Fabric (FRF) to the Railways.

It was alleged that out of 5 Opposite Parties only one Opposite Party used to quote regularly in the tender process and others simply

abstained from quoting any rate in the tender process. It was therefore alleged that all the Opposite Parties have a nexus with Opposite Party No. 4 which usually quotes very exorbitantly without any reasons.

The Commission prima facie held that all the RDSO approved Opposite Parties are engaged in the business of FRF have entered into a tacit understanding with each other to facilitate the Opposite Party No. 4 to secure the tender at the prices it quoted by abstaining from the tender process. It was further observed that such behavior indicates deliberate reduction of competition in the supply of FRF to Railways which not only hampers competition, but is also violative of Section 3 (3) of the Act. While directing the investigation by Director General CCI, the Commission has also taken into consideration past conduct of the cartel which was closed by the Commission as the matter was related to the period prior to the date of enforcement of Section 3 of the Act.

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 16 17

ADVOCACY INITIATIVES

Trade Associations

Professional/Management InstitutesOfficers of the Commission addressed IIM Lucknow- NOIDA Campus in May 2014 on Competition policy in India, which was attended by participants of the executive program.

Members of ICAI-EIRC were addressed on Scope for Chartered Accountants under the Competition Act at Kolkata in June, 2014.

Shri Ashok Chawla, Chairperson, CCI inaugurated a conference on Boosting Competition Compliance Tackling Challenges organized by Confederation of Indian Industry at Mumbai in June 2014. Shri Augustine Peter, Member, CCI chaired a technical session on Merger Regulations at the same conference

Officers of CCI held a session on Competition Compliance in ASSOCHAMs Seminar on Compliance & Complications under Companies Act 2013 in June 2014 at New Delhi.

Chief Materials Manager, North Western Railways vs. Milton Industries Limited and 04 ors.

The Commission has acted in the matter on the basis of information filed by the Chief Materials Manager, North Western Railways alleging a cartel between Opposite Parties in the tender process for supply of Fire Retardant Fabric (FRF) to the Railways.

It was alleged that out of 5 Opposite Parties only one Opposite Party used to quote regularly in the tender process and others simply

abstained from quoting any rate in the tender process. It was therefore alleged that all the Opposite Parties have a nexus with Opposite Party No. 4 which usually quotes very exorbitantly without any reasons.

The Commission prima facie held that all the RDSO approved Opposite Parties are engaged in the business of FRF have entered into a tacit understanding with each other to facilitate the Opposite Party No. 4 to secure the tender at the prices it quoted by abstaining from the tender process. It was further observed that such behavior indicates deliberate reduction of competition in the supply of FRF to Railways which not only hampers competition, but is also violative of Section 3 (3) of the Act. While directing the investigation by Director General CCI, the Commission has also taken into consideration past conduct of the cartel which was closed by the Commission as the matter was related to the period prior to the date of enforcement of Section 3 of the Act.

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014 16 17

Internship Programme

To familiarize students with Competition Law, CCI has an internship programme for students pursuing study in law, economics, management and regulatory governance. Under the programme students get an opportunity to research on various competition related issues under a mentor from Commission. From April to June 2014, twenty three students successfully interned with the Commission.

Fair Play Volume 9 : April - June 2014

A three member CCI delegation led by Chairperson Mr. Ashok Chawla attended the three day ICN annual conference (April 23-25) and the pre-ICN forum organised by the World Bank on April 22, 2014 at Marrakech, Morocco.

CCI delegation participated in a number of conference sessions and meetings which included the pre- ICN forum meeting titled competitive domestic markets: the cornerstone to boost trade and competiveness on April 22, 2014. During the three day ICN conference- the delegation attended the opening session, first plenary session on State-owned Enterprises under Competition Law, second plenary session on Agency Effectiveness Working Group: Investigative process and its BOS, meeting with United Nations Conference Trade and Development and ICN-Co Chairs Meeting. On the second day the delegation attended the optional BOS on the ICN curriculum Project, the Advocacy Working Group Plenary in Teaming up

EVENTS

against Cartels: how ICN promotes effective cartel enforcement, BOS and optional Merger Working Group Meeting. On day three the delegation attended the Merger Working Group Plenary on International Cooperation in Merger Cases, and the merger BOS on Fostering Convergence in Merger Notification & Procedures : Challenges for New Competition Agencies and the role of MWG Outreach, the session on implementation, and the closing ceremony.

The Delegation attended and convened following meetings during the conference:

I. Meeting with the USFTC and the DOJ heads and officials

II. Meeting with BRICS counterparts, and

III. Meeting with Asia Pacific Competition Authorities

International Competition Network

Volume 9 : April - June 2014 Fair Play18 19

Internship Programme

To familiarize students with Competition Law, CCI has an internship programme for students pursuing study in law, economics, management and regulatory governance. Under the programme students get an opportunity to research on various competition related issues under a mentor from Commission. From April to June 2014, twenty three students successfully interned with the Commission.

Fair Play Volume 9 : April - June 2014

A three member CCI delegation led by Chairperson Mr. Ashok Chawla attended the three day ICN annual conference (April 23-25) and the pre-ICN forum organised by the World Bank on April 22, 2014 at Marrakech, Morocco.

CCI delegation participated in a number of conference sessions and meetings which included the pre- ICN forum meeting titled competitive domestic markets: the cornerstone to boost trade and competiveness on April 22, 2014. During the three day ICN conference- the delegation attended the opening session, first plenary session on State-owned Enterprises under Competition Law, second plenary session on Agency Effectiveness Working Group: Investigative process and its BOS, meeting with United Nations Conference Trade and Development and ICN-Co Chairs Meeting. On the second day the delegation attended the optional BOS on the ICN curriculum Project, the Advocacy Working Group Plenary in Teaming up

EVENTS

against Cartels: how ICN promotes effective cartel enforcement, BOS and optional Merger Working Group Meeting. On day three the delegation attended the Merger Working Group Plenary on International Cooperation in Merger Cases, and the merger BOS on Fostering Convergence in Merger Notification & Procedures : Challenges for New Competition Agencies and the role of MWG Outreach, the session on implementation, and the closing ceremony.

The Delegation attended and convened following meetings during the conference:

I. Meeting with the USFTC and the DOJ heads and officials

II. Meeting with BRICS counterparts, and

III. Meeting with Asia Pacific Competition Authorities

International Competition Network

Volume 9 : April - June 2014 Fair Play18 19

DEVELOPMENTS IN OTHER JURISDICTIONS

CCS Fines First Global CartelThe Competition Commission of Singapore (CCS) has fined three Japanese bearings manufacturers and their Singapore subsidiaries S$9.3 million for taking part in a ball bearing pricing cartel, the first move in a global investigation of price-fixing by car parts makers. CCS fined Nachi-Fujikoshi Corp S$7.6 million, the largest fine the regulator has ever levied. NSK Ltd and NTN Corp were given smaller fines of S$455,652 and S$1.3 million respectively. This was the enforcers first international cartel case involving foreign-registered companies and their Singapore subsidiaries.

The European Commission has imposed fines totalling 3,22,25,000 on Lutce, Prochamp and Bonduelle for participating in a cartel to coordinate prices and allocate customers of canned mushrooms in Europe during more than a year. The cartel members exchanged confidential information on tenders, set minimum prices,

EU fines three producers of canned mushrooms 32 million in cartel settlement

CCS found that the Parties were competitors and met regularly at meetings both in Japan and Singapore where they exchanged information, discussed and agreed on sales prices for Bearings sold to their respective Aftermarkets Customers in Singapore, so as to maintain each participants market share and protect their profit and sales.

In levying the financial penalties, CCS took into account various factors such as seriousness of the infringements, each partys relevant turnover, duration of the infringements, aggravating and mitigating factors etc.

Volume 9 : April - June 2014 Fair Play

Capacity Building Events

a) Induction training for the newly joined direct recruitment officers was organized in CCI during April 2014.

b) Three Specialized workshop for CCI officials under EU- Capacity Building Initiative for Trade and Development (CITD) program were organized during May 2014. The subjects were as belowPrima Facie InvestigationsDrafting Orders in Combination Cases Advocacy: Public Access to CCI Orders

Fair Play Volume 9 : April - June 2014

CCI officials participated in various workshops/ seminars/ meetings, some of which are:

a) OECD-Korea Policy Center Workshop on Evidentiary Issues in Establishing Abuse of Dominance held during June 2014 in Jeju Island, Korea.

ndb) 2 Training Course

on Competition Law and Policy for Asian Countries organized by the Japan Fair Trade Commission (JFTC) & Asian Development Bank (ADB) during June 2014 in Tokyo, Japan.

20 21

DEVELOPMENTS IN OTHER JURISDICTIONS

CCS Fines First Global CartelThe Competition Commission of Singapore (CCS) has fined three Japanese bearings manufacturers and their Singapore subsidiaries S$9.3 million for taking part in a ball bearing pricing cartel, the first move in a global investigation of price-fixing by car parts makers. CCS fined Nachi-Fujikoshi Corp S$7.6 million, the largest fine the regulator has ever levied. NSK Ltd and NTN Corp were given smaller fines of S$455,652 and S$1.3 million respectively. This was the enforcers first international cartel case involving foreign-registered companies and their Singapore subsidiaries.

The European Commission has imposed fines totalling 3,22,25,000 on Lutce, Prochamp and Bonduelle for participating in a cartel to coordinate prices and allocate customers of canned mushrooms in Europe during more than a year. The cartel members exchanged confidential information on tenders, set minimum prices,

EU fines three producers of canned mushrooms 32 million in cartel settlement

CCS found that the Parties were competitors and met regularly at meetings both in Japan and Singapore where they exchanged information, discussed and agreed on sales prices for Bearings sold to their respective Aftermarkets Customers in Singapore, so as to maintain each participants market share and protect their profit and sales.

In levying the financial penalties, CCS took into account various factors such as seriousness of the infringements, each partys relevant turnover, duration of the infringements, aggravating and mitigating factors etc.

Volume 9 : April - June 2014 Fair Play

Capacity Building Events

a) Induction training for the newly joined direct recruitment officers was organized in CCI during April 2014.

b) Three Specialized workshop for CCI officials under EU- Capacity Building Initiative for Trade and Development (CITD) program were organized during May 2014. The subjects were as belowPrima Facie InvestigationsDrafting Orders in Combination Cases Advocacy: Public Access to CCI Orders

Fair Play Volume 9 : April - June 2014

CCI officials participated in various workshops/ seminars/ meetings, some of which are:

a) OECD-Korea Policy Center Workshop on Evidentiary Issues in Establishing Abuse of Dominance held during June 2014 in Jeju Island, Korea.

ndb) 2 Training Course

on Competition Law and Policy for Asian Countries organized by the Japan Fair Trade Commission (JFTC) & Asian Development Bank (ADB) during June 2014 in Tokyo, Japan.

20 21

KNOW YOUR COMPETITION ACT

This issue focuses on the Competition Appellate Tribunal (COMPAT)

The Competition Appellate Tribunal (COMPAT) was created in the year 2007 by way of amending the Competition Act, 2002. It became functional on May 15, 2009. It is a an adjudicatory body headed by a sitting or retired judge of the Supreme Court or the Chief Justice of a High Court along with two other Members.

Eligibility

A Member of the Appellate Tribunal shall be a person of ability, integrity and standing having special knowledge of, and professional experience of not less than twenty-five years in, competition matters, including competition law and policy, international trade, economics, business, commerce, law, finance,

accountancy, management, industry, public affairs, administration or in any other matter which in the opinion of the Central Government, may be useful to the Appellate Tribunal.

The Chairperson and Members of COMPAT are appointed by the Central Government from a panel of names recommended by a selection committee that consists of the Chief Justice of India or his nominee and two Secretaries of Government of India.

Tenure

The Chairperson or a Member of the Appellate Tribunal shall hold office for a term of five years and shall be eligible for re-appointment. Provided that no Chairperson or other Member of the Appellate Tribunal shall hold office after he has attained the age of sixty-eight years or sixty-five years respectively.

Fair Play Volume 8 : January - March 2014

Koreas Fair Trade Commission (KFTC) has fined 17 artificial turf manufacturers 7.4 billion Won (5.3 million) for colluding to rig bids on more than 200 public projects. Five of the companies whose violations were particularly serious and who actively took part in bid rigging may face criminal prosecution.

KFTC imposed penalty against turf bid riggers

The manufacturers had rigged the artificial turf bids called for by the Public Procurement Services (PPS) upon requests from schools, local governments etc. They discussed each bidding procedure in advance over the telephone or through meetings before (or after) receiving tender documents. Collusions have been made continually for 255 bidding procedures (total amount of contracts awards: approximately 73.3 billion won). Consequently, the average ratio of successful bid prices reached approximately 95%, much higher than the average ratio of successful bid prices tendered for contracts made without collusion, which was approximately 65%.

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agreed on volume targets and allocated customers. Lutce was not fined as it revealed the existence of the cartel to the Commission. Prochamp benefitted from fine reductions for cooperating with the investigation and was fined 20 21 000. Bonduelle was fined 30 204 000 for breaching antitrust rules.

In setting the level of fines, the Commission took into account, in particular, the companies' sales of the products concerned in the European Economic Area (EEA), the serious nature of the infringement, its geographic scope and its duration.

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KNOW YOUR COMPETITION ACT

This issue focuses on the Competition Appellate Tribunal (COMPAT)

The Competition Appellate Tribunal (COMPAT) was created in the year 2007 by way of amending the Competition Act, 2002. It became functional on May 15, 2009. It is a an adjudicatory body headed by a sitting or retired judge of the Supreme Court or the Chief Justice of a High Court along with two other Members.

Eligibility

A Member of the Appellate Tribunal shall be a person of ability, integrity and standing having special knowledge of, and professional experience of not less than twenty-five years in, competition matters, including competition law and policy, international trade, economics, business, commerce, law, finance,

accountancy, management, industry, public affairs, administration or in any other matter which in the opinion of the Central Government, may be useful to the Appellate Tribunal.

The Chairperson and Members of COMPAT are appointed by the Central Government from a panel of names recommended by a selection committee that consists of the Chief Justice of India or his nominee and two Secretaries of Government of India.

Tenure

The Chairperson or a Member of the Appellate Tribunal shall hold office for a term of five years and shall be eligible for re-appointment. Provided that no Chairperson or other Member of the Appellate Tribunal shall hold office after he has attained the age of sixty-eight years or sixty-five years respectively.

Fair Play Volume 8 : January - March 2014

Koreas Fair Trade Commission (KFTC) has fined 17 artificial turf manufacturers 7.4 billion Won (5.3 million) for colluding to rig bids on more than 200 public projects. Five of the companies whose violations were particularly serious and who actively took part in bid rigging may face criminal prosecution.

KFTC imposed penalty against turf bid riggers

The manufacturers had rigged the artificial turf bids called for by the Public Procurement Services (PPS) upon requests from schools, local governments etc. They discussed each bidding procedure in advance over the telephone or through meetings before (or after) receiving tender documents. Collusions have been made continually for 255 bidding procedures (total amount of contracts awards: approximately 73.3 billion won). Consequently, the average ratio of successful bid prices reached approximately 95%, much higher than the average ratio of successful bid prices tendered for contracts made without collusion, which was approximately 65%.

Volume 9 : April - June 2014 Fair PlayFair Play Volume 9 : April - June 2014

agreed on volume targets and allocated customers. Lutce was not fined as it revealed the existence of the cartel to the Commission. Prochamp benefitted from fine reductions for cooperating with the investigation and was fined 20 21 000. Bonduelle was fined 30 204 000 for breaching antitrust rules.

In setting the level of fines, the Commission took into account, in particular, the companies' sales of the products concerned in the European Economic Area (EEA), the serious nature of the infringement, its geographic scope and its duration.

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Powers

COMPAT is the forum for first appeal before which any direction, decision or orders passed by the CCI as provided under section 53A(a) of the Act are adjudicated. The COMPAT has powers to adjudicate on any claim for compensation which may arise from either the findings given by the CCI or the orders passed by the COMPAT upon receiving an application from the affected party. The orders passed by CCI under sections 26(2), 26(6), 27, 28, 31, 32, 33, 38, 39, 43, 43A, 44, 45 or 46 of the Act are challengeable before COMPAT. Any person aggrieved by the direction, decision or order passed by the

Commission can file the appeal before COMPAT within a period of 60 days. However, the COMPAT has the power to condone delay beyond this period of sixty days.

As per Section 53O of the Act, the COMPAT is not bound by the procedure laid down under the Code of Civil Procedure, 1908 but shall follow the principles of natural justice. It has powers to regulate its own procedure subject to the Act and any rules made by Central government.

Further, COMPAT has the power inter alia to summon and enforce the attendance of a person, receive evidence on affidavit, issue commissions for examination of witness. The COMPAT is vested with the power to review its decisions. It is also vested with numerous powers to enforce its

orders, including contempt powers as vested to High Courts under the Contempt of Courts Act, 1971. Every order made by the Appellate Tribunal shall be enforced by it in the same manner as if it were a decree made by a court in a suit pending therein.

Finally, the appeal challenging the orders or decisions of the COMPAT is to be filed in the Supreme Court within 60 days of receipt of the order.

Currently the COMPACT is headquartered in New Delhi and functioning from 1, Shahjahan road, New Delhi 110011.

Competition Commission of IndiaThe Hindustan Times House18-20, Kasturba Gandhi MargNew Delhi- 110001

Please visit www.cci.gov.in for more information about the Commission.For any query/comment/suggestion, please write to advocacy@cci.gov.in

Disclaimer: The contents of this publication do not necessarily reflect the official position of the Competition Commission of India. Contents of this newsletter are only informative in nature and not meant to substitute for professional advice. Information and views in the newsletter are fact based and incorporate necessary editing.

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