Recent key developments in the competition arena

The Competition Commission of India (CCI) has been in the spotlight recently. Four of the reasons are outlined below.

First dawn raid conducted

The CCI conducted its first dawn raid, at the Delhi office of JCB, a major construction equipment manufacturer, in connection with an investigation of allegations that JCB is abusing its dominant position in the market.

Media reports said the decision to exercise the CCI Director General’s power to conduct the raid was taken because JCB wasn’t complying with requests of the CCI. Documents and data were seized in the raid.

In March this year, based on information filed by Bulls Machine Private Limited (a small-scale manufacturer of low-cost construction equipment), the CCI held that prima facie, JCB was abusing its dominance by denying market access through an injunction obtained by JCB from Delhi High Court on the grounds that Bulls Machine was infringing designs of JCB. The CCI in its order observed that “predation through abuse of judicial processes” presents an increasing threat to competition. JCB had sought a stay on the CCI order from Delhi High Court. In April the high court held that the CCI could continue its investigation but would not be entitled to pass a final order pending a final order of the court.

[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”3″ ihc_mb_template=”2″ ]

Public consulted on merger

In another first, the CCI has invited comments in writing from persons adversely affected or likely to be affected by the proposed merger of Ranbaxy into Sun Pharmaceuticals.

The CCI received notice from Sun Pharmaceuticals and Ranbaxy in relation to the proposed merger on 6 May. In terms of Section 29(2) of the Competition Act, the CCI formed a prima facie opinion that the combination was likely to have an appreciable adverse effect on competition and accordingly directed the parties to publish details of the combination in the public domain.

14 car makers fined

Fourteen car makers – Tata Motors, Maruti Suzuki, Mahindra & Mahindra, Toyota, General Motors, Honda, Skoda, Ford, Fiat, Mercedes-Benz, BMW, Hindustan Motors, Volkswagen and Nissan – were fined a total of ₹25.45 billion (US$ 415 million) for failing to provide access to spare parts and diagnostic tools to customers in the open market.

In addition to the fines, the companies have been ordered to cease and desist from anti-competitive practices and to allow their suppliers to sell spare parts in the open market without any restriction, including on prices. They have also been directed to not place any restrictions on the operation of independent repairers/garages and to not impose a blanket condition that warranties would be cancelled if a consumer uses the services of any independent repairer.

The CCI’s order also suggests that the manufacturers should implement other measures, such as working towards standardization of an increasing number of parts so that they can be used across different brands, which would result in lower prices and also give more choice to consumers and service providers.

The CCI studied antitrust precedents in other jurisdictions and concluded that refusal to provide access to branded or alternative spare parts, technical manuals and repair tools is generally frowned upon.

Delhi High Court stayed the fine imposed on Maruti Suzuki, and stated that the CCI order will not take effect until Madras High court disposes of a petition filed before it by Hyundai, which has obtained a stay on the matter. Delhi High Court also stayed the CCI orders against BMW and Mercedes for three weeks, in connection with the same matter.

CCI seeks stay in DLF case

In late September, the Supreme Court admitted the CCI’s appeal in the case of DLF, a Delhi-based real estate developer. The CCI, under the provisions of section 53T of the Competition Act, has moved the Supreme Court to stay certain aspects of the order of the Competition Appellate Tribunal (COMPAT), dated 19 May 2014.

The COMPAT order upheld the fine imposed by the CCI in 2011 for abuse of dominance but in some aspects disagreed with views of the CCI. COMPAT held that the CCI was wrong in applying section 4 (which came into effect in 2009) retrospectively to agreements made in 2006-07 and was therefore wrong in directing that the agreements must be rewritten. Another reason given by the COMPAT for rejecting the CCI’s directions was that the CCI did not cite non-compliance with provisions of section 3 (anti-competitive agreements), which per the COMPAT is a prerequisite for ordering the modification of an agreement.

DLF has also appealed against the order of COMPAT in the Supreme Court but, despite this, the Supreme Court has ordered DLF to deposit part of the fine pending the appeal.

[/ihc-hide-content]

Amit Tambe is a partner at Trilegal and Kunal Chandra is a counsel. Trilegal is a full-service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.