The Cartels and Leniency Review: India
Enforcement policies and guidance
i Statutory framework
The Competition Act 2002 (the Act), in conjunction with various regulations, forms the competition regime in India. While there are many sectoral regulators responsible for maintaining fair competition in their respective sectors, the Competition Commission of India (CCI), established under Section 7 of the Act, is the principal regulator for anticompetitive behaviour across all sectors.
Provisions of Section 3 of the Act and various regulations, particularly the Competition Commission of India (Lesser Penalty) Regulations 2009 (the Leniency Regulations), deal with anticompetitive agreements, including cartels. The term 'cartel' has been defined under the Act to include 'an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit, control or attempt to control the production, distribution, sale or price of, or trade in goods or provision of services'. Therefore, to establish the existence of a cartel, the existence of an agreement needs to be proved first.
The term 'agreement' under the Act has been defined very widely and includes an arrangement or understanding or acting in concert and is not limited to written formal agreements. Section 3(1) of the Act sets out a general prohibition on all agreements that have or are likely to have an appreciable adverse effect on competition (AAEC) within India, while Section 3(3) specifically sets out that certain horizontal agreements, including cartels, will be presumed to have an AAEC in India, thereby shifting the burden of proof to the accused to rebut the presumption. These horizontal agreements include those that:
- directly or indirectly determine purchase or sale prices;
- limit or control production, supply, markets, technical development, investment or provision of services;
- share the market or source of production, or provision of services by way of allocation of geographical market area, or type of goods or services, or number of customers in the market, or any other similar way; or
- directly or indirectly result in bid rigging or collusive bidding.
The CCI is the enforcing body, assisted by its investigative arm, the office of the Director General of the CCI (DG). Most cartel investigations have been initiated by the CCI upon receipt of information through either a complaint or a leniency application, although the CCI has also initiated suo motu action or has initiated proceedings upon receipt of a reference made by a government or statutory authority. The CCI directs the DG to commence an investigation if it is of the view that there exists a prima facie case warranting an investigation. The DG cannot initiate investigations suo motu. Once the DG submits an investigation report to the CCI, the CCI can either direct the DG to investigate further or continue with its inquiry and call upon the parties to make written and oral pleadings. On reaching a positive finding of the existence of a cartel and any resulting infraction, the CCI may impose a penalty and pass any other order that it deems fit. CCI orders can be appealed before the National Company Law Appellate Tribunal (NCLAT).2 An NCLAT order is finally appealable before the Supreme Court of India.
The penalty that may be imposed in the case of any anticompetitive conduct cannot be more than 10 per cent of the average of the turnover3 of the contravening enterprise for the three preceding financial years. However, in the case of a cartel, the CCI can impose a penalty of up to three times the profit of the contravening enterprise or 10 per cent of the turnover of the contravening enterprise, for each year of the continuance of the cartel, whichever is greater. Further, the directors and other employees of the contravening entity found responsible can also be penalised under the Act.
The CCI has held that an agreement in itself cannot be the basis of a cartel prosecution and that there must be economic consequences arising out of the agreement. Cases in which the CCI has prosecuted cartels show that the CCI relies not only on direct evidence but also on indirect evidence and economic analysis.4
There are no criminal sanctions in India for cartelisation. However, non-compliance with the orders of the CCI or the NCLAT can attract criminal liability.
ii Guidelines and policy
The substantive provisions of the Act dealing with anticompetitive behaviour have only been in force since 2009. Competition jurisprudence is still developing in India. Both legal practitioners and the CCI rely on cases decided upon by the courts of the United States and the European Commission for guidance. The CCI has not issued any policies or guidelines on cartels.
iii Cartel enforcement
Cartel enforcement has been a focus for the CCI since the beginning but has taken time to gain traction. The covid-19 pandemic has caused CCI and related court proceedings to be slower than usual. However, cartel enforcement has been gaining momentum and the CCI has penalised cartels and conducted dawn raids in the past 12 months. Overall, 18 months into the pandemic, there has been no discernible change in the CCI's priorities or responsiveness towards cartels. Since December 2020, the CCI has dealt with 37 cases relating to cartels and has found companies (including their officers) guilty in only seven cases, with monetary penalties imposed in five of these cases.
As at October 2021, the CCI has issued a total of 83 orders penalising companies (including their officers) for cartel infringements. The total monetary fines imposed by the CCI for cartel infringements to date is approximately 90 billion rupees.
In 2021, the CCI passed three orders involving leniency applications, one of which found the companies concerned not guilty of cartelisation. In one case, beer manufacturers filed leniency applications with the CCI disclosing the existence of a cartel that had operated in the beer industry since 2009. The CCI, while granting reduction in penalties to the leniency applicants, imposed monetary penalties amounting to 8.63 billion rupees on two companies and their trade association. In the other case, the CCI found manufacturers of low-density polyethylene covers guilty of cartelisation on the basis of leniency applications filed by them, but it decided not to impose any monetary penalty.
Cooperation with other jurisdictions
The CCI has been granted extraterritorial jurisdiction over any anticompetitive conduct occurring outside India if that conduct has caused, or is likely to cause, an AAEC within India.
Section 18 of the Act permits the CCI to enter into any memorandum or arrangement, with prior approval of the central government, with any agency of any foreign country for the purpose of discharging its duties or performing its functions under the Act. The CCI has executed memoranda of understanding on cooperation with several competition agencies, including those of the United States, the European Union and Australia, in an attempt to set up a framework for cooperation and exchange of information. In 2021, the CCI signed memoranda of cooperation with the Administrative Council for Economic Defence of Brazil and the Japan Fair Trade Commission. The scope and content of these arrangements are not publicly known.
It is believed that there is a fair amount of coordination and dialogue with regulators in other jurisdictions through the International Competition Network and other channels, although there is no provision permitting the CCI to share information or documents with other jurisdictions without the consent of the concerned parties.
Jurisdictional limitations, affirmative defences and exemptions
An action taking place outside India that has or is likely to have an AAEC in the relevant market in India may be the subject of an inquiry by the CCI under Section 32 of the Act. The CCI has exercised extraterritorial jurisdiction in a few cases involving operation of an alleged cartel outside India that affected the Indian market.
The Act provides for certain affirmative defences and exemptions, namely:
- joint venture: while certain horizontal agreements have been presumed to harm competition, an exemption from this presumption is offered to an efficiency-enhancing joint venture. The burden of demonstrating qualifying efficiencies lies with the enterprise seeking the exemption. If the efficiency gain is shown to exceed the harm to competition, the party is unlikely to be held to be engaging in anticompetitive behaviour on an application of the rule of reason;
- intellectual property rights defence: notwithstanding its anticompetitive agreement provisions, the Act provides that a person shall be free to impose restrictions insofar as the restrictions imposed are reasonable for the protection and prevention of any infringements of any intellectual property rights granted under India's intellectual property laws; and
- export cartels exemption: the Act provides that restrictions relating to anticompetitive agreements, including cartels, do not apply to the right of any person to export goods from India to the extent that agreements relate exclusively to production, supply, distribution or control of goods or provision of services. This exemption may be read to exclude export cartels (i.e., cartelisation in markets outside India).
The leniency policy in India is governed by Section 46 of the Act read with the Leniency Regulations, which set out the requirements for qualification, the procedure to be followed for the imposition of a lesser penalty and the benefits available.
The Leniency Regulations provide for a reduction in penalty of up to 100 per cent if an applicant makes vital disclosures about the existence of a cartel to the CCI and if no reduction in penalty has been granted to any other applicant by the CCI. This benefit of reduction in penalty would be granted to an applicant only if the CCI has insufficient evidence, or no evidence at all, to establish the existence of a cartel.
In August 2017, far-reaching amendments were made to the Leniency Regulations (2017 Amendment). By way of the 2017 Amendment, the scope of an 'applicant' under the Leniency Regulations was expanded to specifically include an individual who has participated in a cartel on behalf of an enterprise to make a leniency application to the CCI for a grant of a lesser penalty. Further, the 2017 Amendment provides an option to an enterprise making a leniency application, to include the names of individuals involved in the cartel (on behalf of the enterprise) for whom it wishes to seek a lesser penalty.
The most salutary development pursuant to the 2017 Amendment is that the grant of a reduction in penalty to an applicant (including an individual) who meets the conditions required is now mandatory. Prior to the 2017 Amendment, it was left to the discretion of the CCI to reduce a penalty and by how much, if at all. Notwithstanding the mandatory nature of the grant, the percentage by which a penalty should be reduced remains discretionary, with no guarantee of a full reduction.
The leniency regime also sets out a marker system for applicants. An applicant can approach the CCI on a no-names basis and provide details of the infringement and the evidence in its possession. The CCI will employ a priority status marker system based on the time of the initial contact. The first applicant to contact the CCI, albeit orally, will be given the status of first applicant. If the initial contact is oral, the applicant will need to ensure that the documentary evidence is provided to the CCI within 15 calendar days of receiving a direction from the CCI to submit the application. Failure to do so will result in the loss of the priority status.
The Act and applicable regulations do not provide any specific guidance as to the nature and level of detail of the evidence required. Once a marker has been given, the CCI does not deal with another applicant until a decision regarding the first applicant has been made.
The conditions that need to be met for an applicant to qualify for a reduced penalty include:
- ceasing further participation in the cartel from the time of the applicant's disclosure, unless otherwise directed by the CCI;
- providing vital disclosures in respect of a violation under Section 3(3) of the Act;
- providing all relevant information, documents and evidence as required by the CCI;
- cooperating genuinely, fully, continuously and expeditiously throughout the investigation and other proceedings held by the CCI; and
- not concealing, destroying, manipulating or removing relevant documents that may contribute in any manner to establishing the existence of a cartel.
Subsequent applicants may be granted a reduction in penalty by making a disclosure or submitting evidence that, in the opinion of the CCI, may provide significant added value over and above the evidence already in the possession of the CCI or the DG to establish the existence of a cartel. The applicant marked as having second priority status may be granted a reduction of up to 50 per cent of the leviable penalty, while the applicant marked third priority status or later may be granted a reduction of up to 30 per cent of the leviable penalty. Neither successful nor unsuccessful leniency applicants are provided with immunity from civil claims.
In terms of the applicable regulations, no leniency application can be entertained after the CCI has received the DG's investigation report.
As such, under the Leniency Regulations, the CCI grants confidentiality regarding the applicant's identity and the information and evidence furnished by an applicant. However, pursuant to the 2017 Amendment, the DG can disclose the information and evidence furnished by an applicant to any party if the DG deems the disclosure necessary for the purposes of the investigation. Nevertheless, disclosure can only be made after obtaining prior approval from the CCI in the form of a reasoned written order.
In 2021, the CCI passed three final orders in cases involving leniency applications and found a contravention only in one.
In September 2021, the CCI found Carlsberg India Private Limited (Carslberg), United Breweries India Private Limited (UBL), SABMiller India Private Limited/Anheuser Busch InBev SA/NV (SABMiller/AB InBev) and the All-India Brewery Association (AIBA), including their office bearers, (collectively, the Opposite Parties) guilty of cartelisation in relation to the sale and supply of beer in various states and union territories of India from May 2009 to October 2018, in contravention of Section 3(3) of the Act.
The investigation was initiated by the CCI pursuant to a leniency application filed by SABMiller/AB InBev disclosing the existence of the cartel. SABMiller/AB InBev disclosed that the Opposite Parties shared commercially sensitive information (CSI) regarding pricing, stock held and sold, revenue earned, production, individual communication with various government agencies, etc. in relation to the various beer markets; and UBL and SABMiller cartelised for purchase of second-hand beer bottles for reuse in their breweries. This disclosure led to dawn raids conducted by the DG on the business premises of the Opposite Parties. Subsequently, the other Opposite Parties also filed leniency applications with the CCI. The CCI relied on evidence gathered by the DG and provided by the Opposite Parties relating to communication among themselves via official emails, personal emails, SMS messages, WhatsApp messages, etc. and found it to show a contravention of Section 3(3) of the Act. It noted that the exchange of CSI in itself is a contravention of the Act and actual implementation of the information is not an essential condition of the contravention. The CCI observed that AIBA played a role by providing a platform to the Opposite Parties for disseminating CSI.
Accordingly, the CCI directed the Opposite Parties and their officers to cease and desist from engaging in anticompetitive conduct. It granted 100 per cent immunity to SABMiller and its officers for disclosing the existence of the cartel in the beer market. As the second leniency applicant, UBL and its officers were granted a 40 per cent reduction of the fine and fined approximately 7.5 billion rupees, and finally, as the third leniency applicant, Carlsberg and its officials were granted a 20 per cent reduction of the fine and fined approximately 1.1 billion rupees. AIBA was fined 6.3 million rupees for facilitating the cartel.5
In another case, the CCI initiated an investigation into NSK Ltd, Japan, NSK International (Singapore) Pte Ltd and NSK Bearings India Pvt Ltd (NSK); JTEKT Corporation, Japan, and Koyo Bearings India Ltd (JTEKT); and NTN Corporation, Japan (NTN) for alleged price-fixing cartel conduct in the automotive bearing market. The investigation was initiated pursuant to a leniency application filed by NSK. During the investigation, JTKET also filed a leniency application with the CCI. Interestingly, in October 2021, the CCI concluded that the nature of evidence presented by the DG and the leniency applicants was insufficient and no case of contravention could be made out against the bearings manufacturers, and it closed the investigation.6
Finally, in a case concerning manufacturers of low-density polyethylene covers (covers), the CCI investigated the companies and their officers (collectively, the Counterparties) for engaging in cartelisation and bid rigging from 2009 to 2017, in contravention of Section 3(3) of the Act. The CCI initiated the investigation on the basis of a reference from the Food Corporation of India (FCI). During the investigation, some of the Counterparties filed leniency applications. The investigation disclosed that the Counterparties had engaged in bid rigging by fixing prices of covers in the tenders held by the FCI, sharing tender quantities and limiting and restricting the supply of covers. The CCI found smoking-gun evidence of collusion, including emails, WhatsApp chats between Counterparties and admissions obtained in depositions from company representatives about deciding prices to be quoted and quantity allocation inter se while bidding for the FCI tenders. Although the CCI found that the Counterparties had engaged in bid rigging, it decided against imposing penalties because all the Counterparties were micro, small or medium-sized enterprises in a sector that was under economic stress because of the covid-19 pandemic, and because some of the Counterparties had come forward to seek leniency.7
Under the Act, where cartel conduct is established, the CCI has the power to impose a penalty of up to three times the profit or 10 per cent of the turnover of each participating enterprise for each year of continuance of a cartel agreement, whichever is greater. If an enterprise is a company, any of its directors or officials who are guilty are also liable to prosecution.
While the CCI has not framed any guidelines or offered any sort of guidance on calculating penalties, the Supreme Court in Excel Crop limited the penalty levied on multi-product companies to the turnover attributable solely to the product that was the subject of the contravention (i.e., relevant turnover). Further, the Supreme Court provided a two-step methodology for calculating penalties:
- step one: determining the relevant turnover – the relevant turnover should be the entity's turnover pertaining to products and services that have been affected by the contravention; and
- step two: determining the appropriate percentage of penalty based on aggravating and mitigating circumstances.
The guidelines laid out by the Supreme Court will help to eliminate the imposition of disproportionate penalties on enterprises and clarify appropriate mitigating circumstances for the imposition of lesser penalties.
In addition to the imposition of penalties, the CCI may pass orders, inter alia, directing the parties to terminate the agreement and to refrain from re-entering such an agreement, or to modify the terms of the agreement.
The Act does not provide for criminal liability other than for wilful default in implementing orders issued by the CCI. Non-compliance with CCI orders may result in a fine of up to 250 million rupees or imprisonment for up to three years, or both, while non-compliance with orders issued by the NCLAT may lead to a fine of up to 100 million rupees or imprisonment for up to three years, or both.
Non-cooperation during an investigation may also lead to the imposition of a penalty by the CCI. The CCI imposed a fine of 10 million rupees on Google for its failure to comply with the directions given by the DG seeking information and documents.8 The CCI also imposed a fine of 15 million rupees on Monsanto and its affiliate companies for their failure to provide information sought by the DG in respect of its authorised representatives.9 Further, in a recent case in which the CCI imposed a penalty on an individual for non-cooperation with the DG, the NCLAT set aside the penalty after the individual apologised.10
'Day one' response
The information received from an informant or collected suo motu is reviewed by the CCI to determine whether a prima facie case exists to warrant an investigation by the DG.
The same powers as those of an Indian civil court have been conferred on both the CCI and the DG, including the power to summon any person and enforce his or her attendance, and powers of discovery and enforcement of production of documents. Additionally, the DG has been vested with the power to conduct searches and seizures.
To be able to conduct operations such as dawn raids, the DG must first obtain a search warrant duly issued by the Chief Metropolitan Magistrate, New Delhi.
To date, the DG has conducted nine dawn raids, with the most recent conducted on manufacturers of country liquor (October 2021), vegetable seeds (September 2021) and cement (December 2020) for alleged cartelisation.
The Act does not provide for private enforcement of rights. Section 53N of the Act provides a right to file for compensation for any loss or damage shown to have been suffered on account of a contravention of the provisions of the Act. Such a claim must be filed with the NCLAT. According to the Act, such claims can be made either after the CCI arrives at a finding of contravention or after the NCLAT arrives at a finding of contravention if the decision by the CCI is appealed. However, as a matter of practice, the NCLAT awaits the decision of the Supreme Court on the merits before proceeding to hear compensation claims. The NCLAT has yet to pass an order addressing a claim for damages.
Although damages jurisprudence has yet to develop in India, it is possible for one or more persons, with the approval of the NCLAT, to file compensation claims on behalf of many. If many persons have suffered loss or damage from an action of the same enterprise or group of enterprises, an application for an award of compensation can be made by just one of those persons on behalf of them all. Furthermore, since the quantum of the fine is indicative of the severity of the offence, that may be considered an important factor when the award is calculated.
To date, compensation applications have been filed in only the following eight cases: by Crown Theatre against Kerala Film Exhibitors Federation; by Sai Wardha Power Limited against Coal India Limited; by East India Petroleum Private Limited against South Asia LPG Company Private Limited; by MCX Stock Exchange Limited against National Stock Exchange of India Limited; by Sateyendra Singh against Ghaziabad Development Authority; by Maharashtra State Power Generation Co Limited against Nair Coal Services Limited; by Food Corporation of India against Excel Crop Care Limited; and by G Krishna Murthy against Karnataka Film Chamber of Commerce. These cases are all currently pending before the NCLAT.
In February 2020, the Ministry of Corporate Affairs (MCA) released the draft Competition (Amendment) Bill, 2020 (the Bill) inviting public comments on the proposed amendments to the Act. This was pursuant to the recommendations of the Competition Law Review Committee constituted by the MCA to review and recommend amendments to the Act in line with international best practice and the changing economic reality. The Bill is currently pending before Parliament. Key amendments proposed in the Bill concerning cartels and leniency are as follows:
- Cartel facilitators to be penalised: under the existing framework, cartel agreements between competitors are presumed to have an AAEC in India. This presumption is proposed to be extended to include a cartel facilitator, irrespective of whether the facilitating entity is engaged in a similar trade.
- Scope of anticompetitive agreements to be widened: under the existing framework, specifically under Section 3 of the Act, the CCI can only investigate and penalise horizontal and vertical agreements between parties. The Bill expressly covers all kinds of agreements, including those that may not fall within a strict categorisation of horizontal or vertical agreements.
- 'Leniency plus' provision to be introduced: the Bill proposes to introduce a leniency plus policy, allowing an enterprise that files for leniency in relation to one cartel and also helps in exposing a separate cartel to receive a reduction in penalty for both the existing and the newly revealed cartels.
In April 2021, the CCI published a draft proposal for public comment, to revisit the detailed mechanism for dealing with confidentiality claims made by parties under Regulation 35 of the CCI (General) Regulations 2009. The proposal includes provision for setting up a 'confidentiality ring' to share confidential information between parties to a proceeding. The CCI may set up a confidentiality ring comprising the authorised representatives (internal and external) of the parties, who will be able to review the confidential or unredacted case records of other parties. The internal authorised representatives in the confidentiality ring shall be from commercially non-operational streams (i.e., other than sales, marketing or commercial teams). A similar confidentiality ring may also be constituted at the level of the DG, if so required, for the purposes of investigation. The CCI also recently conducted a stakeholder workshop to discuss the resulting comments and suggestions.
In addition to the Bill and draft proposal, there have been some notable decisions pertaining to cartel enforcement in India during the past year.
In December 2020, the Supreme Court upheld the findings of the NCLAT and the CCI, dismissing a case against cab aggregators Ola and Uber (collectively, the OPs) for engaging in various anticompetitive activities, including finding that the OPs' business model constituted a hub-and-spoke cartel (the cartel allegation). Allegations were made to the CCI that the OPs were using their respective pricing algorithms to fix prices between their drivers, thereby facilitating a cartel. It was contended that in the absence of the pricing algorithm, drivers would compete on prices that would, in turn, prevent them from commanding high prices (as calculated by the algorithm). The CCI dismissed the case, noting that for a hub-and-spoke cartel to exist there had to be a conspiracy to fix prices, which requires the existence of collusion. The accession of drivers to the prices algorithmically determined by the platform could not be considered collusion. The complainant appealed to the NCLAT, which, inter alia, noted that the cartel allegation was based upon the US class action suit in accordance with US antitrust laws and could not be imported directly into India, especially as the OPs' business model in India was not manifestly restricting price competition among cab drivers to the detriment of riders. It noted that the original action had been pursued in a foreign antitrust jurisdiction, which was implicitly different and could not be imported to operate within the ambit of the mechanism dealing with redressal of competition concerns under the Act. Accordingly, the NCLAT upheld the CCI order and dismissed the appeal. Aggrieved, the complainant challenged the NCLAT decision before the Supreme Court, which upheld the findings of the NCLAT and the CCI in relation to the cartel allegation.
In February 2021, the CCI closed the case against domestic airlines, including Jet Airways, Indigo, Spice Jet, Go Air and Air India, for alleged cartelisation. The CCI took suo motu cognisance of the matter on the basis of a letter from the Lok Sabha Secretariat (i.e., the Secretariat of the lower house of Parliament) to determine whether there was any evidence of cartelisation in the airline sector, and it referred the matter to the DG for investigation. However, the DG, after conducting a detailed investigation, did not find any evidence of cartelisation in the airline sector. The CCI upheld the findings of the DG and, inter alia, noted that the airlines used similar software and algorithms for pricing but there was significant manual intervention by revenue management personnel to determine the algorithm and prices for each airline on account of unforeseen events such as cyclones and sporting and cultural events. There was no evidence on which to establish concerted action between airlines at the software level.11
In February 2021, the CCI found the Federation of Publishers and Booksellers Association of India (FPBAI) guilty of cartelising through the establishment of a committee, namely the Good Offices Committee. The investigation was initiated by CCI on the basis of a complaint by a subscription agent. The CCI upheld the findings of the DG's investigation and noted that the FPBAI had engaged in anticompetitive conduct by capping the quantum of discounts offered by its members to buyers, and issuing advisories directing its members not to participate in certain procurement advertising thereby limiting and controlling the supply of books, journals, etc. in the market for the supply of books, e-resources and print journals in India. The CCI ordered the FPBAI and its officers to cease the cartel behaviour and desist from engaging in it in future. The CCI also imposed a penalty of 0.03 million rupees on the FPBAI and its officers.12
In March 2021, the CCI found home appliance dealers guilty of cartelising and bid rigging of tenders held by the local government body that administered the rural areas of Pune district in the state of Maharashtra. The tenders were for the distribution of sewing machines among 'backward classes', women and disabled persons in the rural areas of Pune district. The investigation was initiated by the CCI on the basis of a complaint from People's All India Anti-Corruption and Crime Prevention Society. The CCI upheld the DG's findings and noted that the dealers engaged in bid rigging by fixing inter se the prices to be quoted for the tenders. The CCI found smoking-gun evidence of collusion, including the use, without any objective justification, of the same Internet Protocol (IP) address to submit bids for the tenders, call data records, and payment of charges for the tenders from the same bank account. The CCI imposed a penalty of 1 million rupees on each of the home appliance dealers and 10,000 rupees on each of the guilty officers.13
In June 2021, the CCI received a complaint from the Confederation of Professional Baseball Softball Clubs (CPBSC) against the Amateur Baseball Federation of India (ABFI) for alleged abuse of dominance in preventing its affiliated state baseball associations from dealing with unrecognised bodies, preventing players from participating in such bodies' events and threatening to take action against players if they participated in these events. The CCI noted that while there was a prima facie case against ABFI for abuse of dominance in imposing unfair conditions and denying market access to other bodies or federations, its conduct also warranted detailed investigation in relation to limiting or controlling the provision of services of other bodies or federations under Section 3(3) of the Act. The CCI granted interim relief to CPBSC restraining ABFI from disallowing its players to participate in events organised by other bodies or federations, and directing ABFI not to threaten players who wanted to participate in such events.14 The matter is currently pending investigation by the DG.
In June 2021, the CCI found the film associations the Tamil Film Producers Council and the Telegu Film Chamber of Commerce guilty of engaging in anticompetitive practices. The investigation was initiated by the CCI on the basis of a complaint by an unnamed party. The CCI formed a prima facie opinion that the film associations and their officers inter alia called for a boycott not to release new films in the state of Tamil Nadu thereby:
- restricting the supply of new films, affecting exhibitors, producers and several film industry craft practitioners;
- restricting competition among Tamil film producers by controlling the release of Tamil films through the formation of a release regulation committee; and
- preventing film exhibitors from dealing with digital service providers of their choice.
The CCI upheld the findings of the DG and inter alia noted that:
- the Tamil Film Producers Council issued boycott calls to Tamil film producers and even encouraged other associations to join the call for strike action; and
- the Telegu film producers of the Telegu Film Chamber of Commerce took a collective decision to issue a call for strike action and stop releasing films in Tamil Nadu.
Further, the CCI also noted that trade associations play an important role in promoting the interests of the members and industry they serve; however, since members are typically competitors, they must be sensitive to the antitrust risks involved in participation in such associations. Accordingly, the CCI directed the associations and their officers to cease and desist from engaging in anticompetitive conduct but did not impose any monetary penalty in view of the nature, duration and level of participation in the strike.15
In October 2021, the CCI found eight axle bearing manufacturers guilty of cartelising and bid rigging in tenders held by Eastern Railway (ER), one of the 18 Indian Railways zones, between 2012 and 2014. The investigation was initiated by the CCI on the basis of a complaint by ER. The CCI found smoking-gun evidence of collusion, including emails, call detail records between axle bearing manufacturers, and admissions obtained in depositions from company representatives about deciding prices to be quoted and quantity allocation inter se while bidding for the ER tenders. Although the CCI held that the axle bearing manufacturers engaged in bid rigging, it decided against imposing penalties because of mitigating factors such as the 'cooperative and non-adversarial approach adopted by the axle bearing manufacturers in admitting their involvement and coming forward to seek leniency, small turnover of the axle bearing manufacturers, limited staff, lack of awareness of the law, and economic shock of covid-19 on the liquidity and credit needs of micro, small and medium-sized enterprises'.16
In October 2021, the CCI found engineering service providers guilty of cartelising and bid rigging in tenders held by GAIL (India) Limited (GAIL) for the restoration of drilling well sites. The investigation was initiated by the CCI on the basis of a complaint by GAIL. The CCI upheld the findings of the DG and noted that the engineering service providers had reached an understanding to coordinate their conduct in submitting their respective bids by sending their bids through a common IP address, from the same premises and in quick succession. Accordingly, the CCI directed the engineering service providers and their officers to cease and desist from engaging in anticompetitive conduct and, noting that imposing a behavioural correction on market participants would subserve the larger cause of market correction, it imposed a 'symbolic penalty' on the service providers.17
1 Farhad Sorabjee and Vaibhav Choukse are partners, Ela Bali is a principal associate and Aditi Khanna is an associate at JSA.
2 The NCLAT replaced the Competition Appellate Tribunal with effect from 26 May 2017.
3 Turnover is to be interpreted as relevant turnover as held by the Supreme Court in the case of Excel Crop Care Ltd v. Competition Commission of India, Civil Appeal No. 2480 of 2014.
4 Neeraj Malhotra v. Deutsche Post Bank Pvt Ltd, Case No. 05 of 2009.
5 In Re: Alleged anticompetitive conduct in the Beer Market in India, Suo Motu Case No. 06 of 2017.
6 In Re: Cartelisation in the supply of Bearings (Automotive and Industrial), Suo Motu Case No. 07(02) 2014.
7 In Re: Food Corporation of India v. Shivvalik Agro Poly Products Ltd & Ors, Ref Case No. 07 of 2018.
8 In Re: Consim Info Private Limited v. Google Inc USA and Ors, Cases Nos. 07 and 30 of 2012.
9 In Re: M/s Nuziveedu Seeds Limited and Ors v. Mahyco Monsanto Biotech (India) Limited and Ors, Case No. 107 of 2015.
10 AKMN Cylinders (P) Ltd & Anr v. Competition Commission of India and Anr, Competition (AT) No. 50 of 2018.
11 In Re: Alleged Cartelization in the Airlines Industry, Suo Motu Case No. 03 of 2015.
12 In Re: International Subscription Agency and Federation of Publishers' and Booksellers' Associations in India, Case No. 33 of 2019.
13 In Re: People's All India Anti-Corruption and Crime Prevention Society and Usha International Ltd & Ors, Case No. 90 of 2016.
14 In Re: Confederation of Professional Baseball Softball Clubs and Amateur Baseball Federation of India, Case No. 03 of 2021.
15 In Re: XYZ and Tamil Film Producers Council & Ors, Case No. 07 of 2018.
16 In Re: Eastern Railway v. Chandra Brothers & Ors, Ref Case No. 02 of 2018.
17 In Re: GAIL (India) Limited v. PMP Infratech Private Ltd & Rati Engineering, Case No. 41 of 2019.