Competition | April – June 2024
Enforcement Matters
NCLAT and Delhi High Court decide the quantum of penalty imposed on Godrej and Geep for their participation in a bilateral ancillary battery cartel
Godrej and Boyce Manufacturing Co (“Godrej”) and its officials had filed an appeal before the National Company Law Appellate Tribunal (“NCLAT”) challenging the CCI’s order dated 15 January 2019 which imposed a penalty of INR 8.50 million (~USD 100,000) on Godrej and a penalty of INR 1.50 million (~USD 10,000) against its officials for participating in a bilateral ancillary cartel for the sale of dry cell batteries in India. The NCLAT, without interfering with the CCI’s findings on merits, reduced the penalty imposed from 4% to 2% of Godrej’s turnover for each year of continuance of the cartel activity, while maintaining the penalty imposed on its Godrej’s office bearers.
The NCLAT, while reducing the penalty, made note of mitigating factors such as (a) Godrej’s market size, its presence and low bargaining power; (b) losses suffered by Godrej and its subsequent exit from the market for dry cell batteries; (c) the fact that Godrej approached the Director General of Anti-Dumping and Allied Duties to complain about the possibility of cartelisation in the dry cell batteries’ market; and (d) the fact that Godrej sold its products at rates that were lower than those involved in the primary cartel. Further the NCLAT also compared the present case with an earlier NCLAT decision arising out of the similar facts qua Geep Industries Private Limited (“Geep”) where the penalty was also reduced. Notably, the NCLAT in this decision dated 5 April 2024 did not waive the interest payable on the penalty amount, holding that a pendency in appeal and continuation of stay would not be a ground for such waiver.
That said, on, 26 April 2024, the Delhi High Court, while inter alia deciding on whether Geep would be liable to pay interest on the penalty imposed by the CCI, either from the (a) date of the CCI’s penalty order; or (b) the date of the CCI’s demand notice, held that interest on CCI penalties would only be calculated from the date the CCI officially issues a demand notice to deposit a penalty amount, which was presently made only after the NCLAT passed its order in 2023.
The NCLAT, vide two orders dated 31 May 2024 and 2 July 2024, upheld the CCI’s findings and penalty (based on total turnover) against Delicacy Continental Private Limited (“Delicacy“) and M/s Toyfort (“Toyfort” and collectively “Appellants“). Pursuant to these orders the two entities were found to have violated the cartel provisions of the Competition Act, by providing cover bids during tenders floated by the Department of Agriculture, Government of Uttar Pradesh for soil sampling during 2017 and 2018 and consequently fined Delicacy and Toyfort INR 3.30 million (~USD 30,000) and INR 1.20 million (~USD 10,000) respectively at the rate of 5% of their average turnover for the financial years 2017-18, 2018-19 and 2019-20.
While dismissing the Appellants’ pleas that their penalty should not be based on their total turnover, but rather, their relevant turnover (i.e. turnover only qua soil testing), the NCLAT noted that the Appellants being first time bidders and not in the soil testing business, would have a nil ‘relevant turnover’. Consequently, holding that the CCI had correctly imposed penalties on the basis of total turnover. That said, the NCLAT also noted that the Appellants only played a supporting role in the cartel by providing cover bids and accordingly reduced their penalties from 5% to 3% of their average annual turnover(s) for the financial years 2017-18, 2018-19 and 2019-20.
CCI dismisses abuse of dominance complaint against Google
On 24 June 2024, the CCI dismissed a complaint against Google India Private Limited (“Google“) which inter alia alleged that Google was affording Truecaller preferential treatment by allowing it access to android users’ contact book details, (a) in violation of its own policies and (b) to the exclusion of other competition applications, since Truecaller had availed Google’s ad and cloud computing services.
While acknowledging Google’s dominant position in the market, the CCI at the time of dismissing the allegations relating to Google preferencing Truecaller, took note of the arguments advanced by Google viz. (a) the informant in its complaint had relied on the specifications and functions of a version of the Truecaller app that was not available on Google’s play store but rather available through third party downloads; (b) the presence of competing caller ID and spam protection apps on the play store that provide the same services and functions as Truecaller negates the allegation of preferential treatment; and (c) any access to a user’s contacts has been granted after obtaining such user’s consent; and accordingly dismissed the allegations.
Further, with respect to the commercial relationships between Google and Truecaller, the CCI emphasized that a mere commercial relationship between two entities ipso facto can’t be assumed to grant any favourable or preferential treatment outside of what those commercial arrangements envisage.
CCI dismisses complaint against Covai Properties, Covai Senior Citizen Services and Ozone Urbana
On 5 April 2024, the CCI dismissed a complaint against Covai Property Centre (India) Private Limited, Covai Senior Citizen Services Pvt. Ltd. (“Covai Services“) and Ozone Urbana Infra Developers Private Limited (collectively as “Opposite Parties“) which alleged that by (a) making property purchasers mandatorily accept the catering and housekeeping services of Covai Services as a condition of sale; (b) imposing unilateral changes in allotment of housekeeping staff; and (c) increasing the monthly maintenance charges, the Opposite Parties had abused their dominance and entered into anticompetitive vertical agreements.
On account of the presence of other real estate developers, offering similar services (i.e., development and sale of apartments for senior citizens), the CCI observed that the Opposite Parties were not dominant and consequently their conduct could not be considered as abusing their dominant position. However, with respect to the allegations of anti-competitive vertical agreements, the CCI noted that the impugned agreement was between an enterprise and an end consumer, and as such was not covered within the ambit of provisions of the Competition Act that dealt with anticompetitive vertical agreements.
CCI dismisses abuse of dominance allegations against WordPress
On 29 April 2024, the CCI dismissed a complaint against Automattic Inc., the parent entity of WordPress.org (“WordPress“), which alleged that WordPress had abused its dominance by delisting Mr. Tiwari (“Informant“), an app developer’s plugins from the plugin’s directory and allegedly removing its reviews in an attempt to self-preference its own WordPress plugins.
While acknowledging that WordPress was the market leader in the markets for content management software and WordPress-specific plugin directories, the CCI held that the actions taken against the Informant were justified since these actions were taken pursuant to Informant not conforming to the WordPress’ prescribed standards as provided under its guidelines. Further noting that these guidelines had not been applied in a discriminatory or unfair manner since 35 developers, including the Informant, had been permanently banned from WordPress for repeated violations of the guidelines.
Additionally, with regard to the allegations of self-preferencing, the CCI noted that there was a substantial distinction between the scope and depths of features of the WordPress’ and Informant’s plugins and as such they would not be in direct competition with each other, thus concluding that the self-preferencing allegations were unfounded.
Madras High Court quashes CCI’s investigation against MRF due to irregularities in procedure
On 30 April 2024, the Madras High Court (“MHC“) quashed an order and a notice issued by the CCI that had the effect of including MRF Ltd. (“MRF“) as a party to an ongoing investigation against certain tyre companies on account of procedural infirmities.
Notably that MHC, while acknowledging that the CCI had the authority to include additional parties to an investigation, held that prior to changing the status of MRF from ‘third party’ to an investigation from whom industry information was being sought, to an ‘opposite party’ in the said investigation, the CCI ought to have given MRF prior notice to defend itself. Further emphasizing that the status of a party in a proceeding determines the extent of the application of the statutory provisions and connected regulations; their consequences; and available protections.
Karnataka High Court directs CCI to revisit its decision on Swiggy’s confidential data sharing
On 26 June 2024, the Karnataka High Court (“KHC“) directed the CCI to revisit its decision that had the effect of giving National Restaurant Association of India (“NRAI“) access to Swiggy’s confidential information, through a confidentiality ring, after allowing both parties to be heard. Notably, this direction came pursuant to a writ petition that was filed, before KHC, by Swiggy against the CCI’s order that included NRAI in the confidentiality ring even though the said order was unreasoned and passed without affording Swiggy an opportunity of being heard.
Merger Control
CCI approves the acquisition of an additional stake in Religare Enterprises by its existing shareholders
On 23 January 2024, the CCI approved the acquisition by Puran Associates Private Limited, M.B. Finmart Private Limited, VIC Enterprises Private Limited and Milky Investment and Trading Company (collectively, the “Acquirers”) in Religare Enterprises Limited (“Religare“), pursuant to which, the collective shareholding of the Acquirers would increase from 21.25% to (up to) 26% through a series of open market purchases. At the time of assessing the horizontal and vertical overlaps between (a) the portfolio of the Burman family, since they controlled the Acquirers; and (b) Religare, the CCI concluded that they would not cause an appreciable adverse effect to competition (“AAEC“), and also observed that while assessing the effect of the proposed combination, the CCI is neither concerned about the criminal matters involving the parties to the transaction nor any submissions made to other regulators if no prayer is made to the CCI under such submissions.
CCI approved the acquisition of Tianish Laboratories by the Matrix Pharma
On 13 February 2024, the CCI approved the acquisition of 100% of the equity shares of Tianish Laboratories Private Limited (“Target“), an entity into which Mylan India would demerge its Active Pharmaceutical Ingredients (“APIs”) business, by Matrix Pharma Private Limited (“Matrix“) and a Kotak alternate investment fund (“Investor“).
At the time of granting its approval the CCI inter alia assessed overlaps between the Target’s API business and, Biocon a portfolio company of the investment manager of the Investor. Notably at the time of undertaking its overlap analysis, the CCI while considering Biocon’s presence in the Indian markets noted that the Target’s market presence could be considered nil since the APIs produced by the Target were for export and as such were not utilised in the production of formulations that are sold in India, accordingly concluding that such potential overlaps were not likely to cause an AAEC.
CCI approves JSW’s acquisition of up to 38% in MG Motor India
On 23 January 2024, the CCI approved the acquisition of up to 38% in MG Motor India (“MG“) by JSW Ventures (“JSW“). Further, in its application to the CCI, JSW had also intimated the CCI of its future right to acquire an additional stake in MG, pursuant to which JSW’s effective shareholding could increase up to 46%. Notably, the CCI analyzed the overlaps between the JSW group and MG, concluding that the same would not cause an AAEC. Consequently, the CCI approved JSW’s acquisition of up to 38% in MG, while noting that the subsequent acquisition of additional shares in MG by JSW up to 46% was dependent upon occurrence of certain futuristic events, and as such should be dealt with by the CCI at such time in the future.
Developments in the Legal Framework
Amendments to the Competition Commission of India (General) Regulations, 2009
On 10 May 2024, certain changes to the Competition Commission of India (General) Regulations 2009 (“General Regulations“) relating to access to confidential information, were notified. These amendments, broadly provide (a) that parties must self-certify their confidentiality claims through affidavits; (b) timelines and process to be followed by parties to a confidentiality ring seeking to access confidential information; and (c) the timelines, processes and costs related to inspections of case records and obtaining certified copies, documents reviewed during an inspection of the CCI’s case record.
Further, CCI also released draft amendments to the General Regulations on 6 June 2024 introducing certain changes inter alia relating to the (i) translation of documents; (ii) contents and procedure for filing of the information or reference and inquiry; (iii) mode of service of notice; and (iv) implementation and monitoring of orders passed by the CCI.
Zenia Cassinath
Practice Head – Competition
zenia.cassinath@veritaslegal.in
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