Competition | July – September 2024

Enforcement Matters

Delhi High Court sets aside the prima facie order passed by the CCI and terminated the proceedings against JCB India and another

On 14 August 2024, the Delhi High Court (“DHC“) quashed the prima facie order passed by the CCI directing an investigation into the conduct of JCB India Limited (“JCB India“) that was initiated on account of information filed by Bull Machines Private Limited (“Bull Machines“). It also terminated the proceeding that arose from an intellectual property dispute between JCB India and Bull Machines.

It may be noted that these cases were instituted by the two companies against each other because of certain inter-se disputes that were eventually settled through mediation. Consequently, after the settlement was reached the Supreme Court passed an order disposing all the pending cases relating to this dispute and directed the parties to approach the DHC in relation to the challenge to CCI investigation.

The DHC, while noting the CCI’s objections against the closure of the investigation, since competition parameters were not considered while reaching a settlement, observed that the CCI must honour the outcome of mediation and settlements between the parties as mediation is not a preliminary step but a conclusive process that provides binding and enforceable outcomes.

Guwahati High Court quashes the orders passed by the CCI against Star Cement and others

On 30 August 2024, the Guwahati High Court (“GHC“) set aside an order passed by the CCI directing the Director General (“DG“) to investigate Star Cement Limited (“Star“) along with two other cement companies for allegedly cartelising; and the subsequent penalty of INR 500,000 imposed on Star for not following the directions of the DG.

While accepting the contentions of Star that the CCI failed to establish a prima facie case against the cement companies prior to directing the DG to investigate the matter, the GHC observed that the ‘test’ (to be followed by the CCI) is to take information received at its face value and thereafter examine whether there has been any prima facie violation of the provisions of the Competition Act dealing with anticompetitive agreements and abuse of dominance.

Further, on applying this test and upon review of the evidence, it was inter alia noted that there was no uniform raise in price by the cement companies and the end prices also differed from company to company and as such it could not be concluded that the cement companies had indulged in cartelisation. Consequently, the GHC dismissed the orders passed by the CCI.

CCI dismisses complaint against Saint Gobain India and Campagnie De Saint-Gobain

On 22 July 2024, the CCI dismissed complaint against Saint Gobain India Pvt. Ltd. and its French parent company Campagnie De Saint-Gobain (collectively “Saint Gobain“) alleging that there was an abuse of dominance and that Saint Gobain had entered into anti-competitive agreements with respect to glass distribution.

At the time of dismissing the matter, with respect to allegations pertaining to Saint Gobain’s exclusivity arrangements, the CCI observed that (a) the exclusivity was limited to only certain types of glass; and (b) there were objective commercial justifications for imposing exclusivity such as technical training and guidance provided by Saint Gobain to improve efficiency. Thus, making the said exclusivity arrangement mutually beneficial to both parties and accordingly not anti-competitive.

Further in relation to allegations concerning the co-branding of products, it was observed that co-branding in and of itself did not raise competition law issues. Moreover, on the allegations relating to resale price maintenance and refusal to deal, it was observed that such allegations appeared to be originating from oral directions without any other corroborating evidence and as such no case could be made out in this regard.

Lastly, with respect to the allegations pertaining to abuse of dominance, the CCI while acknowledging Saint Gobain’s market position held that merely holding market power did not per se amount to abuse of dominance.

CCI dismisses abuse of dominance allegations against National Internet Exchange of India

On 20 August 2024, the CCI dismissed a complaint made by Extreme Infocom Pvt. Ltd. (“Infocom”) against National Internet Exchange of India (“NIXI”) that alleged that NIXI had abused its dominance by indulging in predatory pricing.

This dismissal was based on the reasoning that Infocom was able to increase its market presence even though it entered the market after NIXI, which in turn showed that the market was contestable and that NIXI didn’t seem to hold any particular advantage over the competitors.

Separately, while addressing certain contentions made in relation to the jurisdiction of the CCI, since the subject matter also fell within the jurisdiction of a sectoral regulator (i.e. TRAI), the CCI noted that in every case of overlapping jurisdiction with a sectoral regulator, the CCI can’t withhold taking action as this would render the object and purpose of the Competition Act nugatory.

CCI dismisses complaint against India Bulls Housing Finance and its officials

On 22 July 2024, the CCI, while dismissing claims against India Bulls Housing Finance Limited (“IBHFL“) that alleged the breach of provisions of the Competition Act pertaining to anti-competitive agreements and abuse of dominance, observed that IBHFL could not be considered to be a dominant entity inter alia because of the presence of a large number of banks and non-banking financial companies in the market. Further, in this regard, the CCI reiterated its position that an agreement with an end-consumer is not envisaged as an anti-competitive agreement under the Competition Act. 

CCI dismisses complaint against Sugar Mills Associations and others

On 22 July 2024, the CCI dismissed bid rigging and cartelization allegations made against the Indian Sugar Mills Associations and others. Notably, in 2023 the NCLAT had set aside the earlier findings and penalties imposed by the CCI on account of natural justice infringements and remanded the matter back to the CCI.

At the time of dismissing the matter the CCI observed that in order to establish such violations of horizontal collusion, parallel pricing must be supplemented with “plus factors” which establish that the alleged conduct was a conscious action and not the result of independent business decisions.

Further while dealing with the averments that the joint tendering process was itself anticompetitive, the CCI observed that if such tender was set up purely on account of commercial and operational considerations and to meet the directives of the government in a cost effective manner it could not be construed as anti-competitive.

Merger Control

CCI imposes penalty on India Business Excellence Fund-IV for gun-jumping

On 16 August 2024, the CCI imposed a penalty of INR 1 million on India Business Excellence Fund-IV (“IBEF“) for gun jumping since it wrongly notified and consummated its acquisition of a stake in VVDN Technologies Private Limited under the Green Channel route.

During its review, the CCI took note of Printed Circuit Board assembly services provided by the target to an IBEF portfolio company on an ad hoc basis.

Concluding that this arrangement amounted to a vertical/ complimentary linkage, and thus making the transaction ineligible for the Green Channel route, the CCI inter-alia observed that merely because a service was being provided commercially only to one entity and not to others or that it was not the primary business activity, did not imply that a vertical/complementary relationship did not or could not exist.

Developments in the Legal Framework

Updated Merger Control Regime has come into effect

The Indian merger regime has undergone significant changes, with effect from 10 September 2024.

These changes have been effectuated through the contemporaneous notification of various sections of the Competition (Amendment) Act 2023 that dealt with changes to the merger control provisions and

1. The Competition Commission of India (Combination) Regulations, 2024 (“Combination Regulations”) which governs the procedural aspects of how transactions are to be notified to the CCI and replaces the erstwhile Combination Regulations of 2011;
   
2. The Competition (Criteria for Exemption of Combinations) Rules, 2024 (“Exemption Rules”) which provides for various exemptions to transactions based on their structure;
   
3. The Competition (Criteria of Combinations) Rules, 2024 (“Green Channel Rules”) which provides for the types of transactions that are eligible for fast tracked approvals under the green channel route; and
   
4. Competition (Minimum Value of Assets or Turnover) Rules, 2024 which exempts transactions from needing to be notified to the CCI if the target’s assets/turnover is below certain monetary thresholds (“De-minimis/Small Target Rules”.

To know more about these amendments; please read our detailed article available at here.

Updated General Regulations has come into effect

On 17 September 2024, the CCI notified the Competition Commission of India (General) Regulations, 2024 (“General Regulations, 2024“) replacing the erstwhile 2009 regulations.

The General Regulations 2024, not only harmonises the recent changes to the Indian competition regime with updated procedure but also introduces changes to streamline existing process, some of which include

1. introduction of the distinction between interlocutory and miscellaneous applications for applications filed during the pendency of a suit and those filed after the passing of the CCI’s final order;
   
2. simplification of the procedure to seek extensions of time and adjournments;
   
3. timelines within which matters are to be concluded etc.

For more information contact:

Zenia Cassinath
Practice Head – Competition
zenia.cassinath@veritaslegal.in

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VERSED by Veritas Legal intends to provide the readers with an overview of some of the noteworthy legal developments for education / information purposes only. This newsletter should not be construed or relied on as legal advice, or to create a lawyer-client relationship. Readers should reach out to us for any specific factual or legal questions or clarifications; and are encouraged to seek legal advice before acting on any information provided herein. The enclosed information is available in the public domain and shall not be construed as dissemination of any confidential information.