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Competition | October – December 2023

Enforcement Matters

On 10 October 2023, the National Company Law Appellate Tribunal (“NCLAT”) set aside the CCI’s order which held sugar mills and their trade associations (collectively “Appellants”) guilty of rigging bids for the procurement of ethanol.

The NCLAT, while accepting the Appellants’ contentions and ultimately remanding the case back to the CCI for a fresh hearing inter-alia reasoned that the impugned CCI order did not adhere to principles of natural justice since (a) there was a delay of 13 months between the date of the conclusion of oral arguments and the pronouncement of the impugned order; (b) on account of this inordinate delay, the final order was signed and authenticated by only 3 members of the CCI even though 5 members heard the case on all dates; and (c) the CCI failed  to provide the  Appellants with an opportunity to present their oral arguments when considering a supplementary investigation report prepared by the Director General, investigation (“DG”).

On 10 November 2023 the Supreme Court upheld a division bench order of the Madras High Court (“MHC”) dated 19 October 2023. The MHC order rejected a writ petition filed by Agni Steels Private Limited (“Agni Steels”) challenging an investigation into the alleged collusive conduct of steel manufacturers. Notably this investigation was instituted by the CCI at the behest of information shared by the Central Bureau of Investigation (“CBI“) with the DG.

Agni Steels’ contentions, in its writ petition, related to the propriety of the inquiry initiated and the incidental summons issued to its officials because inter-alia the CCI did not pass an order explicitly setting out its prima facie opinion before the DG investigation commenced; and Agni Steels was not named in the original information shared by the CBI. In this regard, the MHC observed that the CCI deliberated the information shared by the CBI in a meeting and subsequently decided to register a suo moto case which consequently led to the initiation of the DG investigation. Accordingly, the MHC held that the initiation of the investigation was not in contravention of the provisions of the Competition Act. Further, the MHC while refusing to interfere with the investigation at this stage observed that the mere fact that the DG was investigating companies not mentioned in the original complaint did not necessarily imply that the investigation was being conducted in an arbitrary manner.

On 19 October 2023 a division bench of the Gauhati High Court (“GHC“) upheld a single bench decision of the GHC which dismissed a writ petition filed by Dalmia Cement (Bharat) Ltd (“Dalmia Cement“) that challenged the CCI’s investigation into bid rigging allegations raised by the Oil and Natural Gas Corporation Limited in relation to its tenders floated for the purchase of oil well cement.

Notably, Dalmia Cement’s primary contentions related to (a) the manner in which the investigation was being conducted and (b) that certain documents relied on by the CCI were not provided to Dalmia Cement in spite of repeated requests. Rejecting these contentions, the division bench inter-alia held that there was sufficient reason to justify the CCI’s investigation and that information sought in furtherance of the same could not be considered to be a fishing and roving inquiry. That being said, the GHC did however direct the CCI to provide Dalmia Cement with the complete set of documents that it relied upon to initiate the investigation subject to any confidentiality claims.

On 30 November 2023, the CCI dismissed a complaint filed against Survey of India, Department of Science and Technology (“Survey of India“) for allegedly imposing anti-competitive tender conditions. Consistent with past decisions, the CCI held that a procurer is within its rights to establish technical criteria, conditions, or provisions in the tender documentation based on its specific requirements. Further observing that, unless a procurer holds a position of dominance, the CCI will not be inclined to interfere in such matters.

On 30 November 2023, the CCI dismissed a complaint filed against Lupin and Dr. Reddy’s Laboratories inter-alia alleging that the distribution and stockist onboarding policies of these companies were anti-competitive in nature and also resulted in an abuse of dominance.  However, given the lack of substantiating evidence submitted by the informant in this case, the CCI rejected the allegations.

On 15 December 2023, the CCI dismissed a complaint filed by a former Air India pilot which inter-alia objected to various aspects of Air India’s integration with the Tata Group and Vistara (discussed in our July-September edition of Versed)  on the grounds that it causes an adverse impact to his career and service record. However, given the lack of substantiating evidence submitted by the informant in this case, the CCI concluded that the Informants’ claims did not establish any competition law violations.

On 20 September 2023, the CCI approved 2 secondary acquisitions of (a) a 72.49% stake in Quality Care India Limited (“Care Hospital“) by BCP Asia II TopCo IV Pte. Ltd (“BCP“), an entity controlled by the Blackstone group; and (b) a 24.16% stake in Care Hospitals by Centella Mauritius Holdings Limited (“Centella“), which is an affiliate of the TPG group. Both these transactions had the same seller viz. Touch Healthcare Private Limited (“Touch Healthcare“), which is an entity owned and controlled by TPG. After analysing (a) the vertical overlap between a Blackstone portfolio entity and Care Hospital; (b) the TPG affiliate to affiliate transfer of shares between Centella and Touch Healthcare; and (c) the overall impact on the control of Care Hospitals after the exit of certain controlling TPG co-investors from Touch Healthcare’s parent entity, the CCI concluded that the proposed transactions would not be likely to cause competition concerns in India.  

On 6 November 2023, the CCI approved a composite transaction relating to the rebalancing of shareholding amongst the two promoter groups of Indo Rama Synthetics (India) Limited (“IRSL”) (i.e. the O. P Lohia Group and the A. Lohia Group). Pursuant to this transaction Mr. Aloke Lohia (“Mr. A. Lohia”) an IRSL promoter from the A. Lohia Group would first acquire an additional 20.51% equity stake in IRSL; and thereafter gift the acquired shares to Ms. Urmila Lohia (“Ms. U Lohia“), an IRSL promoter from the O. P. Lohia Group (“Proposed Combination“). Pursuant to the Proposed Combination the A. Lohia Group’s shareholding in IRSL would decrease from 59.33% to ~39% whereas the O.P Lohia Group’s shareholding in IRSL would increase from 15.51% to ~ 36%. Notably, the CCI observed that even though there would be no change in the nature of (contracted) rights between the two promoter groups, there would be a change in the nature of control that could be exercised by the promoter groups due to the change in their respective shareholdings in IRSL. After analysing effect of this change in control and a vertical relationship between IRSL and an entity controlled by the O. P. Lohia Group, the CCI concluded that the Proposed Combination would not be likely to have an appreciable adverse effect on competition (“AAEC“) in India.

On 3 October 2023, the CCI approved the acquisition of a 1.74% minority stake in Lenskart Solutions Private Limited (“Lenskart“) by Kedaara Capital Fund III LLP (“Acquirer”) from Kedaara Capital Fund II LLP and Kedaara Norfolk Holdings Limited (collectively “Sellers“) (“Proposed Combination“). Notably the Acquirer and Sellers were both affiliates under the common control /management of the Kedaara group. At the time of granting its approval the CCI, analysed horizontal overlaps relating to the sale of eyewear products between Lenskart and a Kedaara group portfolio entity and concluded that it would not be able to cause an AAEC in India.

On 26 October 2023, the CCI approved a transaction between Renault S.A (“Renault”) and Nissan Motor Co. Limited (“Nissan”) aimed at rebalancing (a) their cross shareholding in each other at a global level and (b) their respective shareholdings in their Indian joint ventures i.e. Renault Nissan Automotive India Private Limited and Renault Nissan Technology & Business Center India Private Limited (collectively “JV Entities“). Notably, at the time of granting its approval the CCI, inter-alia noted that the rebalancing exercise would not lead to any change in market concentrations and further observed that the products and services provided by the JV Entities to Nissan and Renault in India were solely captive in nature and as such there could be no competition concerns arising out of such relationships.

On 10 October 2023, the CCI approved a transaction involving (a) a 20% investment by JICC-01 Limited partnership which is an entity ultimately owned and controlled by the Japan Investment Corporation (“JIC“) in Hitachi Astemo Ltd. (“HAL”); (b) Honda Motor Co. Ltd.’s (“HMCL“) acquisition of additional shares in HAL and (c) reorganisation of HMCL’s shareholding in HAL’s subsidiary (“Proposed Combination“). Notably, at the time of granting its approval the CCI analysed the impact of the vertical relationship between HAL group entities and HMCL which stemmed from an existing supply arrangement between the two entities. In this regard the CCI observed that, these pre-existing vertical linkages had been operational before the Proposed Combination and would have persisted even if the Proposed Combination had not occurred and as such there would be no change to the market dynamics in India. 

On 3 October 2023, the CCI approved the acquisition of a majority stake of up to 65.8% in Indira IVF Hospital Private Limited (“Indira IVF“) by Zonnebaars Netherlands B.V. (“Zonnebaars“), an entity owned by the BPEA Fund VIII and managed by the EQT group (“Proposed Combination“). At the time of granting it’s approval, the CCI noted that Proposed Combination was slated to either take place through a primary structure whereby Zonebaars would ultimately hold a 60% stake in Indira IVF or a fall-back structure pursuant to which Zonebaars would ultimately acquire a 65.8% stake in Indira IVF. Further the CCI analysed (a) vertical overlaps relating to the manufacture and use of certain pharmaceutical products; and (b) horizontal overlaps relating medical specialities and procedures, being offered by Indira IVF and an EQT portfolio entities, eventually concluding that these overlaps would not be likely to cause AAEC in India.

On 14 November 2023, the CCI approved the acquisition of a minority stake in Shadowfax Technologies Private Limited (“Shadowfax”) by Mirae Asset Late Stage Opportunity Fund (“Mirae Late Stage”). Further, contemporaneously with the acquisition of shares by Mirae Late Stage, certain Mirae group entities that were existing shareholders in Shadowfax would also acquire additional rights including the right to collectively appoint one director on the board of Shadowfax (“Proposed Combination”). At the time of approving the Proposed Combination, the CCI analysed vertical overlaps between Shadowfax and portfolio entities of the Mirae group relating to logistics services on the one hand, and online sales and geospatial data and services on the other, eventually concluding that these overlaps would not be likely to cause an AAEC in India.

On 6 November 2023, the CCI approved two inter-connected transactions pursuant to which the Bharti Group would acquire sole control over Bharti AXA Life Insurance (“BALIC”) and Bharti Management Services Limited (“BMSL”) (“Proposed Combination“). Pursuant to this transaction, AXA India Holdings and its subsidiary (“AXA“) would sell their stake of (a) 49% in BALIC to Bharti Life Ventures Private Limited and (b) 48.54% in BMSL to Bharti Enterprises Limited. Notably, at the time of granting its approval the CCI analysed a vertical overlap relating to the provision and distribution of life insurance products and services between BALIC and a Bharti group portfolio entity and concluded that it would not be likely to cause an AAEC in India.

On 16 October 2023, the CCI published the draft CCI (Lesser Penalty) Regulations, 2023 (“Draft Lesser Penalty Regulations”) for public comments, which is intended to replace the existing regulations and inter-alia provide a mechanism to implement the changes to the Indian leniency regime as contemplated in the Competition (Amendment) Act, 2023 (“Amendment

Act“). Brief overview of some of the key provisions of the Draft Lesser Penalty Regulations are set out below:

Leniency Plus: In furtherance of the leniency plus mechanism introduced through the Amendment Act, the Draft Lesser Penalty Regulations provide that if a cartel participant seeks leniency for its involvement in a known cartel and also provides information regarding another undisclosed cartel to the CCI then, (a) it stands to receive an additional reduction (i.e., in addition to the lesser penalty based on its priority status) of up to 30% on the penalty for the known cartel and (ii) it will be eligible for up to or equal to 100% penalty reduction in the newly disclosed cartel.

Timelines for making and withdrawing leniency applications: Applications to avail the benefit of the leniency and leniency plus regime, can be made at any time, prior to the receipt of the DG report pertaining to the known cartel. Further, leniency and leniency plus applications can also be withdrawn at any time, prior to the receipt of the DG report pertaining to the known cartel. However, it may be noted that irrespective of the withdrawal of an application, the DG and/or the CCI will continue to have the right to utilize any information, evidence, or document submitted by the applicant, with the exception of admissions of guilt made in the application.

Grant and forfeiture of leniency benefits: In order to gain the benefit of the leniency plus regime, the applicant is inter-alia required to (a) make vital, full and true disclosures about information/ evidence, which is sufficient for the CCI to establish the existence of the newly disclosed cartel; (b) provide details of the investigation with respect to the known cartel where in it has obtained a priority status; and (c) justify how the newly disclosed cartel is a new cartel arrangement (separate from the known cartel). However, applicants can stand to lose their leniency and leniency plus benefits in case of (a) non-compliance with the conditions upon which leniency/leniency plus was granted; (b) submission of false evidence or wilful omission of material information; and (c) Disclosures that do not meet the criteria of ‘vital disclosures’.

Treatment of cartel facilitators: The Amendment Act has broadened the scope of cartel provisions to include cartel facilitators, as such the benefits of the Draft Lesser Penalty Regulations will also extend to such cartel facilitators even if they are not involved in identical or similar trades but participate or intend to participate in furtherance of the cartel.

Treatment of confidential information: The CCI is permitted to disclose details of the evidence submitted by the leniency/leniency plus applicant, after it has received the DG investigation report. However, such disclosures are to be in accordance with the provisions of the CCI General Regulations relating to confidentiality and confidentiality rings.

On 22 December 2023, the CCI published the draft CCI (Determination of Turnover or Income) Regulations, 2023 (“Draft Turnover Regulations”) for public consultation. Pursuant to these regulations, the CCI intends to provide clarity on the ‘turnover’ (of an erring party) that would be considered for the purpose of calculating penalties under the Competition Act. As such, these Draft Penalty Regulations set out (i) the method for computation of turnover of an enterprise and an individual; (ii) the categories of income that can be excluded for the calculation of turnover/income; and (iii) documents to be relied on for the purposes of such calculations.

On 12 January 2024, the CCI amended the CCI General Regulations, 2009 with the intension of streamlining the process of monitoring and tracking the interlocutory applications received by it on various grounds such as adjournments, seeking extension, cross examination, etc. As such, these amendments provide for (a) the manner in which such interlocutory applications should be registered and numbered; and (b) the fees payable at the time of filing an interlocutory application which ranges from INR 500 to INR 5000 depending on the nature of entity making such application.

For more information contact:

Zenia Cassinath
Practice Head – Competition

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.

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