Important Case Laws in Competition Law

Automobiles Case

Hopefully, you remember the case ofthe Shamsher Kataria automobiles case. To quickly recap, it was alleged in this case that the car manufacturers were indulging in anti competitive practices regarding the supply of spare parts and technological know how that are required for routine maintenance and repairing of the cars that they sold. The practices of a number of famous car companies in India were compared to their counterparts abroad, and it was found that on a relative to market price basis, the companies in India are charging a much higher price for their spare parts, diagnostic tools, software, etc. Moreover, these materials and software were not available in the open market either, forcing the people to move away from independent repair men and to go for the authorized dealers even though they charge exorbitant prices and service fees.

In this case, the CCI took a revolutionary new approach in determining what the relevant market would be. The car companies had argued that the car spare parts and diagnostic tools etc. are part of the relevant market for cars, as one is severely dependent upon the other. In that case, in the market for cars in India, there is no lack of competition, as a number of companies are competing hard among themselves. However, the CCI did not agree with this view.

As per the CCI’s judgment, there were two different markets in this case – one primary market for the cars, and an aftermarket for the car spare parts, diagnostic tools, etc. These two might be dependent upon each other, but they are separate markets all the same. Under this scenario, the CCI contended that once a customer buys a car, he or she becomes locked in to the aftermarket of that company, where the company is the sole supplied. For example, if you buy a car from BMW, you need to access further tools and technology from BMW itself, and can not buy those from Honda. Thus, each company was in a dominant, even monopolistic position, in terms of the aftermarket.

This analysis of relevant market has been hailed as an extremely progressive view by a number of experts. Even though an argument was brought forward by the parties that their actions were protected because they were working to prevent the misuse of their intellectual property rights, such an argument was rejected by the CCI because these measures were unreasonable, considering what would practically be needed to protect their IPR. It was contended that competition can not be barred from the market in an unreasonable manner to ensure IPR protection by the parties

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DLMW Cartelization Case

In terms of cartels and bid rigging, the Diesel Loco Modernization Works case or DLMW case is extremely important. In this case, a tender was floated by the DLMW for procuring feed valves for diesel locomotives. For these valves, three organizations who are competitors in the market, provided identical bids, when none of them ideally should have known what the other party was quoting. It was also found that this rate of bids was 33% higher than the price of the product last time. The DG’s investigation suggested that the parties were taking part in bid rigging after a collusion among themselves, as they had quoted identical bids even after being competitors in the market.

The parties claimed that:

  • They were each separately eligible to enter their bids, and the issue of cartelization was thus not relevant;
  • After one bid was chosen as successful, it can be said that the DLMW chose the party based on merits and after considering other factors, and not just based on price;
  • There was no agreement that could be proved between the parties, and all of them had acted independently;
  • The bids are submitted electronically, and the parties had no way of knowing each other’s bids;
  • In the context of the bidding process, the scenario is highly competitive, and as a result, each party was trying to outbid the other. This, according to the parties, would be proof of a highly competitive market, and not anti competitive agreements;

The CCI, in its analysis, first pointed light on the factor that agreement, as provided under the Competition Act, 2002, did not only mean overt agreements, but also covert ones. Merely an understanding to act in concert, even without any formal or written agreement, would be considered as an Agreement under the Act. Even though there was no direct evidence of an agreement, the possibilities suggested that there would be one. The CCI found that even though the three manufacturers were located in different areas and that there would be different costs of transport and production, it was implausible for them to quote almost identical prices. Additionally, two of the bids contained minor technical defaults, which the CCI suggested were intentional, because the aim of the collusion was to let the third party succeed in this case.

In this case, the CCI decided that there was an anti competitive agreement among the parties, and as a result of the same, they took part in bid rigging. Thus, a penalty was placed on all three of the parties, at the rage of 2% average turnover of the company

Coal India Case

An extremely important case regarding the abuse of dominance is the coal India case, Bijay Poddar vs. Coal India Ltd. In this case, a complaint was lodged against Coal India, that they were abusing their dominant position with regard to their online bidding process. Under this bidding website, people could bid for buying non coking coal from the website, but there were some terms and conditions which were accused of being arbitrary. For example, if a person, after placing a bid which was successful, could not pay the same, a penalty was applied on the bidder. However, if Coal India itself failed to supply the coal as per the bid, there was no provision for fines. There were many such provisions which the complainants argued were arbitrary, and Coal India had implemented them only by the virtue of being a dominant player in the market. The terms were of such nature that there was a ‘take it or leave it’ burden on the customers.

The CCI, in its analysis, delved deep into the issue. It found that Coal India, due to being supported by the government, enjoyed undisputed dominance in the market, and were not subject to the concerned market powers that the other competitors were facing.

Moreover, even though Coal India did not face any penalty for not being able to supply the coal, it still earned an incentive if it supplied coal above a certain amount. Moreover, it has been getting increasing amount of profits, even though supply of coal overall had not increased. Considering that most of the customers of Coal India were power plants, such a profit motive, as per the consideration by the CCI, could ultimately be harmful towards the power industry and consumers of the nation.

After such an analysis, the CCI had found that certain clauses provided by Coal India in its take it or leave it agreement, were in contravention of the Competition Act, 2002. They were applying unfair, discriminatory, and arbitrary conditions on the consumers, and it was directed to change the same.

This case is additionally important because in this case, as per CCI’s approach, it was seen that the burden of proof would be on the party that is enjoying the dominant position, that its terms and conditions are reasonable and not discriminatory. Moreover, such ‘take it or leave it’ conditions were also discouraged by the CCI, as bilateral discussions among parties are extremely important in these cases

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BCCI Case

BCCI, a society registered under Tamil Nadu Societies Registration Act, 1975, is concerned with promoting and conducting cricket in India. In particular, it conducts the cricket tournament IPL or Indian Premier League. It was alleged by Mr. Surinder Singh Barmi that the practices of BCCI in terms of franchise rights, media rights, sponsorship rights, etc. are unfair and discriminatory. However, the key question in this case was as BCCI was registered as a society, whether it would be considered as an enterprise under the Act.

However, it was considered by the CCI that through conducting of the IPL, BCCI had developed into a global brand which was valued between 3 – 4 billion USD. At such a juncture, even though it was registered as a not for profit organization, it can not be said out of the ambit of the Competition Act, 2002, as it was still an enterprise. Moreover, the BCCI was using its regulatory powers to influence its commercial agreements, which was a violation of section 4 of the Act. As a result, the CCI provided an order to not use similar clauses in future agreements, which were potentially preventing other competitors from entering the market. Additionally, the BCCI was also instructed to not use its regulatory powers in influencing its commercial activities.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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