Clear skies emerge as competition authorities across jurisdictions become more sure-footed in dealing with the ever growing (new) digital economy.

The Competition Commission of India’s (CCI) confidence in dealing with apps and technologies is reflected in its relevant market[1] determination in cases concerning instant messaging apps.

On 1 June, 2017, the CCI passed an order[2] under Section 26(2) of the Competition Act, 2002 (Competition Act), holding that the case did not warrant an inquiry into alleged abuse of dominant position by WhatsApp Inc (WhatsApp).

Continue Reading Where Do They Belong? Relevant Market Determination for Instant Communication Apps

On 14 June 2017, the Competition Commission of India (CCI) imposed a penalty of INR 87 crore (approx. USD 13.54 million) on Hyundai Motor India Limited (HMIL), which is engaged in the sale and distribution of Hyundai cars and its parts in India. This was for engaging in the practices of resale price maintenance (RPM) and tying in, in contravention of the provisions of Sections 3(4)(e) and 3(4)(a) read with Section 3(1) of the Competition Act, 2002 (Act).


The CCI combined information filed against HMIL by authorised HMIL dealers, Fx Enterprise Solutions India Private Limited and St. Anthony’s Cars Private Limited (Informants), alleging a contravention of Section 3 of the Act on the grounds that:

  1. HMIL had restricted the informants from acting as dealers of competing brands by virtue of clause 5 of their dealership agreement, which required prior consent of HMIL for investing in any new or existing business which was unrelated to the Hyundai dealership.
  2. HMIL had fixed the maximum retail price of the cars (which included the pre-fixed margin of the dealers) and the maximum discount which could be offered by the dealers through its Discount Control Mechanism (DCM).
  3. HMIL tied the purchase of popular cars to the sale of high-end unwanted cars and also, designated certain companies as the preferred suppliers of complementary goods.

The CCI found a prima facie case against HMIL and directed the Director General (DG) to specifically investigate the alleged contravention of Section 3 of the Act. On investigation, the DG concluded that HMIL had contravened the provisions of Section 3(4) of the Act on account of the above, except in respect of the allegation of tying in the sale of high end cars with fast moving cars. In addition, the DG also concluded that HMIL, being a dominant entity in the aftermarket for services of its cars, had violated Section 4 (relating to abuse of a dominant position) of the Act.

In respect to the contravention of the provisions of Section 3(4) of the Act, the CCI’s findings were as follows:

  1. Exclusive Supply Agreement and Refusal to Deal: The CCI observed that the requirement to get prior consent from HMIL for dealing with competing brands was not a prohibition. Hence, it did not amount to an exclusive supply agreement under Section 3(4)(b) and/or refusal to deal under Section 3(4)(d) of the Act.
  2. Resale Price Maintenance: The CCI held that fixing of a maximum retail price and maximum permissible discount which could be given by dealers, effectively amounts to setting a minimum resale price, thereby resulting in RPM. Hence, HMIL’s arrangement of setting a minimum resale price and monitoring the same through a penalty mechanism contravened Section 3(4)(e) of the Act, since it stifled intra and inter brand competition.
  3. Tie-in Arrangement:
  1. CNG Kits: The CCI held that cancellation of warranty for use of non-designated CNG kits may be objectively justified. As such, this did not amount to a contravention of Section 3(4)(a) of the Act. Further, the CCI observed that HMIL may have a legitimate interest in ensuring that alternative brands of CNG kits are not used since ultimately HMIL would have to bear the costs of warranty.
  2. Lubricants: HMIL mandated its dealers to purchase engine oil only from its two designated vendors, at the price indicated by HMIL in its circular. In case of non-compliance by the dealers, HMIL threatened to terminate the dealership agreement. The CCI noted that this practice resulted in price discrimination, without accruing any benefit to the dealers or consumers, thereby contravening Section 3(4)(a) of the Act.
  3. Car Insurance Services: The CCI noted that it was a business norm to have a tie-up with insurance companies and, hence, merely recommending that the dealers suggest designated insurance companies to consumers does not amount to a tie-in arrangement, since it is not mandatory for the consumer to purchase the same.

On the procedural front, the CCI was of the view that the DG’s investigation into the contravention of Section 4 of the Act by HMIL went beyond the scope of investigation as directed by the CCI at the outset (since the DG was specifically directed to investigate only a Section 3 violation) and therefore deserved to be disregarded in entirety.

In terms of penalty, the CCI, after considering factors such as proportionality, absence of supra-normal profits, HMIL’s voluntary introduction of a competition law compliance programme into its business, and the penalty already imposed in the Autoparts case[1], imposed a penalty of INR 87 crore (0.3 per cent. of the average turnover of the past three years of HMIL which accrued from the sale of motor vehicles (i.e., the relevant turnover)).

 Key Takeaway

Interestingly, the CCI has adopted a business friendly view in this case. It has steered away from the approach in the Autoparts case by making a clear distinction between prudent/standard business practices and anti-competitive conduct. This is demonstrated through the CCI’s approval that consumers would be disentitlement to warranties and incentives if they did not use the manufacturer’s designated products, thereby aiming to intervene only when necessary.

Further, by analysing the effects in the relevant market for each allegation, not only has the CCI followed the principle laid down by the Hon’ble Supreme Court of India in the West Bengal Artists’ case[2], but it has also affirmed the evolving undertone that exclusivity is not anti-competitive per se [3] and may often be a fundamental part of doing business.

Also, being one of the few cases to examine the issue of RPM, the decision provides valuable insight in as much as it classifies the practice of setting a limit on maximum discount as RPM and demonstrates that any assessment in this regard should necessarily consider intra and inter brand competition as well as the factors stipulated under Section 19(3) of the Act.

While the CCI could have used this opportunity to distinguish between price and non-price-related vertical restraints, this decision suggests that the CCI does not deem it necessary to treat RPM cases in a different light, and similar to other vertical arrangements, will be tested on the touchstone of “rule of reason”. Pertinently, this is also the first instance where the CCI has applied the principle of “relevant turnover” in the imposition of penalty, on the similar lines as the Excel Crop case[4].

[1] Shamsher Kataria vs. Honda Siel Limited & Ors., Case No. 03 of 2011.

[2] Competition Commission of India vs. Coordination Committee of Artists and Technicians of West Bengal Film and Television and Others, Civil Appeal No. 6691 of 2014. The Supreme Court stressed on the requirement of defining a relevant market for an assessment under Section 3 of the Act and also widened the scope of the analysis to include “affected markets”, a concept not explicitly provided for under the Act.

[3] Dr. L.H. Hiranandani Hospital vs. Competition Commission of India & Another, Appeal No. 19 of 2014.

[4] Excel Crop Care Limited vs. Competition Commission of India & Another, Civil Appeal No. 2480 of 2014.

* The authors were assisted by Aishwarya Gopalakrishnan, Senior Associate

The Competition Commission of India’s (CCI) prima facie order under section 26(1) of the Competition Act, 2002 (Competition Act) allows the Director General (DG) to investigate alleged violations of the Competition Act. Parties under investigation, however, often allege that the DG investigations go beyond the scope of the order passed by the CCI.

Various High Courts are considering issues of this nature under their writ jurisdiction. However, the recent Hon’ble Supreme Court of India’s (SC) decision in Excel Crop Care Limited v. Competition Commission of India & Another (Excel Case)[1] may provide an important perspective to the existing debate.

The Facts

The inquiry in the Excel Case was triggered by a letter (dated 4 February 2011) from the Food Corporation of India (FCI) to the CCI. This alleged that an anti-competitive agreement had been arrived at between certain manufacturers of Aluminium Phosphide (ALP) tablets in relation to a tender issued by the FCI in 2009 (FCI 2009 Tender). As part of its letter, the FCI also referred to bids submitted by the ALP manufacturers’ to tenders of various State Warehousing Corporations (SWCs).

The CCI took notice of the letter and passed an order under Section 26(1) of the Competition Act directing the DG to investigate. While the DG’s investigation was underway, the FCI wrote another letter to the DG informing them about a subsequent tender in 2011 (2011 FCI Tender) where certain ALP tablet manufacturers had allegedly collectively boycotted the tender in violation of Section 3(3) of the Competition Act.

DG’s investigation report recorded a violation of Section 3(3) of the Competition Act in relation to the 2009 FCI tender and the 2011 FCI tender. The ALP tablet manufacturers challenged the DG’s authority to examine allegations/ give findings with respect to the 2011 FCI tender considering that it was not covered within the initial letter filed by the FCI nor within the terms of reference laid out in the order passed by the CCI under Section 26(1) of the Competition Act. This challenge was rejected by the CCI and the Competition Appellate Tribunal (COMPAT), in appeal[2]. Accordingly, the parties challenged the rejection in the appeals[3], before the SC.

SC’s View

In considering this contention, the SC has held that they completely agree with the view taken by the COMPAT. In its findings, the COMPAT accepted the view that the DG should investigate the matter in accordance with the direction given by the CCI. The COMPAT also accepted that the DG must record its findings on each of the allegations made in the information. However, the COMPAT also held that scope of investigation will depend on the language of the CCI’s order. The COMPAT observed that in the facts of Excel’s case the language of CCI’s order is broad enough to allow the DG to investigate the tenders beyond 2009.

Therefore, the COMPAT simply considered whether the language of the order passed by the CCI under Section 26(1) of the Competition Act in the Excel Case was “broad enough” to legitimise the investigation and findings by the DG into the 2011 tender. Accordingly, the COMPAT did not examine or issue any finding of general application beyond the above situation. This is where SC appears to have gone a step further than the COMPAT.

After recording its agreement with the findings recorded by the COMPAT, the SC seems to have given certain findings that do not seem to be limited to the scope of the Excel Case but to investigations by the DG generally.

The SC has found that the purpose of a DG investigation is to “cover all necessary facts and evidence in order to see as to whether there are any anti-competitive practices adopted by the persons complained against”. Therefore, “the starting point of the inquiry would be the allegations contained in the complaint” but during the course of the investigation “if other facts also get revealed and are brought to light”, according to the SC, “the DG would be well within his powers to include those as well in his report”.

The SC has decided the above on the basis that at the initial stage, the CCI “cannot foresee and predict whether any violation of the Act would be found upon the investigation and what would be the nature of the violation revealed through investigation”. Accordingly, the SC holds that a restriction of the investigation process “would defeat the very purpose of the Act”.

Therefore, the order passed by the SC has broadened the boundaries/ paradigm of DG investigations. For all practical purposes the SC has ventured a step beyond the COMPAT order by suggesting that DG is well within its power to investigate other facts regarding a contravention (not considered by the CCI) which the DG discovers later, during the course of the investigation.

Key Takeaways

The above decision may have far-reaching impact on the nature of investigations being conducted by the DG. Since it is couched in fairly general terms, it will be important to examine how High Courts respond to the finding when they are faced with similar challenges. It will also be noteworthy whether the findings of the SC in the Excel Case will apply in cases where the DG subjects added parties to investigation despite lack of formal orders from the CCI. Additionally, it will be relevant to see whether the SC reiterates this view in cases involving similar issues.


[1] Excel Crop Care Limited v. CCI and Another Civil Appeal No. 2480 of 2014; Judgment dated 8 May 2017

[2] Under Section 53-A of the Competition Act.

[3] Under Section 53-T of the Competition Act.

* Cyril Amarchand Mangaldas represented Excel Crop Care Limited

** The author was assisted by Anu Monga, Director – Competition Practice

On 8 May, 2017, in a landmark judgment, the Hon’ble Supreme Court (bench consisting of Hon’ble Mr. Justice A.K. Sikri and Hon’ble Mr. Justice N.V. Ramana) upheld the principle of “relevant turnover” for determination of penalties in competition law contraventions; and settled a critical issue in India’s antitrust jurisprudence, which was heavily debated amongst all stakeholders for over five years.


The above ruling arises out of a proceeding involving an alleged contravention of Section 3(3) of the Competition Act, 2002 (Competition Act) in the public procurement of Aluminium Phosphide (ALP) Tablets by the Food Corporation of India (FCI). The Competition Commission of India (CCI) found a violation of Section 3(3) of the Competition Act and imposed a penalty at the rate of 9% of the total turnover of the concerned ALP manufacturers – namely, Excel Corp Care Limited (Excel), United Phosphorus Limited (UPL) and Sandhya Organic Chemicals Private Limited (Sandhya).

Continue Reading Supreme Court Limits CCI’s Penalty Powers: “Relevant Turnover” Upheld

This article was first published in The Practical Lawyer

Recently, the Government of India decided to merge the Competition Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT). While the debate is still ongoing as to the benefits and drawbacks of this decision, it is interesting to see the approach of the COMPAT in a few cases which came before it in the last few months. In the recent past, the Competition Commission of India (CCI) has often found itself at the receiving end of the COMPAT, in more ways than one. Several of the CCI’s orders have been set aside, primarily on grounds of failure to adhere to the principles of natural justice. However, following a string of recent orders of the COMPAT, it now appears that the COMPAT has been steadily slipping into the CCI’s adjudicatory shoes!

In a recent decision of the CCI involving alleged abuse of dominance by Gas Authority of India Limited[i], the COMPAT disapproved of the CCI for being overly diligent while passing a prima facie order. The COMPAT noted that at the initial stage of forming an opinion on whether there exists a prima facie case, the CCI is required to merely conduct a preliminary analysis based on averments made in the information. It further noted that the CCI cannot conduct a detailed examination of the allegations, evaluate evidence and record its findings on the merits of the issue given that such exercise can be undertaken only after receiving the investigation report from the Director General (DG). Accordingly, the COMPAT reversed the CCI’s finding of no prima facie violation under the Competition Act, 2002 (Act) and simultaneously directed the DG to investigate the matter.

Continue Reading COMPAT v. CCI: A Power Tussle

In a judgment that has far reaching consequences, the Delhi High Court (Delhi HC) has adjudicated upon the constitutional validity of various regulations formulated under the Competition Act, 2002 (Act) addressing confidentiality of sensitive information that is submitted to the Competition Commission of India (CCI).[i]

The petitioners in the Writ Petitions are opposite parties in a suo moto investigation by the CCI for alleged participation in a bid-rigging cartel in the conveyor belt sector in India. The CCI found prima facie evidence of violation of the provisions of the Act and directed its investigative arm, i.e., the office of the Director General (DG), to commence an investigation against the petitioners, amongst others.

In the course of the investigation, the petitioners filed an application before the CCI for inspecting the information relied upon by the CCI to arrive at its prima facie view and procure copies under Regulation 37 of the Competition Commission of India (General) Regulations, 2009 (General Regulations). The above application by the petitioners was denied by the CCI on the grounds that the information/documents requested by the petitioners formed part of the confidential records of the CCI and accordingly could not be disclosed to the petitioners at this stage of the investigation.

Continue Reading Delhi High Court Upholds Constitutionality of Confidentiality Regulations

This article was first published in The Practical Lawyer

Within a short span of about six years, the Competition Commission of India (Commission) has steadily emerged as an effective merger control regulator. Since 2011, the Commission has approved over 430 transactions in diverse sectors. An overwhelming majority of the approvals have been unconditional in nature; only three transactions have been examined and cleared post a detailed Phase II investigation; and not a single one has been blocked.

Recently, the Commission approved a transaction with structural remedies in Phase I (prima facie investigation stage) itself. While conditionally approving the proposed transaction between Abbott Laboratories and St. Jude Medical, Inc. in the medical devices sector, the Commission noted that the market for small-hole Vascular Closure Devices (VCDs) was highly concentrated, with the combined market share of the parties being in the range of 90-100 percent and the market share of Cardinal Health, the only other competitor, being in the range of 0-5 percent. The Commission accepted a voluntary divestiture offered by Abbott and St. Jude Medical of the entire small hole VCD segment of St. Jude Medical on a worldwide basis to a third party, observing that such modification would eliminate the overlap in the Indian market and enable fair competition.

The Commission’s approach deserves consideration in light of the fact that this case involves a voluntary divestment of assets in Phase I against the ordinary trend of Phase II divestments. Prior to this, the Commission had accepted voluntary modifications on several occasions (such as in Orchid/Hospira, Mylan/Agila and Torrent/Elder) where it conditionally approved those transactions, subject to modifications which were predominantly in the scope of non-compete obligations. A shift in the Commission’s approach from such behavioural to structural modifications in Phase I was first witnessed in the case involving ZF Friedrichshafen (ZF) and TRW Automotive (TRW), where the Commission accepted ZF’s commitment to exit (through divestment of shares) from a joint venture operating in steering system products thereby significantly diluting the horizontal overlap between ZF and TRW. A key difference between the ZF and Abbott cases is that while ZF had already decided to terminate the joint venture prior to notifying the Commission, in the Abbott case, the parties appear to have proposed the divestiture post the Commission identifying concerns over the significant overlap in the relevant market.

Continue Reading CCI’s Roulette with Remedies

In one of the most significant amendments to the merger control regime in India, the Government of India, by way of a notification published on March 29, 2017 (Notification), has enhanced the scope of the de minimis or the small target exemption to include transactions structured as mergers or amalgamations. Further, in transactions involving the acquisition/merger of only a business, division or portion of an enterprise, the Notification stipulates that only the asset and turnover value of such business/division will need to be considered.

We examine these sweeping changes introduced by the Notification and their ramifications in detail below:

A. Applicability of Target Exemption

An important exemption granted to acquisitions was the small-target or the de minimis exemption, which excluded a transaction from the mandatory requirement to obtain the Competition Commission of India’s (CCI) prior approval (Target Exemption), if structured as an ‘acquisition’ of shares, control, voting rights and assets of an enterprise that has assets of not more than INR 350 crores (approximately USD 54 million) in India or turnover of not more than INR 1,000 crores (approximately USD 154 million) in India.

The language of the Target Exemption notified by the Government of India, first in 2011 and then in a revised form in 2016[1], meant that it only applied to acquisitions. The Notification now increases the scope of the Target Exemption to include mergers and amalgamations.

The effects of this inclusion are far ranging. In the previous iteration, the structure of transactions gained significance, i.e., while an acquisition of majority stake or even 100% shareholding of an enterprise with assets or turnover less than the Target Exemption thresholds was exempt, a merger of such an enterprise (likely to have the same effect on the market) was unable to avail itself of this benefit. However, with this revision, the legislative intention behind the ‘small-target’ exemption may be realised to its fullest.

There is no increase in the Target Exemption thresholds which were revised last in 2016 and the applicability of the Notification is for a period of five years, i.e. until 28 March 2022.

Continue Reading Substantive Changes Introduced in the Indian Merger Control Regime

On March 22nd, 2017, nearly seven years since the introduction of the leniency regime in India, the Competition Commission of India (CCI) has proposed the first set of amendments to the Competition Commission of India (Lesser Penalty) Regulations, 2009 (Leniency Regulations) and invited comments from stakeholders.

In line with most developed competition law regimes, the Competition Act, 2002 (Competition Act) also provides for establishment of a leniency regime in India. Section 46 of the Competition Act, supplemented by the Leniency Regulations, draws up the leniency regime in India. The regime enables enterprises to come forward and provide information on cartel arrangements and, in return, avail themselves of up to 100% reduction in penalties.[i]

In view of the CCI’s powers and increasing awareness of the Competition Act, the past few years have seen a number of enterprises come forward to gain benefit of the leniency provisions. In fact, in January this year, the CCI passed its first ever order in a leniency matter[ii] and a glance at the proposed amendments indicates that the CCI is seeking to clarify issues relating to procedures in such matters.

Continue Reading Amendments Proposed to the Indian Leniency Regulations

On 7 March 2017, the Supreme Court of India (SC) upheld an appeal by the Competition Commission of India (CCI) against an order of the Competition Appellate Tribunal (COMPAT) in a case of alleged cartelisation by members of a film and television artists’ trade union in the state of West Bengal. This order of the SC (Order) is arguably the first of the apex court on substantive issues arising under the provisions relating to anti-competitive agreements under the Competition Act, 2002 (Competition Act).

The matter arose out of information filed by a distributor and telecaster of regional serials in Eastern India, including the state of West Bengal (Informant). The Informant alleged that he had been assigned the rights to dub and telecast the television serial ‘Mahabharat’ in Bengali and had entered into agreements to telecast it on two television channels. However, under opposition and pressure from two associations, namely the Eastern India Motion Picture Association (EIMPA) and the Committee of Artists and Technicians of West Bengal Film and Television Investors (Co-ordination Committee), one of the two channels decided to not proceed with the telecast.

The Co-ordination Committee is a joint platform comprising the Federation of Cine Technicians and Workers of Eastern India, and West Bengal Motion Pictures Artists Forum. Upon one channel deciding to not telecast the dubbed serial, the Informant decided to approach the CCI and filed an information alleging that the restrictive acts of EIMPA and the Co-ordination Committee were in violation of the provisions of the Competition Act.

Continue Reading Banning of Dubbed Serials is Anti-Competitive, Says Supreme Court in its First Substantive Order Under the Indian Competition Act