As soon as the details were disclosed, the Finance Bill, 2017 raised eye-brows[1] . Some noted that:

  • To minimise the number of tribunals, the Finance Bill, 2017 sought to merge eight tribunals with other tribunals and amended provisions relating to the structuring and re-organization of such tribunals.
  • The above measures were sought to be taken through a money bill, which is only supposed to contain provisions for imposition of taxes and withdrawal of money from the State Treasury.

Continue Reading Spanner in the Works? Judicial Challenge to the Finance Act, 2017

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).

Continue Reading CCI’S First Substantive Order on Resale Price Maintenance

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.

Continue Reading How far is too far? The Supreme Court’s View on the Scope of Director General Investigations

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.

Background

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