In a notification dated July 4, 2018, the Ministry of Corporate Affairs (MCA) has granted an additional three year extension to the Vessel Sharing Agreements Exemption (VSA Exemption) in the liner shipping industry. This exempts VSAs from scrutiny under Section 3 (i.e., anti-competitive agreements) of the Competition Act, 2002 (as amended) (Act). This extension, which is a furtherance of international best practice, has come as a source of relief to the liner shipping industry, given that the last extension of the VSA exemption expired on June 19, 2018. The expiry of the previous exemption had led to speculation regarding the status and future of the VSA exemption.
Partner in the Competition Practice at the Mumbai office of Cyril Amarchand Mangaldas. Anshuman advises on the full range of competition matters, including merger control, abuse of dominance and cartel enforcement. He can be reached at email@example.com
* This piece was first published in the February 2018 issue of the Practical Lawyer (2018) PL (Comp. L) Feb 75
The boom in the technology and internet arenas has globally accelerated the growth of the digital economy. This has significantly aided the mechanism of collecting, processing and commercially exploiting the data in the hands of large corporations and even start-ups. Commonly referred to as ‘big data’, the concept refers to large volumes of a variety of data which is collected at high velocity and is then processed by computing softwares to produce unique datasets which has significant commercial value. While the collection and use of personal data falls under the domain of data protection laws, a question that is now being examined by several competition law regulators is whether the use of big data can impact competition in the markets.
Before we delve into this question, it is pertinent to consider the advantages and efficiencies which result from the commercial exploitation of big data. Consider the modus operandi of any frequently used search engine. It would use self-learning computing algorithms which would observe, record and analyze search terms keyed in by the users, the websites ‘clicked on’ and combine it with data collected from its other applications and services such as e-mail or data processing services to create detailed user profiles. It would then use, and maybe even sell, these unique and individualized information assets to various online advertisers and retailers for targeted advertising. Consider also the personalized recommendations of products and services that a user receives on various e-commerce platforms or on social networking websites based on the purchasing history, the keywords typed, and the general and personal information provided to these websites. Therefore, by closely tracking and analyzing the users’ needs and studying the consumer demand pattern, big data immensely assists in improving the quality of goods and services and their targeted advertising. It also improves the decision-making on the supply side by improving market predictions and the operational efficiency of manufacturers.
* This piece was first published in the January 2018 issue of the Practical Lawyer (2018) PL (Comp. L) Jan 75
With the USD 130 billion merger between global agrochemical giants – Dow Chemicals and E. I. du Pont de Nemours and Company (DuPont) being granted a green chit by the European Commission (EC) and the Competition Commission of India (CCI), the significance of innovation in merger assessment has witnessed a renewed focus. The extent and role of innovation in the concerned market is one of the factors that antitrust regulators are required to consider while evaluating a proposed transaction. Ordinarily, this exercise is undertaken to study the impact of the transaction on future innovation and any competitive harm which may result from reduction in the incentives to innovate as also the pro-competitive outcomes emanating from operational synergies which enhance innovation.
In the Dow/DuPont merger, the relevance of innovation was discussed at length by the EC which observed that the merger would not only significantly impede competition in the pesticides and petrochemical industries, at a global level, but would also reduce future innovation in the global pesticides industry. It was noted that the development of effective and environment friendly pesticides required large scale investments and continuous research and development (R&D) and globally, only five players were engaged in R&D in the field of pesticides. The Dow/DuPont merger therefore, would further consolidate market power in an already highly concentrated industry with significant entry barriers and would substantially reduce the parties’ incentives to innovate in the pesticides sector.
* This piece was first published in the December 2017 issue of the Practical Lawyer (2017) PL (Comp. L) Dec 76
This century is continually being marked by the convergence of this goliath world into a global village. While this phenomenon is attributable to a number of factors, inter-operability of technology and adoption of common standards have acted as important catalysts in this process. As such, this convergence perforce requires that common standards are available on fair terms to all. However, a number of components of these essential standards are patented, i.e., are standard essential patents (SEPs), thereby implying the exclusive right of the patentee to use and exploit the SEP. It is at this juncture that a complex yet interesting legal wrestle between the competition law and intellectual property rights (IPR) regimes emerges.
In essence, SEPs encompass those patented technologies which have become essential to a standard. From an antitrust perspective, an SEP holder enjoys substantial, almost monopolizing market power due to lack of substitute alternative technologies. The SEP holder is susceptible to engaging in abusive practices, such as refusal to license the SEP to other manufacturers, or charging exorbitant royalties. In order to balance this one-sided bargaining power, standard setting organizations (SSOs) across all jurisdictions obligate SEP holders to license the their intellectual property on fair reasonable and non-discriminatory (FRAND) terms. However, the multi-jurisdictional decisional practice elucidates that mere affirmation by SEP holders to SSOs does not preclude them from engaging in abusive practices, thereby necessitating an interaction between competition laws and IPR.
In a recently released order, the Competition Commission of India (CCI) has imposed a token penalty of INR 5 lakhs (approx. USD 7800) on ITC Limited (ITC) for its failure to notify a combination. The combination relates to ITC’s acquisition of the trademarks “Savlon” and “Shower to Shower”, along with other related assets, from Johnson & Johnson by way of two separate asset purchase agreements entered into on 12 February 2015.
In its order, the CCI has held that trademarks are assets for the purposes of the Competition Act, 2002 (as amended) (Competition Act). Further, the order also re-emphasises the position that the Indian merger control regime relates to not only an acquisition of one or more enterprises but also acquisition of control, shares, voting rights or assets of another enterprise. In the event the jurisdictional thresholds prescribed under Section 5 of the Act are met, such an acquisition requires prior notification to, and approval from, the CCI.
This piece was first published in the October 2017 edition of the Manupatra Competition Law Reports.
Over the years arbitration has become a preferred private and consensual mode of dispute resolution. Arbitral tribunals and courts have been dealing with complex contracts and rapidly evolving the law relating to arbitrations. An issue commonly faced by arbitral tribunals is whether the dispute referred to it is arbitrable in the first place. These questions commonly arise when allegations of fraud are made before a tribunal, or a reference is made to decide issues relating to competition law.
Traditionally, courts across jurisdictions have taken the view that competition law disputes are non-arbitrable. This was because arbitration being a private and consensual mode of dispute resolution, was considered to be an inappropriate forum for deciding competition law issues which related to the larger public interest of promoting competitive markets. However, around late 1980s to early 1990s, the judicial trend on arbitration of competition law disputes changed. The U.S. Supreme Court’s decision in Mitsubishi Motor Corp. v. Soler Chrysler Plymouth (Mitsubishi) and the European Court of Justice’s decision in Eco Swiss China Time Ltd. v. Benetton International N.V. held that an arbitral tribunal could also arbitrate upon competition law issues. Continue Reading Arbitrating Competition Law Disputes in India
This piece was first published in the October 2017 issue of The Practical Lawyer [(2017) PL (Comp. L) October 104]
Antitrust authorities worldwide have actively investigated and penalised dominant enterprises on various types of anti-competitive conduct. However, historically, very few cases have been pursued on the issue of excessive pricing by dominant entities. It is a popular perception that this seemingly unanimous reluctance by competition authorities to initiate cases in this realm of antitrust laws could be attributable to the perceived difficulties in establishing when pricing is truly excessive. While the allegations of excessive pricing have been often brought up in a multitude of jurisdictions, its successful enforcement has been rare given the challenges in determination of the ambit of ‘excessive’ and against what ‘benchmark’ price should it be compared. This coupled with the paucity of substantial evidence concerning the costs and expenditures incurred in manufacturing/providing the goods/services, and the presence of commercial justifications for charging the excess over and above the costs and a reasonable margin have further contributed to the dormancy of this rather key issue under antitrust laws. We briefly examine here the concept of excessive pricing, reasons it is fraught with difficulties and the old as well as the recent decisions which have the potential to be a game-changer in the domain of ‘excessive pricing’.
This piece was first published in the September 2017 issue of The Practical Lawyer [(2017) PL (Comp. L) September 82]
The Indian merger control regime has evolved substantially over the years since its introduction in June 2011. The preceding six years have seen a steady series of five amendments to the Combination Regulations, the primary regulations which supplement the merger control provisions under the Competition Act, 2002 (Act), to bring greater certainty, transparency and ease in relation to the Competition Commission of India (CCI) filing processes. In line with this trend and overarching objective of promoting the ease of doing business in India, the Ministry of Corporate Affairs, Government of India, recently issued a notification dated 29 June 2017 (Notification) which has done away with the strict filing timeline of 30 calendar days from the date of the trigger document. The Notification is applicable for a tenure of 5 years until 28 June 2022. This piece briefly examines issues with this strict statutory timeline and the welcome ramifications that ensue this policy change.
A proposed acquisition of shares, voting rights, control or assets or a merger/amalgamation which satisfies the pecuniary statutory thresholds set out under the Act and is unable to benefit from applicable exemptions under the Act or the Combination Regulations is reportable to the CCI. Such a pre-merger notification was required to be filed within the timeline as set under the Act. Originally, parties to a notifiable transaction were required to notify the CCI within 7 days of receiving board approval for a merger or amalgamation, or pursuant to the execution of any agreement or other document in case of an acquisition (Trigger Document). Subsequently, by way of an amendment in 2007, the filing timeline was extended from 7 to 30 days.
This piece was first published in the August 2017 issue of The Practical Lawyer [(2017) PL (Comp. L) August 80]
Price fixing arrangements strike at the very heart of antitrust violations since they go against the accepted norm of price being determined by market forces. Such arrangements raise concerns in both horizontal and vertical markets. Under the scheme of the Competition Act, 2002 (Act), while horizontal pricing agreements (between competitors) are presumed to cause an appreciable adverse effect on competition (AAEC), there is no such presumption in the case of vertical agreements (between entities operating at different levels of the value chain), where the “rule of reason” approach is applied.
Interestingly, the treatment of vertical agreements and in particular resale price maintenance (RPM)[i], has been long debated in many jurisdictions. Initially, antitrust authorities in mature jurisdictions were in agreement that RPM, in principle, was a per se violation and as such, not subject to any justification. However, acknowledging the need for relaxation, the US Supreme Court and the European Commission refrained from adopting a strict per se presumptive approach in cases of RPM to apply the “rule of reason” standard. On the other hand, national competition authorities in the European Union continue to take a hostile approach towards RPM without considering any pro-competitive effects that may arise. Moreover, in the Indian context, while the CCI had reiterated the statutory construct in dealing with RPM, by stating that AAEC needs to be determined on basis of the factors provided under Section 19(3) of the Act, until recently the treatment of RPM (including its scope and standard of proof) lacked clarity.
On 31 October 2017, the Competition Commission of India (CCI) passed cease and desist orders against certain national and regional trade associations of film artists and producers for engaging in practices of controlling/limiting the supply of services and market sharing. Such acts have been held to be in contravention of Sections 3(3)(b) and 3(3)(c) read with Section 3(1) of the Competition Act, 2002 (Competition Act).
Mr. Vipul Shah (Informant), a producer of films, filed an information against Artists’ Associations, comprising the All India Film Employees Confederation, Federation of Western India Cine Employees (FWICE) and its affiliated associations, as well as Producers’ Associations, comprising the Indian Motion Picture Producers Association, the Film and Television Producers Guild of India, and the Indian Film and Television Producers Council (Artists’ Associations and Producers’ Associations are collectively referred to as the Opposite Parties). The information alleged a contravention of provisions of the Competition Act on the grounds that: