Photo of Bharat Budholia

Partner in the Competition Practice at the Mumbai office of Cyril Amarchand Mangaldas. Bharat advises on the full range of competition matters, including cartel enforcement, abuse of dominance, merger control and competition audit and compliance. He can be reached at bharat.budholia@cyrilshroff.com

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).

Background

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[1], 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:

Continue Reading CCI Reprimands Film Industry Trade Unions for Engaging in Anti-Competitive Behaviour

The Competition Commission of India (CCI) has imposed a cumulative penalty of INR 120 million (approx. USD 1.87 million) on ten coal and sand transporters (Opposite Parties or OPs) for bid-rigging. The OPs were found to have rigged the bids submitted in relation to four tenders for coal and sand transportation floated by Western Coalfields Limited (Informant), a subsidiary of the state-owned monopolist, Coal India Limited.[1]

The information filed with the CCI alleged contravention of the provisions of the Competition Act, 2002 (Competition Act) on the ground that the OPs had quoted identical prices, which were suspiciously higher than the rates quoted for the same jobs in the recent past.

Continue Reading Coal Transporters Penalised for Bid-Rigging

The Ministry of Corporate Affairs, Government of India (MCA), has through a notification published on August 30th, 2017, exempt reconstitution, transfer of whole or any part thereof and amalgamation of nationalised banks under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, from merger control scrutiny for a period of 10 years (Notification).

Continue Reading Nationalized Banks Exempt from Merger Control Scrutiny

The Competition Commission of India (Lesser Penalty) Regulations, 2009 (Leniency Regulations) have been amended by a notification issued on 22 August 2017 (Notification). The Leniency Regulations supplement Section 46 of the Competition Act, 2002, which sets out the statutory provision for grant of leniency in matters involving cartels and enables parties to ‘blow the whistle’ on cartel arrangements and avail up to 100% reduction in penalties.

The amendments have been introduced after nearly seven years since the introduction of the leniency regime in India, addressing substantive issues faced by the industry. The formal amendments are largely in line with the draft amendments issued in March 2017 wherein the Competition Commission of India (CCI) invited comments from various stakeholders.

This update briefly captures the key amendments and the potential implications on the effectiveness of the leniency programme in India.

Continue Reading Leniency Regulations Amended

The latest addition to the string of changes introduced by the Ministry of Corporate Affairs (MCA) this year is an exemption to Regional Rural Banks (RRBs) from the applicability of the merger control regime. The MCA introduced a notification on August 10, 2017 (Notification), which stipulates that Sections 5 and 6 of the Competition Act, 2002 (Act), which relate to regulation of combinations, will not apply to amalgamations of RRBs for which the Central Government has issued a notification under Section 23A(1) of the Regional Rural Banks Act, 1976 (RRB Act). This exemption is applicable for a period of five years, i.e., until August 9, 2022.

The RRB Act was enacted to provide for the incorporation, regulation and winding up of RRBs in order to develop the rural economy and particularly enhance the credit facilities available to marginal farmers, agricultural labourers, artisans and small entrepreneurs. Under section 3(1) of the RRB Act, the Central Government can establish a RRB in any state or union territory, upon a request being made by a bank that proposes to sponsor the RRB.

Continue Reading MCA’s Merger Control Exemption for Regional Rural Banks

Keeping with the slew of changes introduced this year, the Ministry of Corporate Affairs, Government of India (“MCA”) has yet again altered the Indian merger control regime, by doing away with the mandatory 30 day deadline for filings notifications, post the trigger event. This brings the Indian merger control regime in sync with most mature competition law regimes, which do not have a fixed timeline within which a merger notice must be filed with the regulator.

By virtue of its powers under Section 54 of the Competition Act, 2002 (“Act”), which allows the Central Government to exempt the applicability of any of the provisions of the Act for a specified period, the MCA has introduced a notification on June 29, 2017 which exempts an enterprise, from filing a notice within 30 days, for a period of five years, i.e., until June 28, 2022 (“Notification”).

Continue Reading Indian Merger Control – 30 Day Filing Timeline Ceases to Exist!

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

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

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