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The CAM Competition team can be reached at cam.mumbai@cyrilshroff.com

* This piece was first published in the November 2017 issue of the Practical Lawyer [(2017) PL (Comp. L) November 86]


Enforced in 2011, the Indian merger control regime envisages an ex-ante assessment by the Competition Commission of India (CCI) of all M&A transactions meeting certain financial thresholds provided in the Competition Act, 2002, as an anticipatory step to avoid potential anti-competitive outcomes such as creation of a monopoly or co-ordinated action by competitors. However, considering the need to avoid filing requirement for certain types of M&A transactions which are not likely to cause an appreciable adverse effect on competition, the CCI, by way of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations) exempted certain categories of M&A transactions from a notification requirement. One such exemption (provided in Item 1 of Schedule I to the Combination Regulations) deals with minority investments and exempts acquisitions of less than 25% shares, if they are made “solely as an investment” or in the acquirer’s “ordinary course of business”, with a categorical caveat that such transaction should not result in the acquisition of ‘control’ (25% Exemption).

Though the 25% Exemption may, at first glance, seem extremely advantageous to private equity and other financial investors, the verbose riders under Item 1 and various CCI orders, considerably limits its scope. More often than not, acquirers are willing to err on the side of caution and seek the CCI’s approval, to avoid monetary as well as reputational loss. This article highlights a few of the issues that are encountered when determining the applicability of the 25% Exemption and in particular, the phrase “solely as an investment”.Continue Reading Antitrust Approval in Minority Acquisitions – A Case of Several Ifs and Buts

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[1] (Mitsubishi) and the European Court of Justice’s decision in Eco Swiss China Time Ltd. v. Benetton International N.V.[2] 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[1] 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’.Continue Reading Excessive Pricing: A Neglected Antitrust Concept?

This piece was first published in the Competition Policy International on August 28, 2017


Introduction

If one looks back at the progress of human kind- one will see that every step forward was always greeted with great scepticism. Inventions and new theories propounded were never accepted easily, for the simple reason that they were not understood well enough. In fact, innovations were always viewed as disruptive ideas. All innovators were ahead of their times and the merit of their ideas was acknowledged only after they were tried, tested and proved to be not only good but also better than the old ones. But time and again history has shown us that old ideas did bow out giving place to the new when their worth was proven, society was benefited and efficiency increased manifold – be it the transformation from doves to the postal system, telegraph, telephone, cellular phones and now the world wide web, that has revolutionized communications. Computers were viewed with great suspicion as they would leave a whole section of people jobless. However, these very same computers created an entirely new industry in the form of the software industry – which is one of the biggest in the world and employs millions today. All of these innovations which seemed disruptive initially have now woven themselves inextricably into the processes of production as well as consumption and have led to great technological advancement and overall economic development. Thus, the relationship between economic development and innovation, in particular disruptive innovation, cannot be overstated.Continue Reading Disruptive Innovations: CCI’s Progressive Outlook

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[1], 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.Continue Reading India Bids Adieu to 30 Day Notification Regime

In the Budget Speech for the financial year 2016-17, the Government of India proposed its vision to strengthen Central Public Sector Enterprises (CPSEs) engaged in the Oil and Gas Sectors (OGS) through consolidation, mergers and acquisitions.

Paving a way for fast track consolidation in the oil and gas sector, the Ministry of Corporate Affairs, Government of India (MCA) has exempted all cases of combinations involving CPSEs operating in OGS, along with their wholly or partly owned subsidiaries operating in OGS, from Section 5 and Section 6 of the Competition Act, 2002 (Competition Act).Continue Reading MCA Exempts Central Public Sector Enterprises Engaged in Oil and Gas Sector from CCI Notification

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.Continue Reading Resale Price Maintenance : Has CCI Upped the Ante?

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