* 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.[1]

In the Dow/DuPont merger,[2] 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.[3] 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.

Continue Reading Towards a New Jurisprudence: Role of Innovation in Merger Control

* 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.

Continue Reading Standard Essential Patents – The Irony of Standardization

Given the multifaceted economic and legal considerations, fair and effective enforcement of competition law is a complex task. It is rendered all the more daunting with the added requirement for the optimal level of competition law enforcement.

Optimal enforcement is arguably more important in competition law proceedings than in other areas of law enforcement because inadvertent under- and over-enforcement may actually end up harming competition itself. For example, if a competition authority attempts to over-enforce, it can actually make conduct illegal that was otherwise legal and, thus, prevent an enterprise from competing on merits. The result would be counter-productive to the objectives of competition law (by harming level of competition in the markets).

Given this debate, the story of competition law has been the story of competition between tests and concepts that are either presumption or form based (thus, simpler and providing legal certainty) and tests that are effects based – i.e. using economic/ quantitative techniques and are, thus, more accurate (and more conducive to the idea of optimal enforcement).

Recently, although the debate in this regard has surrounded the applicability of the effects-based test to prohibite abuse of dominance, companies need to be able to formulate policies that re-assure them of their legal certainty – stakeholders, therefore, await fast-track consensus.

Continue Reading Abuse of Dominance: Effect over Form?

In an interesting development, the Supreme Court of India (Supreme Court) has overturned the Competition Appellate Tribunal’s (COMPAT) order and confirmed the Competition Commission of India’s (CCI) order confirming abuse of dominance by multi-system operators (MSOs).

The Supreme Court not only interpreted the provisions of section 4 of the Competition Act, 2002 (Competition Act) and differed with COMPAT’s understanding; but also delivered a judgment in a sector that is regulated by the Telecom Regulatory Authority of India (TRAI). The judgment, though not directly dealing with the issue, affirms the exclusive jurisdiction of the CCI to deal with anti-competitive conduct even in regulated sectors with special sectoral regulators. Most interestingly, in another case before the Supreme Court, the TRAI is contesting that it is the sole regulator in the telecom sector including competition law related issues and CCI has no jurisdiction.

Additionally, the judgment also advances the penalty jurisprudence in competition law cases by setting aside CCI’s imposition of penalties, due to certain mitigating factors despite upholding its conclusion of abuse of dominance.

Continue Reading Supreme Court Confirms Abuse of Dominance by Multi System Operators

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.

Continue Reading The CCI Reinforces Trademarks are Assets

* 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