India – Behavioural Cases.

27 July, 2016

 

CCI dismisses allegations concerning ‘abuse of dominance’ against a real estate developing company

 

On June 1, 2016, CCI dismissed the allegations of abuse of dominance against (i) Prateek Realtors India Private Limited (‘Prateek’); (ii) the Chief Administrative Officer, New Okhla Industrial Development Authority (‘NOIDA’) and (iii) Chief Architect Planner NOIDA, in a case filed by Mr. A. S Sharma (‘Mr. Sharma’), in terms of Section 4 of the Act.

 

Mr. Sharma alleged that he was compelled to sign an allotment letter and related agree- ments by Prateek with respect to the allotment of an apartment in the residential housing pro- ject developed by Prateek. In particular, Mr. Sharma alleged that the agreement did not contain any exit clause, contemplated a penalty for delay in payment on Mr. Sharma, but lacked any corresponding provision for levy of penalty on Prateek for delay in allotment of possession of the apartment. Mr. Sharma alleged these clauses were abusive and one-sided in nature in terms of Section 4 of the Act.

 

CCI considered the relevant product market in the case as the “provision of services for de- velopment and sale of residential units.” It identified the “geographic region of Noida and Great- er Noida” as the relevant geographic market.

 

While dismissing the case, CCI noted that there are a number of players in the relevant mar- ket offering multiple options to consumers. This, according to CCI, acted as a competitive con- straint on Prateek, which would not allow Prateek to operate independently of market forces. On this basis, CCI determined that Prateek was not in a dominant position and, therefore, there was no possibility of abuse of dominance.

 

CCI dismisses allegations of abuse of dominance against a distributor of ‘Bisleri’ bottled water

 

On June 1, 2016, CCI dismissed allegations of abuse of dominance made against Shri Ganesh Agency (‘Ganesh Agency’), a non-exclusive distributor of Bisleri products in Goregaon (East), Mumbai, by Mr. Aniket Sitaram Kokane (‘Aniket’), another non-exclusive distributor of Bisleri products in Malad (East), Mumbai, in terms of Section 4 of the Act.

 

Aniket alleged that Ganesh Agency was intruding in his territory and dumping large stocks of bottled water in the Malad (East) area at a very low price causing significant losses to Aniket. It was also alleged that Ganesh Agency used its dominant position to restrict retailers from buy- ing Bisleri products from Aniket.

 

CCI in its analysis, considered the relevant market as the ‘distribution of bottled water in Mumbai’. While dismissing the case, CCI observed that (i) there are several other manufacturers such as Kinley, Aquafina, Oxyrich, etc., who have their respective distribution channels compet- ing in the relevant market; and (ii) that Ganesh Agency was not dominant in the relevant market and hence, the question of abusing a dominant position did not arise.

 

CCI dismisses allegations of abuse of dominance against Bennett Coleman & Company

 

On June 2, 2016, CCI dismissed allegations of abuse of dominance made against M/s Bennett Coleman and Co. Limited (‘Bennett’), by Shri Kamble Sayabanna Kallappa (‘Kamble’), in terms of Section 4 of the Act.

 

Kamble alleged that Bennett offered a ‘combo’ offer while selling the newspaper, The Times of India. The offer entailed the sale of a copy of ‘The Times of India’ along with either a copy of ‘The Mumbai Mirror’, or ‘The Economic Times’ or ‘The Maharashtra Times’. However, some vendors in the city of Mumbai only offered a copy of the Mumbai Mirror while selling The Times of India.

 

Kamble alleged that this practice was in the nature of an unfair condition imposed by Ben- nett. CCI observed that all the concerned newspapers were available separately and consumers were free to buy them as such. CCI also held that in any event the conduct of the vendors cannot be attributed to Bennett. Accordingly, CCI dismissed the complaint.

 

CCI dismisses allegation made against Nissan

 

On June 7, 2016, CCI passed an order under Section 26(2) of the Act dismissing the complaint filed by Jolly Diclause (‘Jolly’) against Sterling Vehicle Sales Private Limited (‘Sterling’) and Ni- ssan Motor India Private Limited (‘Nissan’) alleging abuse of dominance under Section 4(2) of the Act. Jolly alleged that the car she purchased either had a manufacturing defect or was damaged by carelessness and negligent handling of Sterling, an authorised dealer of Nissan. Per Jolly, this constituted abuse of dominant position by Sterling and Nissan under the Act.

 

CCI observed that Jolly had failed to delineate a relevant market in terms of Section 4 of the Act. The CCI also noted that the complaint related to deficiency in service of Nissan, which did not fall within the purview of Section 4 of the Act. For these reasons the CCI dismissed the complaint and closed the matter.

 

CCI orders investigation against Monsanto

 

On June 9, 2016, CCI passed an order under Section 26 (1) of the Act, directing an investigation against Monsanto, Inc. USA and its Indian subsidiaries (‘Monsanto’) pursuant to three sepa- rate complaints filed by Kaveri Seed Company Limited (‘Kaveri’), Ajeet Seeds Private Limited (‘Ajeet’) and Ankur Seeds Private Limited (‘Ankur’) (together, ‘Seed Companies’).

 

The Seed Companies alleged that Monsanto is abusing its position of dominance in the market for genetically modified seeds in India, in terms of Section 4 of the Act, by, inter alia, (i) imposing unfair and discriminatory conditions in sub-licensing of ‘Bt technology’ to the seed manufacturing companies in India; (ii) charging unfair ‘trait’ value; (iii) limiting scientific development relating to Bt cotton technology as well as Bt cotton seeds; and (iv) entering into exclusive supply arrangements and refusing to deal with Indian seed manufacturers.

 

CCI has directed the Director General, to add the allegations in the ongoing case concern- ing Monsanto (Mahyco-Monsanto Biotech India).

 

CCI dismisses complaint against Digital Cinema Initiatives

 

On June 8, 2016, re-hearing the matter pursuant to a direction from COMPAT, CCI dismissed the allegations made by K Sera Sera Digital Cinema Private Ltd. (‘K Sera Sera’) against Digital Cin- ema Initiatives (‘DCI’), a JV, along with the JV partners, Walt Disney Company India/UTV Soft- ware Communications Limited, Sony Pictures, Warner Bros., Paramount Films India Limited, Fox Star Studios and NBC Universal Media Distribution Services Private Limited.

 

K Sera Sera alleged that the aforementioned JV partners were: (i) determining the price of movie tickets by imposing revenue share agreements on cinema owners in violation of Sec- tion 3(3)(a) of the Act; (ii) not allowing cinema owners to purchase non-DCI equipment thereby depriving viewers the opportunity to watch movies in a theatre of their choice, in violation of Section 3(3)(b); (iii) tying in the use of ‘DCI-compliant’ equipment to the purchase or display of their movies, in violation of Section 3(4)(a); (iv) imposing exclusivity obligations forbidding cinema owners from purchasing non-DCI equipment, in violation of Sections 3(4)(b) and 3(4) (d); and (v) collectively, abusing their dominant position to impose unfair conditions in the sale of DCI-compliant equipment (in violation of Section 4(2)(b)), denying consumers the chance to watch movies in non-DCI compliant cinemas (violating Section 4(2)(c)), and leveraging their dominance in the movies market to enter into and monopolise the market for providing digital cinema services (contravening Section 4(2)(e) of the Act).

 

CCI dismissed the allegations, primarily, on the following grounds: (i) pro-competitive benefits of an industry-wide standard; (ii) lack of any cogent evidence suggesting that DCI was responsible for any price increase; (iii) no demonstrable harm to competition arising from the DCI standard, especially since Hollywood movies comprised only a minor portion of the movie market in India, and since competitors, including K Sera Sera, had posted impressive growth and success; (iv) the ‘safe harbour’ under Section 3(5) of the Act allowed the JV partners to im- pose reasonable restrictions to protect their intellectual property (movie copyrights); (v) lack of any evidence indicating anti-competitive vertical restraints; and (vi) the absence of a ‘collec- tive dominance’ standard under the Act.

 

CCI dismisses abuse of dominance allegations against Rural Electrification Corp

 

On May 5, 2016, CCI dismissed allegations of abuse of dominance made against state-owned Rural Electrification Corp (‘REC’) and its subsidiary REC Power Distribution Co. (‘RECPDCL’), by an anonymous complainant.

 

REC is engaged in the financing and promotion of rural electrification projects across India. The complaint alleged that that RECPDCL, on account of being a subsidiary of REC, had lever- aged REC’s dominant position to secure work awards for consultancy services on a nomination basis, and consequently, denied market access to other competing consultancy service providers.

 

CCI’s dismissal rested, essentially, on the following grounds: (i) no concrete evidence sug- gesting any explicit ‘conduct’ by REC to influence the decision of the purchasers of the consul- tancy services; (ii) the market data showed no evidence that RECPDCL was disproportionately favoured over its competitors; and (iii) while RECPDCL’s entry had led to a reduction in the market share for the other consultancy firms, the market remained contestable.

 

Interestingly, CCI further observed that although such structural distortions did not violate competition law, they did go against the spirit of ‘competitive neutrality’, and suggested that REC should consider creating adequate safeguards to address the same.

 

CCI dismisses abuse of dominance allegations against Vodafone

 

On May 5, 2016, CCI dismissed allegations of abuse of dominant position against Vodafone India Limited (‘Vodafone’) made by Mr. Vishwambhar M. Doiphode (‘Vishwambhar’), a customer of Vodafone. Specifically, Vishwambhar had alleged that Vodafone was imposing unfair or dis- criminatory price in sale of international roaming services since it was charging customers ¤30 per MB of data used (against the ¤4 per MB it charged for domestic data services), and in case a customer did not purchase a specific roaming package from Vodafone, the charges went as high as ¤564 per MB.

 

CCI dismissed these allegations on the preliminary ground that Vodafone was not domi- nant in the relevant market, which was defined to be the market for provision of international mobile data services in Mumbai.