India -Competition Appellate Tribunal Orders.

27 July, 2016

 

COMPAT directs CCI to re-hear on penalty in the LPG Cylinder cartel

 

On May 2, 2016, the Competition Appellate Tribunal (‘COMPAT’) upheld CCI’s decision to penalise certain manufacturers of LPG cylinders for cartelisation. However, with regard to the quantum of penalty, COMPAT disagreed with CCI, and directed CCI to re-hear the parties on that issue, primarily on the following grounds: (i) CCI failed to consider that certain parties were multi-product companies and went on to compute the penalty based on their ‘total turnover’, instead of the product in question; and (ii) CCI did not pay due attention to mitigating factors.

 

COMPAT quashes CCI orders against office bearers of the pharma trade associations

 

On May 10, 2016, COMPAT quashed CCI’s orders against the office bearers (‘Office Bearers’) of the All Kerala Chemists and Druggists Association and Bengal Chemist and Druggists Association (‘Trade Associations’). CCI had penalized these associations for restricting supply of pharmaceuticals and determining their sale price in India under the Act.

 

CCI’s orders were set aside, primarily, for contravention of principles of natural justice in the proceedings against the Office Bearers, including the following: (i) failure to provide them with a copy of CCI’s order directing investigation or the investigation report; (ii) failure to prove that Office Bearers were personally liable for the acts of their respective Trade Associations; (iii) failure to inform the Office Bearers of the penalties imposed upon them; (iv) denial of opportunity to file objections for investigation of the Office Bearers; and (v) absence of jurisdiction to pass an order which had the effect of directly or indirectly restricting the tenure of the Office Bearers under the relevant statutes.

 

COMPAT sets aside the penalty against Coal India Limited, direct CCI to hear the matter afresh

 

On May 10, 2016, COMPAT set aside the penalty imposed on Coal India Limited by CCI for abus- ing its dominance in the market of supplying non-coking coal to thermal power producers and sponge iron manufacturers, and directed CCI to re-hear the parties.

 

COMPAT’s decision was primarily based on the violations of principles of natural justice by CCI, specifically, the fact that the set of members issuing the order was not present at all hearings to witness the arguments. Accordingly, COMPAT remitted the matter back to CCI for a fresh hearing. However, COMPAT did state that parties are not permitted to adduce any additional evidence before the CCI. CCI has been directed to issue appropriate orders within two months of the COMPAT order. 

 

COMPAT quashes CCI’s order against the suppliers of ‘CN containers with disc’ for collusive bidding

 

On May 17, 2016 COMPAT quashed the order of CCI, concerning suppliers of ‘CN containers with disc’, the raw material component used in manufacture of 81 MM bombs, where CCI had penalised these suppliers for collusive bidding in violation of Section 3 of the Act.

 

The CCI order was quashed, primarily for violation of principles of natural justice. CCI ob- served, inter alia, that: (i) while the order was issued by the chairperson and four other members, the arguments were heard by only three members; (iii) the evidence produced by the suppliers was not duly considered; and (ii) while the Director General (‘DG’) was directed to investigate price-fixing under Section 3(3)(a), the investigation was extended to cover ‘bid-rig- ging’ under Section 3(3)(d) of the Act.

 

COMPAT sets aside penalty on Alkem Laboratories

 

On May 10, 2016, COMPAT set aside CCI’s order where Alkem Laboratories Ltd. (‘Alkem’) and its officials were fined for entering into an anti-competitive agreement. CCI had noted that phar- maceutical trade association of Kerala and its office bearers had been insisting on a no-objec- tion certificate (‘NoC’) before appointing new stockists, effectively limiting and controlling the supply of drugs in Kerala. CCI had reached the conclusion that Alkem was holding up supplies to other stockists, in violation of Section 3(1) of the Act, because of pressure from the trade association.

 

COMPAT observed that CCI’s inferences on the alleged involvement of Alkem were ‘self-con- tradictory’ as once CCI had established that the trade association was coercing pharmaceutical firms to comply with the NoC requirement, the element of Alkem’s liability was automatically negated. Further, COMPAT set aside the penalty against the Alkem officers since: (i) there had been no contravention by Alkem itself; and (ii) the officers were not given adequate opportu- nity to present their case.