1 November, 2017
NCLAT Dismisses Appeal against Director General of Health Services and Ors.9
On September 21, 2017, NCLAT dismissed an appeal filed by Dr. Bishwanath Prasad Singh against Director General of Health Services (‘ DGHS’), Managing Director, Ex-Servicemen Contributory Health Scheme, Secretary General, Quality Council of India, and National Accreditation Board for Hospitals (‘ NABH’). Dr. Singh alleged that prescription of different rates for reimbursement by DGHS to the private hospitals under Central Government Health Scheme based on their accreditation or non-accreditation with NABH gave unfair benefit to selected hospitals, thereby contravening Section 3 of the Competition Act. He further alleged that any differential rate of payment for similar interchangeable professional advice will amount to violation of Section 3(3)(a) of the Competition Act.
National Company Law Appellate Tribunal (‘ NCLAT’) noted that Dr. Singh had failed to make any submission determining the relevant market either at CCI or at the NCLAT level. NCLAT upheld the order of CCI dated March 14, 2017, and agreed that different rates of reimbursement were justified as they were based on the premise of compensating more for observing higher standards and it cannot be said to be unfair or discriminatory. Further, the different rates of reimbursement were arrived at through a competitive bidding process which was not arbitrary or
one sided. Rather it indicated a procedure by which the procurer discovered the price. Accordingly, NCLAT dismissed the appeal.
NCLAT Dismisses Appeal filed by Shivam Medicos Pvt. Ltd.10
On October 4, 2017, NCLAT dismissed an appeal filed by Shivam Medicos Pvt. Ltd. (‘Shivam Medicos’) against an order of CCI dated July 19, 2017. Shivam Medicos alleged that Sanofi India Limited (‘Sanofi’) was contravening Sections 3 and 4 of the Competition Act by not supplying drugs regularly to the distributor in the garb of formalities such as third party due diligence and requests for providing documents even after completion of the third party due diligence.
NCLAT agreed with the findings of CCI that there was no agreement or arrangement or understanding which caused or was likely to cause an appreciable adverse effect on competition (‘ AAEC’). NCLAT further observed that Sanofi was not in a dominant position with a market share of 1.08% in the market of drugs and pharmaceutical products due to the presence of large number of players in the market with greater market shares. Accordingly, NCLAT dismissed the
appeal.
CCI Dismissed Case against Air Cargo Argents Association of India and its Office Bearers11
On September 9, 2017, the CCI dismissed a complaint filed by International Air Transport Association (‘ IATA’) against Air Cargo Agents Association of India (‘ ACAAI’) and its office bearers alleging contravention of Section 3 of the Competition Act. IATA is an international nonprofit trade association consisting of member airlines and is present in India through its wholly owned subsidiary, i.e., IATA (India) Pvt. Ltd. ACAAI is a national trade association that represents the air cargo industry in India. The gravamen of IATA’s allegations was the collective boycott by ACAAI of business with airlines that sought to implement Cargo Accounts Settlement System (‘ CASS’) in India, a web-based online billing and settlement system. IATA further alleged that ACAAI threatened to take actions against airlines which sought to implement CASS and that members of the ACAAI had even sent letters to airlines encouraging the collective boycott.
CCI noted that IATA itself submitted that CASS received an overwhelming response from the members of the ACAAI as well as from enrolment of members for the CASS training program of their own volition. CCI further noted that the letters sent to airlines were merely recommendatory in nature. Therefore, in the absence of any evidence being furnished by IATA suggesting an agreement between the members of ACAAI, the CCI concluded that there was no contravention
of Section 3(3)(b) read with Section 3(1) of the Competition Act.
CCI Dismisses the Case against M/s. Kanti Traders12
On September 28, 2017, CCI dismissed a complaint filed by Shri Rishi Keshwani against M/s. Kanti Traders (‘Kanti’) alleging contravention of Section 4 of the Competition Act. Kanti is a manufacturer of “Shudh Plus” pan masala, and M/s Rishi Enterprises (‘Rishi Enterprises’) was engaged in the business of marketing “Shudh Plus” pan masala under a dealership agreement entered into between Rishi Enterprises and Kanti (‘Agreement ’). The allegations made by Rishi Enterprises were in view of the arbitrary termination of its Agreement by Kanti on account of the informant’s refusal to deposit some demonetized banknotes into his account. Rishi Enterprises further alleged that Kanti took advantage of the informant’s hard labour put into marketing the product and on the same of day of such termination, appointed another super stockist.
CCI observed that Rishi Enterprises was primarily aggrieved by the arbitrary termination of the Agreement. CCI noted that pan masala was a distinct product and cannot be substituted with any other related products, hence delineating the relevant market to be ‘the market for pan masala in India’. Notably, for the year 2015-16, the DS Group (Rajnigandha) had a market share of 65% followed by others who had 11% and 10%. Therefore, CCI concluded that Kanti’s market share in the relevant market would be negligible and held that since Kanti was not dominant in the relevant market, no case of contravention of Section 4 of the Competition Act is made out.
CCI Dismisses Case against Film Distributors Association (Kerala) and Kerala Film Producers Association13
On October 3, 2017, CCI dismissed a complaint filed by Mr. P. V. Basheer Ahamed, against Film Distributors Association (Kerala) (‘FDAK ’) and Kerala Film Producers Association (‘KFPA ’) alleging contravention of Sections 3 and 4 of the Competition Act. Mr. Ahmed alleged the unilateral change by FDAK in the revenue-sharing arrangement entered into between the informant and FDAK to be anti-competitive. Mr. Basheer further alleged imposition of an unofficial ban on his theatres by FDAK and KFPA as he was part of a strike convened to demand a higher revenue share for the member exhibitors of Kerala Film Exhibitors Federation (‘KFEF ’), of which he was an office bearer. Mr. Basheer alleged that no distributor was willing to exhibit their movies at his theatres due to such ban, which led him to shut the theatres down.
CCI noted that the facts did not suggest any unilateral conduct on part of FDAK and KFPA that merited any consideration under Section 4 of the Competition Act. CCI considered FDAK ’s contention that the producers and the Government had to incur losses due to the strike called by KFEK at the behest of the informant. CCI noted that while most members of the KFEF withdrew from the strike and started taking movies as per the prevailing revenue-sharing terms, Mr. Basheer refused to do so and that this may have likely led to movies not being given to him.
Accordingly, CCI held that there was no sufficient material on record to suggest that exhibition rights were denied to Mr. Basheer due to any ban imposed, or that such alleged ban was imposed by FDAK and KFPA and dismissed the allegations made under Section 3 of the Competition Act.
CCI Dismisses Allegations against Skoda Auto India Pvt. Ltd. and its Chief Executive Office Mr. Bernhard Maier14
On October 3, 2017, CCI dismissed a complaint filed by Mr. Akhil R. Bhansali against Skoda Auto India Pvt. Ltd. (‘Skoda ’) and Mr. Bernhard Maier, Chief Executive Officer and Chairman of the Board of Management of Skoda alleging contravention of Section 4 of the Competition Act. The gravamen of Mr. Bhansali’s allegations involved abuse of dominance by Skoda and its exclusive authorized dealers by charging stupendous amounts for service and repair of Skoda cars in addition to installation of spurious parts forcing consumers to replace parts even when they were not required to be replaced, etc . Mr. Bhansali specifically alleged that Skoda shared an anti-competitive agreement with its authorized dealers through which consumers were being deprived from purchasing original equipment/spare parts of Skoda from elsewhere.
CCI observed that the allegations appeared to be a case of deficiency in after sales services by the authorized dealer of Skoda in Chennai which was an individual consumer dispute rather than a competition law issue. Accordingly, CCI relied on its decision in Subhash Yadav v. Force Motor Limited ,15 stating that for the protection of individual consumer interest, there is another statute already in existence known as Consumer Protection Act, 1986 and held that there was no case of contravention of Section 4 of the Competition Act.
CCI Dismisses Case against ANS Developers Pvt. Ltd. and Shalimar Corp. Ltd.16
On October 4, 2017, CCI dismissed a complaint filed by Ms. Usha Roy against ANS Developers Pvt. Ltd. (‘ANS ’) and Shalimar Corp. Ltd. (‘Shalimar ’) alleging contravention of Section 4 of the Competition Act. The informant alleged non-compliance of the agreement entered into between the informant and ANS for a plot of land situated in an integrated township for construction of a hospital (‘Agreement ’), non-cooperation with Informant’s request for arbitration and unilateral termination of the Agreement by ANS . Ms. Usha challenged clauses of the Agreement which provided for payment of interest by the informant in case of delay in payment but did not stipulate any liability upon ANS in case of any delay on its part, as being anti-competitive.
Referring to an earlier case17 which was also filed by Ms. Usha against ANS pertaining to the same subject matter as in the present case, Ms. Usha submitted that ANS had abused its dominant position in the market for “provisions of services for development and sale of plots of land earmarked for providing medical facilities in an integrated township in Lucknow”.
CCI had in its earlier decision in Smt. Usha Roy v. M/s. ANS Developers Pvt. Ltd. , rejected the market definition submitted by the informant and noted that for developing a hospital, a potential developer does not necessarily require to develop the same within a residential colony or integrated township. Therefore, CCI had defined the revenant market as “the provision of services for development and sale of plots of land for providing medical facilities in Lucknow
District of Uttar Pradesh” and held ANS not to be a dominant player on account of presence of a large number of players in the relevant market. CCI had further noted that even if the relevant market submitted by the informant was taken into consideration, ANS was still not dominant in that market as Ansal API held dominant position in the market by launching the largest integrated township in Lucknow. In this regard, Ms. Usha submitted that Ansal API ’s largest township was a hi-tech township and not an integrated township.
CCI noted that the distinction between Integrated and Hi-Tech Township was very narrow and that such distinction does not change the basic criteria of satisfying commercial and residential needs. CCI noted the presence of large and significant players in the relevant market that imposed adequate competitive restraint on ANS . Therefore, CCI held that ANS was not dominant in the relevant market and in the absence of dominance, no case of contravention of Section 4 of the Competition Act is made out.
9 TA(AT) (Compt.) No. 04 of 2017
10 Competition Appeal (AT) No. 21 of 2017
11 Case No. 29 of 2017
12 Case No. 41 of 2017
13 Case No. 07 of 2017
14 Case No. 44 of 2017
15 Case No. 32 of 2012
16 Case No. 96 of 2016
For further information, please contact:
Zia Mody, Partner, AZB & Partners
zia.mody@azbpartners.com
