Invitation to Fill C.O.M.P.A.T. Vacancy

The Ministry of Corporate Affairs has released an Internal Communication within certain departments, calling for Applications for the post of “Member”, Competition Appellate Tribunal. I found a copy of it which was circulated in Ministry of Finance, Department of Revenue, Central Board of Excise and Customs calling all Chief Commissioners and Director General’s interested to apply.

Actually, it was released on 12th June and the copy which is on the link was circulated within the Department on 26th June, so am presuming the appointment process must be almost over by now. About time. There is a tonne of work waiting for the Tribunal when it starts sitting again.

P.S.: In related news, Mr. U. C. Nahta has been appointed as a Member of the C.C.I. He belongs to the Indian Corporate Law Service and was formerly the Director (Inspection & Investigation) in the Ministry of Corporate Affairs. He will serve a full term of five years.

C.C.I. Double Standards Or Bad Reporting ??

The recent reports on the alleged demand of the C.C.I. against a number of builders and C.R.E.D.A.I. “to respond to findings by its investigation arm that they engaged in unfair trade practices such as one-sided contracts with inadequate disclosure” have generated a substantial amount of hype and glee and grimace alike. But to be honest, the news report has (at he risk of sounding stupid) left me confused more than anything else. Listed below are the reasons for my confusion:

1. The report states that the Commission began investigations based on a complaint by an individual, Jyoti Swarup Arora, against Gurgaon-based builder Tulip Infratech, the director of town and country planning, Haryana, and the Haryana Urban Development Authority. However, memory served me correct, as I clearly remember the Case being dismissed at the threshold itself. (It is Case No. 7/2011. Order dated 06.04.2011). There is also no supplementary Order of a later date available on the Commissions website therefore it is difficult to believe that the matter was appealed before the Competition Appellate Tribunal and was referred back from there.

2. As per the report, the “CCI has sought responses from Unitech, Oberoi Realty, BPTP Ltd, Gaursons India, K Raheja Corp, Amrapali Group, Supertech Ltd, Tata Housing Development Company, Ansal Properties & Infrastructure, Purvankara Projects, Prestige Estates Projects and Ambuja Neotia Group.The competition watchdog has also sought responses from Avalon Group, Aparna Construction and Estate, Amit Enterprises Housing, Omaxe, Parsvnath Developers, PS Groups Salarpuria Group and Purohit Construction. The Confederation of Real Estate Developers’ Associations of India (C.R.E.D.A.I.) lobby group has also been asked to comment.”

Notwithstanding what has been stated in point one above, there are already cases which have been filed against some of the above mentioned developers which have raised the exact same issues as given the article, and all of them have been dismissed. Assuming the article is not a case of bad news reporting, surely it is nothing less than double standard on the part of the C.C.I., not to mention that those Orders are Orders In Rem, and thus create a clear balance of convenience against these companies which have been showcaused. The Orders are as follows:

Omaxe (Case No. 77/2013 and Case No. 83/2011)

BPTP (Case No. 25 of 2014 and Case No. 33 of 2013 and Case No. 42/2010)

Raheja Group (Case No. 62/2011)

Supertech (Case No. 86/2013 and Case No. 3/2013 and Case No. 28/2012)

Unitech (Case No. 27/2011 and Case No. 21/2011)

Note: Since many of these developers are also involved in commercial construction market, I have chosen to exclude the Informations/Complaints filed against their commercial/office spaces but rather have limited the Orders on the subject matter at hand, i.e., residential apartments/spaces. But just for the record, all the Orders related to commercial spaces have also been held in favour of the above mentioned developers.

3. To quote directly from the article:

“The complainant alleged an understanding among all real estate players in the market to the detriment of consumers, saying that the code of conduct adopted by Credai indicated collusion among its members. The commission directed the investigation officer to probe the matter after observing that the conduct of Tulip and other members of Credai indicated prima facie violation of the provisions of the Companies Act.”

Not only is the second half of the above quoted stanza factually wrong due to the reasons mentioned in point one, but the very basis of the Complaint/Information as stated in the first half of the stanza is questionable. After all, as per the numerous decisions of the Commission itself, Collective Dominance is presently not recognised under the Competition Act. Furthermore, as the Article creates an impression that these developers are involved in a Cartel through C.R.E.D.A.I., to address this argument, it cannot succeed as the requisites of Section 3(3) of the Act can’t arise and be met in the present case. (There is a reason why all Information’s have been filed under Section 4 of the act.)

I look forward to any form of of clarification or even a correction against me to any and all my doubts. After all, I am purely going by the newspaper report and there is always the possibility that I may have missed something during my analysis.

First Combination Phase – II Investigation !!

For the first time in since it’s inception, the Commission has begun a Phase – II investigation into the proposed Sun-Pharmaceuticals-Ranbaxy Merger. The Commission will in all probability order an investigation to be conducted by the Director General.

It is pertinent to note that the Commission does not seem to be focused on the consequent fifth largest Pharmaceutical Corporation in the world which would be created as a result of the merger, but rather has chosen to keep it’s focus limited to India on the impact on drug prices ans their availability in the Country. (There are approximately forty six drugs which will be manufactured by both together merged as the single entity.) It goes without saying that this is speculative and the focus could widen considerably as the case progresses.

UPDATE:

C.C.I. Invites Public Comments on Sun-Ranbaxy Deal.

Combination Consultations and the “Harvey Two Face” Concern.

With the C.C.I. expanding it’s informal Pre-Notification consultation to include substantive issues regarding filing of notice with the C.C.I., we are now looking at a scenario in competition regulation where there will be a significant growth in the level of interaction between the Regulator and the Practitioner. This growth of informal interaction leads to what I like to call the “Harvey Two-Face” concern (Batman enthusiasts will understand why I choose him for this particular post. Others, maybe not so much.):

1. “Clean face” Harvey: The amendment to the Regulation and the consequent expansion in effective communication Simplifies procedures and most importantly, will result in clearances being granted smoothly within a shorter span of time, thus aiding business growth and consolidation wherever it may be necessary. Plus, it gives a chance for the Commission to be “prepared” for what will be coming and think up replies and make quick decisions to any complications which may be part of the merger proposal.

2. “Burnt face” Harvey: It threatens the impartiality of the entire combination procedure and may probably raise corridor gossip about lobbying to clear combination proposals. As it is, the present lack of “effective combination research”, i.e., effectively assessing complicated market dynamics in complicated mergers(The Jet-Etihad Combination is one such example) at the Commission has created some disquiet among a few (myself included) at the heavy reliance which is being placed on the submissions of parties rather than individual independent research. Handling conflict of interest is not one of the strong suits of the Indian Executive (or to be frank, of Indians in general) and this raises concerns as to overt reliance on the proponent of the Combination to understand it in the first place.

Invitation for Applications for Vacant “Member” Posts.

The C.C.I. has invited Applications for filling up of the two vacant “Member” positions in the Commission. How meritorious the selection will be remains to be seen, as such positions are often prone to bureaucratic and judicial lobbying. Nevertheless, one must learn to retain faith in the system, for if we can’t, then we might as well live in Hobbes’ anarchic world where are lives would be “Solitary, Poor, Nasty, Brutish and Short.” [Have just finished “Law’s Empire” by Ronald Dworkin (finally, if I might add !!), which coupled with the Gopal Subramanium Fracas has put me in a sadly philosophical mood.]

Last date for Submitting Applications is 24th July, 2014.

Further details can be found here.

Is The Noose Tightening ??

Is the C.C.I. noose slowly tightening around Google ?? It sure does seem that way. The C.C.I. recently admitted another case against Google, and will probably club the Information with the ongoing investigation in the BharatMatrimony Case and the C.U.T.S Information Case. Speaking of BharatMatrimony and C.U.T.S., Google’s woes have risen with it being fined one crore for non-cooperation in the ongoing D.G. investigation.

So why is it facing so much difficulty in India ?? Probably because it may not be innocent after all. Not to express opinion on the merits of the case, but it is a fact that Google hasn’t exactly won any of the competition law cases filed against it across the world. Both the E.U. investigation and F.T.C. investigations were closed with settlements, which one can’t exactly count as a victory. All Google did was make certain commitments to the two bodies and consequently changed their programming to suit the settlement. It can’t do that in India, there being no provision for settlement/compromise of cases in the Competition Act, 2002. In fact, Google has lost a case against it’s Adwords programme in Australia, which has probably bolstered the hopes of those who feel discriminated by Google Adwords.

People may believe that I am against Google, considering how much I write about it (and according to many, against it). Rest assured, one could not be farther from the truth. In fact, I am one of Google’s biggest fans, but more on this later in another post which I have planned.

Dish TV India Limited v. Hathway Cable & Datacom Limited and Others, Case No. 78 of 2013

Here’s something which came up sooner than I had expected. A D.T.H. Service Provider filed an information against several M.S.O.’s (Multiple Service Operators) alleging a collective abuse of dominance by them. The issue raised is genuine as we’ve highlighted before here, here and here.

To be frank, am disappointed with the Information. The Informant seem to have pressed for “Collective Dominance”, which every Indian competition lawyer worth his salt knows is presently not addressed in the Act and their seems to have been no elaboration on the Relevant Market (Though not sure about this one. Only have access to the Order and not to the copy of the Information itself.) Furthermore, there seems to have been no attempt to build a case under Section 3. Needless to say, the Information was dismissed without a submission to the D.G. for an investigation. At the same time, it is surprising that the C.C.I. chose to dismiss this straightaway, since there already exists a T.R.A.I. Consultation Paper on this issue. In case it was worried about a regulatory conflict, it should have clearly stated so in the Order.

Interestingly, D.T.H. Service Providers are also facing scrutiny under the Competition Act. An Information against TATA Sky was dismissed in 2011, but the same as been appealed against and is presently pending before the Competition Appellate Tribunal.

Anonymous v. Bengal Greenfield Housing Dev. Co. Ltd And Others, Case No. 103/2013

This is one case which has surprisingly been closed by the Commission, with the finding that that no case has been made out of the existence of an Anti-Competitive Agreement or of an Abuse of Dominant Position. However, in my humble opinion, I am not so sure. While the conclusion of the D.G. in the end may have been that there was no Competition Law violation, it was definitely a case which merited a reference to the D.G. for further investigation.

The Informant in the present case claimed that the absorption of new supply of flats despite prices having gone up from Rs. 1,100/- to 4,800/- per square feet and the sale of Application Forms and allotment through lottery suggesting huge demand gave a clear impression of manipulation and restriction of supply and use of monopolistic and dominant status for monopolistic pricing as the the parcel of land for the township was being developed selectively despite the final allotment of land to the respective builders.

The reason the case is so important is because the Commission seems to have not given enough consideration, though it has been mentioned in the Order of the Commission, is that all the Respondents/Opposite Parties except for DLF Universal Ltd., are in fact joint ventures between the West Bengal Housing Board and various individual private entities. Therefore, all the entities have a common partner which definitely gives an impression of the various Respondents possessing the capability to effectively communicate with each other, or at the very least, coordinating with each other per force the directive of the W.B.H.B. Granted, it is a government body which claims as it’s objective to provide affordable housing to the people of West Bengal. But as we all already know, Government Bodies are not innocent when it comes to violation of Competition Law.

In my humble opinion, there exists a prima-facie case to be investigated on the violation of Section 3(3)(a) and Section 3(3)(b) of the Act and to be frank, it is unfortunate that the Commission chose to close the case.