The Competition Commission of India has invited applications for filling up of various posts on deputation on foreign service basis. The details of the posts along with eligibility criteria, educational qualification/experience etc. required for each category of the posts can be found here.
I recently wrote a critique for Legally India on the Jet – Etihad Combination Order (Main Order/Dissenting Order/Section 38 Order/Section 43A Main Order/ Section 43A Partially Dissenting Order.)
Please feel free to provide feedback and comments, especially if your opinions are contrary to mine.
I have been falling behind in case law readings in recent weeks, which is why a number of posts are presently saved as half finished drafts on the Dashboard of the Blog. Nevertheless, while trying to finish the backlog, I recently had the opportunity to sift through the recent Orders of the Commission. Two of them stand out and thus deserve a special mention.:
The first is that of Mr. Larry Lee Mccallister v. M/s Pangea3 Legal Database Systems Pvt. Ltd., mostly for the reason that as far as can be recalled, this is the first time the Commission has dealt with Non-Compete clauses under the Competition Act. The reasoning seems to be sound on the facts and circumstances of the case as the matter was more about the personal grievances of a particular individual rather than that of anti-competitive or consumer harm. Personally, am waiting for the day when the C.C.I. has to deal with a Telefonica like situation in the context of cooperative joint ventures or M & A transactions.
For those who are not aware about the above mentioned case, in 2010, Telefonica acquired sole control of the Brazilian mobile operator, Vivo, which was previously jointly owned by Telefonica and Portugal Telecom. In the context of this transaction, the parties inserted a clause in the purchase agreement indicating that Telefonica and Portugal Telecom would not compete with each other in Spain and Portugal as between the end of September 2010 and the end of 2011. The European Commission opened an investigation in January 2011, and the parties terminated the non-compete agreement in early February 2011. The European Commission held that, by virtue of the non-compete agreement, Telefonica and Portugal Telecom had deliberately agreed to stay out of each other’s home market. The European Commission considered that this preserved the status quo in Spain and Portugal, which hindered the integration process of the E.U. telecom sector and prevented the parties from competing with each other for offering clients the most advantageous conditions. Despite the short duration of the infringement, which was only 4 months, the European Commission fined Telefonica €66,894,000 and Portugal Telecom €12,290,000.
The second one is Shubham Srivastava v. Department of Industrial Policy & Promotion (D.I.P.P.)/Supplementary Order , which deserves to be added in the growing list of Orders of the Commission on determining the scope of the definition of the term “Enterprise” under Section 2(h) of the Act. In the Order, while dismissing the Information, the C.C.I. has held that D.I.P.P., under the Ministry of Commerce and Industry, would fall under the definition of “Enterprise” under the Act.
Hope this satisfies readers for now. More (finally) finished posts to follow in the next few days. 🙂
A recent Economic Times article reported how a number of “small brick-and-mortar retailers have banded together to seek protection from e-commerce companies, which they say are undercutting them with predatory pricing. The retailers, mostly from Bangalore – home base for Flipkart, India’s largest e-tailer – have written to the Competition Commission of India, complaining that their online counterparts are selling goods below cost and skirting Indian laws on foreign direct investment in retail.”
This is not surprising and frankly, it was only a matter of time. In fact, in one of our previous posts, we focused on the Department of Justice (DoJ) complaint filed against the five publishers (Hachette, Penguin, Simon and Schuster, Macmillan and Harper Collins) alleging their agreement with Apple to be anti-competitive.
My personal opinion is that this is part of the Schumpeterian Cycle of “Creative Destruction”, and this struggle is inevitable. To be honest, in the larger scheme of the economic world, this disputes is trivial, as instances of such disputes abound in economic history.
Two of the vacant posts at the C.C.I. are up for grabs, and YOU could get one of them !! (If you fulfill the eligibility criteria ofcourse. 🙂 )
The Ministry of Corporate Affairs is inviting applications for the posts which have been lying vacant for some time now. Furthermore, the last date for receipt of Applications has also been extended to 11th November, 2013. (Not surprising they had to extend it. Just found out about this a few hours ago this side.)
FACTS:
The reference was filed by Director General (Supplies & Disposals), Directorate General of Supplies & Disposals (D.G. S&D), Department of Commerce, Ministry of Commerce & Industry, Government of India, New Delhi (“the Informant”) under Section 19(1)(b) of the Competition Act, 2002 against opposite parties alleging Bid Rigging and market allocation in contravention of the provisions of Section 3 of the Act while bidding against the Tender Enquiry dated 14.06.2011 floated by D.G. S&D for concluding Rate Contracts (R.C.) of product (Polyester Blended Duck Ankle Boot Rubber Sole) for the period from 01.12.2011 to 30.11.2012.
The Wool and Leather (W.L.) Directorate of D.G. S&D had issued Tender Enquiry No. AB(Duck)/WL-6/ RC-11050000/ 1112/ 66 dated 14.06.2011 for conclusion of new Rate Contracts relating to the period from 01.12.2011 to 30.11.2012 for polyester blended duck ankle boots rubber sole (‘the product’), with tender opening date as 29.07.2011. The estimated requirement indicated in the Tender Enquiry was valued at Rs. 10.45 crores. The Tender Enquiry consisted of 45 items of different sizes and colours of the product, as in the previous Rate Contract for the year 2010-11 which was awarded to the eleven parties who were also holding the Rate Contract for the year 2009-10. On scrutiny of the tenders for year 2011-12 opened on 29.07.2011, it was found that the difference in quoted prices of different bidders was in a very narrow range and all the tenderers barring one, had restricted the quantity to be supplied by it during the Rate Contract period. Nine tenderers had also stipulated the maximum quantity to be supplied by them to a particular Direct Demanding Officer (D.D.O.). This
was stated to indicate a pre-determined, collusive and restrictive bidding pattern or cartel formation by the bidders thereby violating the various provisions of the Act.
ISSUE(S):
Only one broad issue. Whether the opposite parties were guilty of Bid Rigging in the Tender ??
CRITIQUE:
While it is best to reserve judgement on the Final decision in the Order of the Commission on whether the parties were actually guilty of Bid Rigging (For all we know, they actually were), the reasoning used to arrive at the conclusion both by the D.G. and the C.C.I. definitely merits some assessment:
1. The fact that the same set of bidders/manufacturers have been bidding consistently since the past few years cannot be a sufficient ground to accuse them of Bid Rigging. This is because if the bidders have over time come to understand the system and have learnt to bid intelligently, it shows that they’ve been smart, but certainly cannot clearly point to Bid Rigging.
2. Following from the above, the quantity restrictions could have easily been a move of efficiency to optimize production with maximum possible profits, again a consequence of having been smart enough to understand the modalities of production and supply of the product in the present tender.
3. It was pointed out on behalf of the opposite parties at the very outset that the units against which the investigation was ordered by the Commission were small/ micro enterprises enjoying certain concessions/ exemptions from the Government of India and the state Governments.
4. The D.G. took into account a meeting organized by Federation of Industries of India (F.I.I.) on 20.10.2009 to presume that the opposite parties could have shared the information and therefore, there was meeting of minds. Frankly, this is a bit absurd. It is one thing to infer such a conclusion when the association was one specific to the industry, e.g., in the Cement Cartel Case. However, to assume similar conclusions in the case of a general industry body is in my respectful view pushing the ambit of circumstantial evidence in Competition Law a bit too far. Furthermore, there does not seem to have been any evidence to suggest that any of the opposite parties discussed the particular Rate Contract in the meeting.
5. Both the D.G. and the Commission seemed to have omitted considering that fluctuation in the prices of raw materials is not a good enough indicator to determine cost for two reasons. Firstly, sensible industries do not buy raw materials at spot rates. They buy them under long term contracts at fixed rates. Secondly, manufacturers will often hedge against the cost of the raw materials to ensure effective cost considerations both during production and accounting.
6. Practical experience while dealing with the government is a good enough reason for anybody to impose quantitative restrictions on production. Ask any businessman having to deal with the government. The unanimous opinion will be that it is a headache when it comes to demand, supply and payment for providing goods and services !!
In conclusion, to reiterate, it is quite possible that the opposite parties actually were guilty of Big Rigging, and in fact, there are certain evidences unearthed by the D.G. in it’s favour. What I really want to indicate through this post is that if the reasoning in Orders are going to be so flawed or open to loopholes and cracks of ambiguity, then it will become all the more easy to defend against them in Appellate forums.
A recent Economic Times Article states that the “probe by Indian authorities to examine if Google abused its dominant position in the Internet search engine market is progressing at a sluggish pace, mainly due to a lack of understanding on Internet-related issues.” Furthermore, it also stated that “India (presumably through the C.C.I.) has sought the FTC’s help in this matter.”
While the reason stated above is probably true, I feel another important reason the investigation faces difficulty is becaue of the direction the D. G. Office seems to be taking to reach its goal. This is evident from the second line quoted above, where the article states that the C.C.I. is looking for aid from the F.T.C. There is no harm in asking for aid from others, but in this case, the Commission may be asking for aid from the wrong people. One needs to understand that the F.T.C. and the European Commission have SETTLED their cases with Google on the basis of certain commitments they received from the company. (See here for the F.T.C. commitments and here for the E.U. commitments). It is more than evident from their respective press release and the commitments received from Google that both the competition authorities never approached the investigation with an intention to prosecute. Their primary intention was merely to ensure competitiveness without disrupting the market (being the internet search engine market and online advertisement market) to the best possible extent. The merits of such an approach are of course debatable, but are presently outside the scope of this post. What is important is that settlements require a mediative approach (far different from an adjudicatory approach) and this is not the approach the C.C.I. wishes to follow. Even if it wishes to, it as of now can’t, as explained in a previous post.
It is better if the Commission looks eastwards to the Australian Competition and Consumer Commission (A.C.C.C.) for help. The judgement of the Federal Court of Australia is the only case which Google has lost on allegations against its Adwords programme, which is the primary subject of investigation even in India.
A competition law co-blogger recently complained about how the European Commission was turning into a “settlement Junkie”. While this is a debate which no doubt all EC competition law jurists and lawyers will seek to actively participate in and discusss, the post did get me thinking on any future prospective settlements with the CCI in India.
As far as I know, the CCI has till date not settled any case either related to an anti-competitive agreement or an abuse of dominant position. And on a perusal of the Act, there is a good reason. The Commission doesn’t have the power to settle cases !! No section of the Competition Act seems to allow the CCI to settle a case if it wishes to do so. The Section which seems to come closest to granting such a power to the Commission may be Section 36 (Power of the Commission to Regulate its Own procedure). However, that the power to settle a case can be interpreted under this Section seems a doubtful proposition.
Of course, this may not necessarily be a bad thing, as we can see from the above mentioned blog post.
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