Category: India

It’s Not the End of the World You know….

A recent article in the Economic Times pointed out a flaw in the Competition Act, 2002 that the Commission under Section 26  cannot close a case if the Director-General of investigation points out a contravention after a matter is referred to it for investigation.

While the oversight is unfortunate, the concerns of the author in the article are slightly exaggerated. Assuming a party in the future was to raise the issue before CCI or a higher forum, it will in all probability be remedied considering the stance of the hon’ble Supreme Court on the interpretation of statutes. Don’t get the wrong impression. I am certainly not condoning the error on the part of the government. To quote the lament of the late great Nani Palkhivala, “we legislate first, and think afterwords….” (Source:  Soli J Sorabjee and Arvind P Datar, Nani Palkhivala: The Courtroom Genius)

Coming back to the interpretation of statutes, a court of law is entitled to depart from the literal rule of interpretation (i.e. words of a statute should be construed as they are) and insert words into a statute wherever required. To quote from Hameedia Hardware Stores v. B. Mohan Lal Sowear, 1988 (2) SCC 513 

“Words may also be read to give effect to the intention of the Legislature which is apparent from the Act read as a whole”

This rule has been used a number of times by the Court in cases such as Siraj-ul-haq v. Sunni Central Board, U.P., AIR 1959 SC 198; State Bank of Travancore v. Mohammad, AIR 1981 SC 1744 and Union of India v. Seppo Rally, AIR 2000 SC 62. There can be no doubt that the intention of the legislature was in general, subject to the exceptions under sections 54 to 56, to grant supremacy to the CCI to be the final arbiter as to any perceived anti-competitive conduct in the country. Therefore, there does exist an effective judicial solution to the problem if required. And of course, there is always the option of a retrospective amendment to the Act. However, considering the present state of affairs in the country, don’t see that happening anytime soon.

Insurance Management

Apparently, the CCI has sent a letter to the Department of Financial Services last month enquiring whether its  directions to four insurance companies to avoid any competition among themselves would lead to some sort of cartelisation. to quote from the report:

“….It asked the finance ministry to share the letter with it along with the justification for the move. In the absence of any reply from the finance ministry on the issue so far, the CCI is now planning to send a notice to the department to answer its queries.”

Now frankly, if the government wants the existence of a tacit cartel between four of the biggest Indian Insurance companies, then the Commission cannot do much about it. Government intervention, no matter how anti-competitive it may seem, is as of now justifiable under Indian competition law.

However, what is surprising is that the government seems to be least concerned about the procedure to be used by it in order to do so. Section 55 clearly allows the Central Government to issue directions to the Commission whenever it deems necessary on questions of policy. Furthermore, Section 56 also allows the Central Government to supersede the CCI, with Section 56(1)(c) clearly allowing such supersession when “circumstances exist which render it necessary in the public interest to do so.” by notification and for reasons to be specified therein.

We have highlighted this problem earlier in the Cement cartel case, wherein again the collection of information was not exempted by the Government via a notification and hence, became a ground for the action against the CMA on the grounds of cartelisation.

A Layman’s Guide to Indian Competition Law

I found a nice presentation by Shri Vinod Dhall, Former Chairman of the CCI while “competition surfing” the net as I like to call it. Its simple and easy to understand and should help any individual other than a lawyer to easily understand the provisions of the Act.

The presentation can be found here 

“Fair Play” – CCI’s New Newsletter

The CCI has started a quaterly newsletter titled “Fair Play”. (A copy of which can be found here.)

Overall, its looks nice. 🙂 Page three is especially interesting. Titled “figures speak”, it contains pie charts on the cases decided by the Commission.

COMPAT Admits Anti-DTH Appeal.

The Competition Appellate Tribunal (COMPAT) has admitted the appeal of the Consumer Online Foundation (COF) against the decision of the CCI clearing DTH operators including Tata Sky and Reliance Big TV of charges of market dominance abuse in the set-top boxes case has been challenged by a consumer rights group. The matter has been listed for September 5th.

The appeal is not surprising. I have already expressed my views on the apparent confusion of the CCI in the relevant matter on the India Law and Technology Blog.

Is the CCI Thinking Too Much ??

The CCI in its recent Order dated 4th July, 2012 in the case of Owners and Occupants Welfare Association v. M/s DLF Commercial Developers Ltd. (Main Order/Separate Order/Dissenting Order) dismissed the complaint of the informant on the grounds and to quote:

“It is not alleged by applicant that Jasola District Centre had some particular significance to the allottees in comparison to other commercial space located in Delhi. The allottees who booked commercial space in Jasola could have booked commercial space anywhere in Delhi. The informant has not stated about the purpose of investment made by the allottees, whether the allottees had booked for the purpose of shifting their existing business in the nearby areas or they had booked for the purpose of investment.”

Granted, the first point is relevant. The issue at hand is the second point. On the second reason, the Commission has taken the logic that the booking of commercial space is done by two types of consumers. The first category are those are in the need of commercial space for the purpose of establishing a new business venture or for shifting their business place from one place to another place. The second category comprises of who invest in the commercial space for purpose of profits or future rental income.

No doubt such a category of consumers does exist but the question is exactly why such a distinction would be relevant in the present matter. Firstly, any such group of consumers, irrespective of their intentions, would without a doubt still be affected by any such abusive practices of DLF. Secondly, the argument of substitutability also may be hard to support in the present matter due to firstly that such investor would also take into account the fact that “Jasola being far away from the existing commercial centers, there was no nearby commercial complex within few hundred meters at the time when Jasola started developing.” For such investors, substitutability often stands reduced as a new commercial center would mean being able to buy a space for a better price than available in a developed area, and therefore, better profits from the rent revenue, especially in the long run. It must also be noted that any such consumer/buyer considers such an acquisition as a long term investment where the returns or profits shall only be recuperated with time.

Moreover, in conclusion, assuming (as this has not been confirmed in the order) that the consumers/buyers in this case have become “captive consumers” (as was the case in the previous DLF Order of the CCI), then such substitutability cannot be effectively measured.  (This is one of the faults which I find in the use of the SSNIP Test, but more on this later).

A Few Thoughts on Competition Law in the Technology and Media Sector

I recently wrote a post titled “A Few Thoughts on Competition Law in the Technology and Media Sector” for the India Law and technology Blog. To read the article, please click here.

Building Competition Jurisprudence

The Commission is busy building Indian competition jurisprudence. 🙂

Some trivia for all those interested. As on the date of this post the total number of orders passed by the Commission were as follows:

1. Orders under Section 3 and Section4 = 171

2. Combinations orders (FormI/II) = 56

3. Combination orders (Form III) = 3