Category: India

International Conference on Competition Regulation, Competition and Competitiveness: Implications for Indian Businesses

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“Indian Institute of Management (IIM) Kashipur, India is orgnising an International Conference on Competition Regulation, Competition and Competitiveness: Implications for Indian Businesses on November 20, 2013 at Hotel Eros , Nehru Place, New Delhi, India.

The conference is being organized by the Centre of Excellence on Competitiveness (“CoE”), IIM Kashipur, India in association with Corporate Knowledge Foundation (CKF) and AZB Partners as Knowledge Partner.

The objective of the conference is to build and provide a global networking and interaction platform to understand and examine recent developments and prospects of competition regulation to influence corporate strategy and operating practices of businesses and identify the actionable agenda for companies, market participants and policy makers.”

For more details, see here.

3rd Biennial International Conference on “Competition Reforms:Emerging Challenges in a Globalising World”

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“One of the key initiatives that CUTS and CUTS Institute for Regulation and Competition (CIRC) have taken in last few years is to provide a platform to deliberate and discuss key economic and governance challenges to competition and economic regulation at an international level and had organized two previous conferences in New Delhi, India.

The idea for this biennial series was conceived in the backdrop of developing countries concerns of frequent regulatory failures that undermine the capacity to achieve policies important to citizens and consumers. Such failures are due to persistent and common patterns of over-regulation, under-regulation, poorly designed regulation and implementation, and weak institutional capacities.”

Date: November 18-19, 2013, New Delhi

For further details, click here.

Also, a reminder for the upcoming 3rd B.R.I.C.S. International Competition Conference, 2013, though personally think it’s sad that the attendance for the conference is strictly by invitation. 😦

The E – Retailer War Has Reached India.

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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.

Applications For Filling Posts At C.C.I.

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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.)

 

 

In Re M/s Puja Enterprises et. al., Ref. Case No. 01 of 2012 : A Critique

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Click here for the Order.

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.

EC Dawn Raids: A human Rights Violation ?

I recently read an old 2008 article titled “EC Dawn Raids: A Human Rights Violation?” by Imran Aslam and Michael Ramsden.

The Paper examines whether the ‘Dawn Raid’ procedure provided in E.C. Regulation 1/2003 is consistent with two rights protected by the European Convention on Human Rights and Fundamental Freedoms: the privilege against self-incrimination (Article 6 E.C.H.R.) and the right to privacy (Article 8 E.C.H.R.). The paper argues that the protection provided by the European Court of Justice falls far short of protection necessary to undertakings. On this basis, it analyses what available source(s) of judicial remedy an undertaking has in order to avail itself of E.C.H.R. rights.

While the article is old, it does hold special relevance for India in light of the expansive powers which are proposed to be given to the C.C.I. in the still pending Competition Amendment Bill which proposes to amend Section 41 of the Act, conferring the authority on the Commission to grant powers of search and seizure to the Director General’s office as and when required.

Fire Sales in the Aviation Sector: Are they Really a Competition Law Abuse ??

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Much has been said about the recent “Fire Sale” tactics adopted most recently by Jet Airways and also by SpiceJet in the past. While we debate on whether this is fit case to be considered by the C.C.I., I have to submit that in my  personal opinion, this incident can probably not be classified as an incident of predatory pricing, the reasons for which are as follows:

“Fire sales” or “pricing games” cannot per se be considered anti-comeptitive or a Predatory Pricing tactic. The Competition Act, 2002 clearly defines the phrase as when goods or the provision of services are sold BELOW COST. There is no proof that the sale of these tickets is actually below cost, as is further affirmed by the article itself which clarifies that the tickets are exclusive of taxes, effectively bringing the prices at par with other airline ticket prices.

As to the airline declaring losses in a particular quarter or the general lack of financial health in the aviation sector, such general economic scenarios cannot be used to determine Predatory Pricing or any evidence thereof. Predatory Pricing must be determined according to the specific incident which is alleged as Predatory Pricing, i.e., it would be required to show that the tickets that were sold in the fire sale itself were below cost. In the case where one can show them as having been sold above cost, the financial health of the airline would be irrelevant. Furthermore, if the airline could show that my selling large volumes, it was in fact able to make a profit, it would further render the case of he C.C.I. all the more weak.

One may counter this by submitting that my argument is inherently contradictory as a loss making airline would imply tickets having been sold at below cost. However, this is where the peculiarities of the aviation sector itself would need to be taken into consideration. The entire sector is suffering from severe financial strain due to many other factors other than the variable price of tickets. I am of the opinion one could successfully argue that it is these additional factors which play a significant role in the final balance sheet of the airline rather than one individual incident of fire sale.

A Comment on the T.R.A.I. Consultation Paper on “Monopoly/Market dominance in Cable TV services” Part – II

Part II of my comments on the T.R.A.I. Consultation paper on “Monopoly/Market dominance in Cable TV services” can be found on the India Law and Technology Blog

 

Both posts were infact, initially supposed to be on the I.L.T.B., but unfortunately, due to a communication gap between Apar (the founder of the Blog) and me, I ended up putting the first part here.

 

Click here to see the post.