Tag: discriminatory Practices

Delhi High Court Slaps Cost of Rs 1 Lakh. Writ against Section 26(1) CCI Order.

case dismissedIn a rather interesting/unforeseeable turn of events, the Ld. single judge of the Hon’ble Delhi High Court (‘DHC’) has come down heavily on a Petitioner seeking relief against a Section 26(1) Order passed by the Competition Commission of India (‘CCI’).

The writ was filed against order  passed by the CCI under Section 26(1) under Section 26(1) of the Competition Act, 2002 (‘the Act’), whereby the CCI had directed the Director General (‘DG’) to conduct an investigation on an allegation that the petitioner along with certain other manufacturers had contravened the provisions of Section 3(3)(a) and Section 3 (3)(d) of the Act.

The petitioner’s case was solely based on the contention that the said 26(1) order did not make any specific allegation against the petitioner.

A noteworthy background on this particular Sec 26(1) matter; is that the same petitioners had earlier moved to the writ court praying for relief of inspection of files of the CCI pertaining to the said order. And the same relief was granted by the DHC.

Now coming back to exactly what irked the Ld. Single Judge into imposing such heavy costs on the petitioner. Allegedly the whole controversy circles around an apparent untrue statement submitted before the court by the petitioners on their knowledge of  the DG investigation in this particular case.

During the course of arguments , the counsel on behalf on the CCI, submitted before the court, certain documents relating to DG’s questionnaire, which was apparently sent to the Petitioners back in the year 2015, and the petitioners had duly participated in the investigation by replying to the said questionnaire. Without going into any finer details I will just say that this very movement was a true table turner. Because at this juncture the Ld. Single Judge went on to the extent of noting that the false statement and false affidavit of the petitioner make for a fit case to invite proceedings under section 340 of the Cr.P.C.

While not interfering with the operations of the said CCI order, and refusing to stay the  DG investigation, the court  while placing reliance on the Supreme Court case of Competition Commission of India v Steel Authority of India: (2010) 10 744; observed that that an order under Section 26(1) of the Act is in the nature of an administrative order and does not affect the rights of the parties. The Supreme Court had also examined the scheme of the Act and held that the legislative intent was not to permit any appeal against the order passed under Section 26(1) of the Act. Thus, an order under Section 26(1) of the Act cannot be interfered with unless it is established to be perverse or suffering from jurisdictional errors.

And accordingly the said petition was dismissed with with cost quantified at Rs.1,00,000/-. What will now remain interesting to see is how this order impacts the practice being followed by the Opposite parties of  challenging the CCI’s order before the writ court under Article 226 of the Constitution. Would the attitude of not staying the operation of a 26(1) order finally mean that at last the Competition regulator will  have proper time and opportunity of investigating into various alleged contraventions. OR maybe instead of an Article 226 remedy, a review/recall application  before the CCI would be the appropriate way out for the Opposite Parties (Ah! btw hopefully an elaborate post discussing some thoughts on the CCI’s power of Review/Recall- soon). And maybe these investigations see the light of the day and aren’t just left hanging in the middle struggling for a decisive fate for years and years.  And maybe just maybe this would be another step into the direction of having a stronger competition law regime in India.

 

There IS a Better Way to Call India: A Quick Comment On Competition Law And Advertising.

Airtel-Talk

In all the chaotic hullabaloo which arose on Airtel’s VoIP Data charges issue (detailed article on the issue currently in progress), another protest which drew comparatively little attention (probably due to the substantially lesser individuals/entities it affected) was the protest by International Long distance(I.L.D.) Operators against the Company’s practice of advertising it’s own VoIP Application Airtel Talk over long distance calls. Specifically, a few seconds before connecting the call.

I am a total outsider to the precise details of the case, and the facts are also disputed (I.L.D. Operators claim the advertisement was run selectively only on those networks with whom Airtel had not entered into collaboration agreements. Airtel denies this and claims that the advertisement was played on all networks equally without any discrimination.) But it did get me thinking on the issue of Advertising in Competition Law.

Prima-facie, one would consider advertising and competition law as congruous to each other. After all, advertising is an essential part of the competitive process in any economy. If a consumer is not aware as to what goods and services are on offer and at what price they are on offer, he or she will be unable to choose between the suppliers of the goods or services, and therefore, competition between suppliers may get diminished. But in this imperfect and admittedly anti-competitive world that we live in, it never is that simple. There are two different scenarios which need to be considered while addressing the issue of advertising and competition law.:

Individual Advertising

Individual Advertising is what I referred  to above, i.e., an individual entity choosing to advertise it’s products with the aim to grab market share from competitors in the same sector. This would generally not be subject to perceived anti-competitive harm. Misleading and false advertising, including comparative advertising, may be concerns, but in India they would dealt before other fora. There is however some literature which suggests that advertising paradoxically carries with it an inherent anti-competitive effect as advertising costs act as a serious barrier to the entry of new entities wishing to enter a market which is already dominated by a few relatively large competitors, especially in markets which inherently require enormous amounts to be spent in building up a brand name for the product/company. In fact, Bork has even gone so far as to state that it should be considered as a Barrier to trade !! (See Robert H. Bork, The Antitrust Paradox.)

Horizontal Agreements on Advertising

This refers to agreements among competitors in a market, and needless to say, these are a bit problematic. Any agreement among entities which restricts advertising would generally be considered as an anti-competitive agreement.

However, the reaction of the European Commission (E.C.) has been mixed depending upon the facts and circumstances of each case. While in the case of Belgian Roofing Felt, OJ [1986] L 232/15 (later upheld on Appeal in Belasco v. Commission, [1989] ECR 2117) the Commission ruled against joint advertising which led to a uniform image of products in a market wherein individual advertising would have facilitated differentiation, and consequently competition, on the other hand, in Re CECIMO, OJ [1969] L 69/13 and UNIDI, OJ [1984] L 322/10 (later upheld on Appeal in ANCIDES v. Commission, [1987] ECR 3131), it was accepted that it is sometimes desirable to rationalise and coordinate advertising efforts while imposing certain conditions on such coordination.

Post Script: The Advertising Market

As a post script, other than the above, an important area where competition needs to be maintained is the advertising market itself. It is important that the advertising media itself should function in a competitive manner free from any anti-competitive practices, including (but not limited to) any practice which might lead to reduction of advertising space in the market. This has been affirmed in the U.S. as far back as 1951 in Lorain Journal Co. v. United States, 342 US 143 (1951). One such allegation has already arisen before the C.C.I. is the case of Advertising Agencies Guild v. Indian Broadcasting Foundation, Case No. 35 of 2013. Though that particular Information was closed, the currently running Google Investigation before the C.C.I. involves similar issues (among others) and one will have to wait and watch for further competition law developments in this area.