Question 1:

Find 1 case law for each of these topics and write head notes:
a. Cartels
b. Abuse of Dominance
c. Leniency provisions

a. CARTELS
Competition Commission of India V. Bharti Airtel Ltd. Civil Appeal No(s). 11843 of
2018.
(Bench Justice A. Bhushan & Justice A. Sikri)

Reliance Jio Infocomm Limited filed an application in the year 2017, under Section 19(1) of
the Competition Act, 2002 which states that the commission may inquire into certain
agreements and dominant position of enterprise, alleging abuse of dominant position and
cartelization by Bharti Airtel, Idea Cellular Limited, Vodafone India Limited (collectively,
the ‘IDOs’) and the Cellular Operators Association of India for the violation of section 3 &
section 4 of the Act. Section 3 & 4 of the Act states that there should not be any agreement
which is likely to cause appreciable adverse effect on the competition within India & another
which states that no enterprise or group shall abuse its dominant position respectively.

Accordingly, Jio filed an application before TRAI to look into the conduct of IDO and the
COAI. The CCI’s Order on the application was challenged before the Bombay High Court.
The Bombay High Court on 21st September, 2017 set aside CCI’s Order and directed that the
CCI had no jurisdiction in the matters of telecom sector as in the instant case the matter was
also referred to TRAI the telecom sector regulator. the prima facie Order passed by the CCI
was not an administrative order and therefore the CCI should have waited for the final
decision of the TRAI before passing a prima facie Order against the anti-competitive
practices. CCI and Jio aggrieved by the impugned Order of the Bombay High Court and
challenged it before the Supreme Court by way of special leave petition.

Reliance Jio Infocomm Limited (RJIL) filed a case with CCI under Section 19(1) (a) of the
Competition Act, 2002 against three major Cellular Operators namely Bharti Airtel,
Vodafone and Idea Cellular (Incumbent Dominant Operators’ or ‘IDO‟ hereinafter) for
cartelisation. RJIL alleged that the IDOs were colluding against the new entrant. Firstly, by
Denying the point of interconnections that the IDOs were attempting to downgrade the
services of RJIL by only offering one-way POIs instead of giving two-way POIs and
preventing RJIL subscribers from making calls across different service providers; and
Secondly, denying requests for mobile number portability (MNP) so that the customers do
not switch to RJIL’s network.

The Supreme Court in this present case did not grant leave to petitioners and upheld the
decision of the Bombay High Court. The SC declared that the TRAI is the sector-specific
regulator and it has the expertise to deal with the issues in the telecom sector, which arise
from the Telecom Regulatory Authority of India Act, 1997.

Further, The SC held that the CCI is delegated with an important role to curb anti-
competitive practices in the relevant markets of India and this responsibility delegated to
CCI should not be washed away completely and “the ‘comity’ between the CCI and
TRAI is to be maintained”. Therefore, the jurisdiction of the CCI is not outset completely
with regard to the telecom sector but the CCIs jurisdiction is pushed out to the later phase,
once the issue is decided by the TRAI.

b. ABUSE OF DOMINANT POSITION

Shri Shamsher Kataria v. Honda Siel Cars India Ltd. & Ors. (2019) PL (Comp. L) June
77 (Before Mr. Ashok Chawla, Mr. Anurag Goel, Mr. M. L. Tayal)

A complaint filed by Shamsher Kataria to the Competition Commission of India (CCI)

against Honda, Volkswagen, and Fiat (carmakers) alleging that these three companies
were abusing their dominant position in the market and were indulged in anti-competitive
practices by controlling the operations of those workshops and service centers which sell
automobile spare parts. The car manufacturers mandated that the authorized dealers
source their spare parts only from the Original Equipment Manufacturers (OEMs) and
such spare parts could not be sold in the open market thus monopolizing this spare-parts
market.

OEMs and their authorized dealers charged high prices to the consumers for spare parts
and maintenance of the automobile is impossible. CCI ordered the Director-General to
investigate the allegations. At the time of investigating, the director general found 14
more such automobile companies who were indulged in anti-competitive practices of the
same kind.

After examining all the facts and circumstances CCI observed that each OEM was
enjoying a dominant position in the market, which restricted local dealers to enter the
open market. Irrespective of any fact, if an agreement or act eliminates the competition in
the market then the commission has to strike it down. Consequently, OEMs held liable
for violating Sections 3(4) (b), 3(4) (c), 3(4) (d, 4(2) (a) (i), 4(2) (c) and 4(2) (e) of the
Competition Act. As a result, a penalty of 2% of the total turnover (approximately Rs
25.54 Billion) was imposed on the OEMs

OEM opposed the penalty passed by the CCI on 25th August 2014 before the
Competition Appellate Tribunal (COMPAT). Thereafter on 9 December 2016 COMPAT
reduced the penalty to 2% of the average relevant turnover (i.e., the average annual
turnover of spare parts in the aftermarket). However, they were in the favour of the order
passed by the CCI. It was held that the appellants indulged in practices that result in
denial of market access to independent repairers of automobiles thus violating Section
4(2) (c) of the Competition Act 2002. Thereafter, OEM was not satisfied with the
decision made by the CCI and COMPAT so subsequently, they filed a Writ petition in
Delhi High Court in 2019.

The Delhi High Court held that CCI has done extensive analysis of the suit and also it has
followed all the steps for proper investigation as prescribed by law thus the penalty
imposed by CCI was justified.

c. LENIENCY PROVISIONS

Cartelisation in respect of zinc carbon dry cell batteries market in India V.

1. Eveready Industries India Ltd.

2. Indo National Ltd.
3. Panasonic Energy India Co. Ltd.
4. Association of Indian Dry Cell Manufacturers
Suo Motu Case No. 02 of 2016.
(Before Devender Kumar Sikri, Sudhir Mital, Augustine Peter, U.C. Nahta And G.P. Mittal)
Under Section 19 of the Competition Act based on the disclosure by Panasonic under Section
46 of the Act read with the Lesser Penalty Regulations the case against these battery
manufacturers was taken up by CCI. During investigation, DG in exercise of the powers
vested with it under Section 41(3) of the Act carried out simultaneous search and seizure
operations at the premises of Eveready, Nippo and Panasonic and seized incriminating
material and documents therefrom. Subsequently, while the investigation was in progress and
report from the DG was pending, as lesser penalty applicants, Eveready and Nippo
approached CCI.

CCI found from the evidence collected in the case that the three battery manufacturers,
facilitated by AIDCM, had indulged in anticompetitive conduct of price coordination,
limiting production/ supply as well as market allocation in contravention of the provisions of
Section 3(3)(a), 3(3)(b) and 3(3)(c) read with Section 3(1) of the Act. It was examined that
the conduct was continuing from 2008, which is prior to 20 May 2009, the date on which
Section 3 of the Act became enforceable, and up till 23 August 2016 i.e. the date of search
and seizure operations by the DG.

An amount of INR 245.07 Crores, INR 52.82 Crores and INR 74.68 Crores was computed as
leviable penalty on three battery manufacturers i.e. Eveready, Nippo and Panasonic,
respectively considering contravention of provisions of the Act, in terms of proviso to Section
27 (b) of the Act. At time of computing leviable penalty, CCI took all relevant factors
including duration of cartel, industry conditions, etc. into consideration and decided to levy
penalty on the three battery manufacturers at the rate of 1.25 times of their profit for each
year from 2009-10 to 2016-17. Also, penalty of INR 1.85 Lakh was levied on AIDCM at the
rate of 10 percent of average of its receipts for preceding three years. Additionally,
considering totality of facts and circumstances of the case, penalty leviable on individual
officials/ office bearers of the three battery manufacturers and AIDCM was computed at the
rate of 10 percent of the average of their income for preceding three years.

Considering the stage at which the lesser penalty application was filed, CCI granted
Panasonic and its individuals 100 percent reduction in the penalty than was otherwise
leviable. Also granted 30 and 20 percent reduction in penalty to Eveready and Nippo, along
with their individuals, respectively. Pursuant to reduction, penalty imposed on Eveready was
INR 171.55 Crores and on Nippo was INR 42.26 crores. On Panasonic No penalty was
imposed.
Question 2:
Write a note on Agreements in restraint of trade affecting partnerships.

Partnership is the relation between persons who have agreed to share the profits of a business
carried on by all or any of them acting for all. Partners all in all are called ‘firm’. Main
elements of Partnership are as follows:

 There should be two or more persons;

 There should be an existing agreement;
 A Business motive with sharing of profits and losses;
 Each Partner has an unlimited Liability;
 Partnership can have maximum of 20 partners.

Agreements in restraint of trade affecting partnerships can have significant legal implications,
as they touch upon the balance between individual freedom to contract and the public interest
in promoting competition.

 Section 11 of the Indian Partnership Act (IPA) enables partners the authority to establish
their mutual rights and responsibilities through a mutual agreement, which can be either
explicitly expressed or implicitly understood. This section also clarifies that an agreement
preventing a partner from engaging in any business other than that of the partnership
during their tenure as a partner is considered legally valid.
 According to Section 36, IPA, when a partner ceases to be a partner in the firm and his
accounts are settled, he may be required to make an agreement that after he ceases to be a
partner, he shall not carry on any business similar to that of the firm within a specified
period or within specified local limits. Such an agreement tends to protect the interest of
partners still continuing the business, and therefore held to be valid.
 Section 54 of the IPA stipulates that in the event of the dissolution of the partnership,
certain partners may obtain an agreement from other partner(s) in which the latter consent
not to engage in a business akin to that of the dissolved partnership. Such an agreement
shall also be valid.
  Further, Section 55, on the sale of goodwill there may be an agreement between the
partners and the buyer of goodwill, that the partners shall not carry on any business
similar to that of the firm within a specified period or within specified local limits. Such
an agreement has been held to be valid.

Question 3:
Make a hierarchical diagram of the Competition Commission of India and its functionaries.

COMMISSION

Director General Secretary Advisers

Secretariat HR F&A CS Regional Offices

Advocacy ATD-II Combination ICD Legal

ATD-I CBD & Library Economic IT R & TA