An Analysis of Powers and Functions of the Competition Commission of India and Major Adjudications by CCI

By Arryan Mohanty

Published on: January 10, 2024 at 17:42 IST

The first step towards success is competition. When markets stabilise, the economy obtains sustainability, earnings, efficiency, development, and long-term benefits. One such law is the Competition Act of 2002, which seeks to eliminate anti-competitive activity by outlawing anti-competitive agreements and mishandling market dominance situations. As long as it is done legally, competition is a healthy practice for developing opportunities and a motivator in any career.

Perfect competition is defined as a market outcome in which all firms sell a homogeneous and perfectly divisible product, all producers and consumers accept prices, all firms have a small market share, and buyers and sellers are fully informed about the market, including the product’s price and quality, and there are no outside influences. It is the foundation on which the market system and economy are built. Consumers need to be made aware of the consequences of such activities and need help understanding market monopolies. Therefore, raising public understanding of competition legislation is critical. Over time, India’s competition law and policy have been actively interpreted.

Healthy market competition is crucial for economic innovation and prosperity. Even if the Indian economy has evolved away from its protective position towards local sectors, detrimental trade practices such as the formation of cartels and monopolies violate national policy. It not only damages small producers but also the general people, who are now forced to accept the ludicrous terms and conditions imposed by the market’s major participants. The rich get richer at the expense of the poor, which is contrary to the purpose of economic equality. A body like the Competition Commission of India is required to monitor such practices.

Establishing the Competition Commission of India (CCI) in 2003 marked a fundamental shift in Indian competition law. The CCI was founded to safeguard fair market competition, eliminate anti-competitive practices, and foster a competitive environment that promotes economic progress. Over the years, the CCI has been instrumental in regulating competition, scrutinising mergers and acquisitions, examining cartels, and penalising companies that engage in anti-competitive behaviour. This article will examine several notable competition law cases in India and the Competition Commission of India’s powers and activities.

Composition & Jurisdiction of the CCI

The commission has seven members, including a chairperson.¹ Its composition was contentious because it was a quasi-judicial body, but the mechanism for appointing its members was wholly within the control of the administration. It went against the fundamental principle of separation of powers outlined in the Constitution.

This argument was raised in Brahma Dutt v. Union of India² before the Supreme Court. To address these concerns, the Union of India stated that because the CCI is a regulatory agency, its chairperson should be someone with relevant experience rather than a judge. However, before the bench could decide, the Act was changed in 2007 to acknowledge the biased selection system.

Although the appointment mechanism is not yet independent of executive control, the Chief Justice of India will now be consulted before selecting the Chairperson and members. Section 8(2) of the Act³ requires the Chairperson and other members to be of ability, integrity, and standing. They must also have special knowledge and professional experience in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration, or other relevant fields.

The Commission may have a chairperson and a maximum of six members. These members are appointed by India’s central government. Currently, the CCI has two members and a chairperson. Here are the main details about the member composition of the Competition Commission of India:

• Initially, it was decided that a maximum of six and a minimum of two members were required to run the Commission. However, the number was decreased to one chairperson and three members alone.
• The change in membership was made to address the issue of administering the Commission. However, the number was decreased to one chairperson and three members alone.
• The change in the number of members was intended to result in faster hearings and approval. All Commission members, including the chairperson, are full-time members.

Section 61⁴ prohibits civil courts from hearing any lawsuit or action that the Commission can resolve to supplement and expand the CCI’s power in detecting and combating anti-competitive activity. Building a solid competitive culture and eradicating anti-competitive activities and structures are admirable objectives that must be met. To accomplish this, several institutions, including

• The Director General, serve as the CCI’s investigative arm.
• The Chief Metropolitan Magistrate of Delhi.
• The Civil Courts.
• The Tax Recovery Officer.
• The Central Government, state governments, statutory entities, and two top organisations, the NCLAT and the Supreme Court.

To establish “check and balance,” each worker is assigned a particular job. In addition, everyone must collaborate to attain “maximum customer welfare through a competitive process.”

Purpose of CCI

According to Section 18⁵ and its Preamble, the CCI is legally required to end activities that significantly negatively impact competition, foster and maintain competition, protect consumer interests, and secure other participants’ rights to trade in Indian markets.

The Raghavan Committee advised, among other things, that the CCI be the sole recipient of all complaints regarding violations of the Act from any source, whether it is a person, a business, or another organisation, the Central or State governments. It should also have the authority to act independently in a perceived breach.

All of these are explicitly codified in Section 19(1).⁶ The Commission is responsible for preventing anti-competitive practices, promoting and maintaining competition, protecting consumer interests, and ensuring trade freedom in Indian markets.

The Competition Commission of India makes the following efforts to achieve its goals:

• Make markets function in ways that benefit and protect consumers.
• To encourage speedier and more equal economic growth and development and fair and healthy competition in all national economic operations.
• Implement competition policies to ensure that economic resources are used as efficiently.
• Establish and maintain effective ties and contacts with sectoral regulators to ensure their regulations are seamlessly linked with competition legislation.
• To create and foster a competitive culture in the Indian economy, conduct effective competition advocacy, and educate all stakeholders on the benefits of competition.

Powers & Duties of CCI

In today’s highly sophisticated and competitive world, where affluent and industrialised countries frequently aim to control developing-country markets, establishing India’s Competition Commission was critical to preventing such trade. Simply put, the Competition Commission’s primary job is to enforce the Competition Act, 2002.

These features of the Commission are discussed in depth in Chapter IV of the Competition Act of 2002, which runs from Sections 18 to 40.

The Competition Commission has the authority to investigate situations, including anti-competitive agreements and abuse of dominant power in the Indian markets. Sections 19 and 26 to 28 of the Competition Act address these issues.

Anti-competitive agreements include agreements to fix prices, stabilise supplies, and engage in collusive bidding. On the other side, abuse of power can occur through exploitative pricing, ludicrous terms and conditions, and entry hurdles that harm customers and small producers attempting to enter the new business. A case connected to the topic could be filed by any party or based on information from the State and Central governments. Taking up suo motu cognizance is within the CCI’s power.

Section 26 describes the CCI’s investigative procedures. According to it, if the Commission establishes a prima facie case, the matter is forwarded to the Director General for investigation. They then create a report in consultation with the complainant, after which the commission considers the situation and decides.⁷ According to Section 33, it may also impose an interim order to prevent the party from carrying out such an act.⁸

Section 19(1) of the Act authorises the Commission to investigate any alleged infringement of Section 3⁹ or Section 4¹⁰ on its initiative or based on:

• Information may be gathered from individuals, consumer groups, or trade organisations and
• Referenced by the Central Government, state governments, or statutory authorities.

Section 19 of the Act allows the CCI to investigate particular types of agreements and enterprise-dominating positions. Section 19(1) gives the Commission the authority to investigate any alleged violation of Section 3(1)¹¹ (anti-competitive agreements) or Section 4(1)¹² (abuse of dominant position).

An inevitable merger and acquisition or combination may be done multiple times to diminish competition. The Competition Commission investigates the claims and concludes. However, on occasion, they must decide by weighing the harm to competition against the economic growth caused by the merger.

In addition, if a statutory authority’s decision disagrees with the Competition Act, it must cite the Commission. Section 32 of the Act empowers the Commission to investigate any agreement that, despite being made outside the country’s borders, influences India.¹³

As has been repeatedly observed in cases such as Surendra Prasad v. Competition Commission of India and Harshita Chawla v. WhatsApp Inc, the 2002 Act is intended to operate under an inquisitorial structure, with the Commission expected to investigate matters involving competition-related concerns in rem rather than acting as a lone arbiter to discover facts and decide rights in personam arising from competing claims between parties. As a result, the informant does not need to be an injured party to file a case with the CCI.

The government may also implement the commission’s recommendations. Although these recommendations are not needed for policy implementation, they help the government understand the impact of its numerous policies on market competitiveness. The primary purpose of competition law is to promote economic efficiency by assisting in creating markets responsive to consumer preferences, with competition as one of its primary tools. The Competition Act seeks to address the flaws in the nation’s economic system that directly undermine the general public’s and consumers’ interests. One of the Act’s declared purposes is to promote consumer welfare by removing market inefficiencies caused by company actions and agreements that harm consumers’ interests and competition.

The competition law is designed to anticipate instances in which the Commission must intervene and control how enterprises operate in the marketplace to enhance consumer welfare. According to the Act’s Preamble, Section 18 requires the CCI to “remove” anti-competitive activities while advancing free trade, competition, and consumer interests. Other Act provisions must be followed to exercise the authority conferred by Section 18.

The Commission’s goal is to create a system of fair competition consistent with advancing consumer interests.

Section 19(3)¹⁴ requires the Commission to consider all or any of the following factors when determining whether an agreement has AAEC:

• Creating barriers for new market entrants,
• Eliminating competitors,
• Limiting competition,
• Providing consumer benefits,
• Advancing manufacturing, selling, or delivering goods or services, and
• Advancing technical, scientific, and economic progress.

Horizontal agreements (agreements between competitors) of the type described in Section 3(3)¹⁵ are presumed to result in AAEC. In these cases, the burden of proof shifts from the Commission to the opposing parties, who must offer adequate evidence to demonstrate that the agreement does not trigger AAEC. When evidence to challenge the presumption is submitted, the CCI must analyse the factors specified in Section 19 of the Act and determine whether all or any of them are proven.

The agreement would again be viewed as one that may or is likely to have a significant adverse effect on competition, requiring the CCI to take additional corrective measures as authorised by the Act. This also happens if the CCI’s evidence leads to one, several, or all of the factors listed in Section 19(3). The only agreement entered into through joint ventures exempt from this AAEC assumption in terms of horizontal agreements enhances efficiency in commodity production, supply, distribution, storage, acquisition, control, and service provision.

Major Cases where CCI pronounced Judgement

Express Industry Council of India v. Jet Airways (India) Ltd. & Ors

The Express Industry Council of India filed a complaint in this case against five airlines for violating Section 3 of the Competition Act. The underlying contention was that the opposite parties – Jet Airways (India) Ltd., IndiGo Airlines, SpiceJet Ltd., Air India Ltd., and Go Airlines (India) Ltd. – uniformly increased freight charges in a collusive manner under the guise of increasing the FSC (Fuel Surcharge), which was an extra charge linked to fuel prices. The informant claimed that despite dropping gasoline costs, the opposing parties agreed to boost the FSC.

Based on preliminary findings, the CCI requested a thorough inquiry into the subject in 2013, and the DG delivered a comprehensive report, which yielded fascinating results. Based on the facts and information gathered throughout the inquiry, the DG concluded that there was no direct proof of collusion and that Section 3 was not violated.

Nevertheless, the Commission concluded, “Although no evidence of collusion was found during the investigation, behaviour of the Airlines concerning the imposition of FSC was not to conform with market conditions where the domestic players were actively competing.” In 2015, CCI issued an order against three airlines – Jet Airways, SpiceJet, and IndiGo – stating that “the OPs have acted in parallel and the only plausible reason for the increment of FSC rates by the Airlines was collusion amongst them.”

Air India and Go Airlines were not found to be in violation since their actions were not parallel or in collaboration with those of others. The Commission fined Jet Airways, IndiGo, and Spice Jet Limited ₹151.69 crore, ₹63.74 crore, and ₹42.48 crore, respectively, for violating Section 3 of the Act. A cease and desist order was also issued. The airline successfully appealed against the ruling, citing procedural unfairness and failure to follow natural justice standards by the Commission. The Competition Appellate Tribunal (COMPAT) returned the case to the CCI for review.

The CCI re-evaluated the situation and discovered that ATF (Airline Turbine Fuel) prices were decreasing. This suggests that the increase was caused by collusive action and was unrelated to the decrease. The OPs said that the FSC rate was influenced by various variables, including the US$-INR exchange rate, but did not explain why the FSC rates did not match the variation. The Commission ruled out all logical arguments for determining and revising FSC rates, concluding that only collusion could justify the current pricing. The Commission found that the OPs lacked a transparent approach to determining pricing. The Commission maintained that the Ops operated in tandem, and collaboration among airlines was the only possible cause for the increase in FSC rates. This behaviour indirectly affects air freight transport charges under Section 3(3)(a) of the Act.¹⁶

The Commission ordered the firms to stop anti-competitive practices and assessed a revised penalty. The Commission re-considered the prior ruling and computed fines based on airlines’ relevant cargo services turnover rather than overall turnover. The fines levied were ₹39.81 crore for Jet Airways, ₹9.45 crore for Indi-Go, and ₹5.10 crore for SpiceJet.

Builders Association of India v. Cement Manufacturers & Ors.

The Builders Association of India, a society formed under the Societies Registration Act, 1860, is an association of builders and other construction-related companies. They contacted the CCI about a probable collusion involving 11 cement firms and the cement manufacturing organisation (CMA).

CMA, an association of cement businesses, provides a venue for discussing industry-wide concerns. They claimed that the 11 cement businesses utilised the CMA as a forum to share price-sensitive information, production capacity, and dispatch data during particular months in 2009-10. Cement businesses used trade information to decrease supply, create artificial scarcity, maintain high prices, and increase profits significantly.

The CCI instructed the DG to investigate the problem, and the DG made a few remarks about the regular CMA meetings and other observations. The DG concluded that the cement firms had agreed to limit capacity utilisation at peak demand, resulting in higher cement prices and enhanced profitability for all cement businesses.

The respondents denied the accusation and defended their position on merits and procedure. The CMA explicitly accused CCI of violating natural justice principles by refusing it the ability to cross-examine witnesses on whom the DG relied for information throughout the inquiry. Cement businesses have argued about the organisation of the cement industry. It was argued that the cement industry’s oligopolistic character caused prices to move in tandem.

Because each region had a market leader, cement producers would price their products based on the price of the market leader. They stated that because the product is homogeneous, input costs across the country are about the same, and price parallelism was caused by shared inputs and expenses rather than collusion. They also questioned the DG’s assessment of lower capacity use by presenting statistics from states with high capacity utilisation.

The CCI used Regulation 41 of the CCI (General) Regulations, 2009 to address the issue of cross-examination. The regulation allows the CCI or DG to deny a request for cross-examination if there is no valid reason. It also clarifies that the right to seek cross-examination is not absolute. CCI can examine firms before 2009 if violations persist after the Act was enforced.

On the merits, CCI relied extensively on EU competition doctrine, concluding that price uncertainty allows a business to make expected and well-considered pricing decisions in an oligopolistic market. It follows that the exchange of information between rivals is likely to be incompatible with competition rules if it decreases or eliminates the degree of ambiguity about the market operation in issue, resulting in reduced or even eliminated rivalry between enterprises. CCI further said that it could not make any claims on aspects such as production, pricing, and other business strategies; nevertheless, if such information is exchanged and there is no unilateral decision-making by a firm, it is CCI’s responsibility to investigate. Consequently, the CCI found 11 cement companies and the CMA guilty of cartelization for creating artificial scarcity in the market and boosting cement prices and imposed a combined penalty of Rs. 6,400 crore.

The Respondents filed an appeal with COMPAT, citing violations of natural justice principles, after being dissatisfied with CCI’s judgements. One challenge was whether CCI’s Chairperson, who did not hear the Respondents’ arguments, could be a party to the final ruling dated June 20, 2012. Respondents objected to unfair hearings, unfairness, and pre-determined mindsets. COMPAT found that the DG report, party submissions, and interlocutory directives were not fully considered.

According to COMPAT, non-observance of natural justice principles at the first stage cannot be remedied by an appeal, as it cannot be considered a fundamental right. No party can be forced to accept an unfair trial. The COMPAT overturned the contested orders and remanded the case to the CCI for further review of the claimed infringement of S. 3(3)(a) and S. 3(3)(b)¹⁷ in conjunction with S. 3(1) of the Act, as required by law.

M/S Excel Crop Care Ltd. v. Competition Commission of India & Ors.

The Food Corporation of India filed a complaint with CCI on February 4, 2011, alleging that Excel Crop Care Limited, United Phosphorous Limited, and Sandhya Organics Chemicals created a cartel to boost bid prices for Aluminium Phosphide Tablets (APT) between 2007 and 2009. FCI alleged that since 2002, firms had submitted similar tender pricing for the procurement of APT. Bid-rigging posed a concern to FCI, as its need for APT had risen in the previous three years and was likely to rise more. CCI instructed the Director General to examine the situation.

The DG found that most APT purchasers were government bodies, with only four manufacturers in India. Government tenders for APT were published internationally, but no bids were usually received from outside India. The DG also discovered that, except for 2007, all businesses quoted identical pricing at each tender requested by FCI from 2002 to 2009. Two providers sent similar quotations to at least 13 government organisations between 2007 and 2011, including twice after FCI’s complaint was lodged. Finally, the corporations universally boycotted FCI’s 2011 tender offer. The DG ruled out coincidence and decided that a competition-limiting agreement was made.

The Competition Commission of India determined a breach of Section 3(3) of the Competition Act. It assessed a penalty of 9% of the total revenue of the relevant ALP makers: Excel Corp Care Limited, United Phosphorus Limited, and Sandhya Organic Chemicals Private Limited. The appellants filed an appeal, and one of the most critical components of the case was whether the penalty may be imposed on the total average turnover or only the relevant turnover.

The Competition Appellate Tribunal agreed to impose a penalty of 9% of the average three-year turnover. However, it has maintained that the ‘turnover’ would only comprise the ‘relevant turnover’ and not the ‘total turnover,’ resulting in a considerable reduction in the CCI penalty. COMPAT modified penalties based on the principle that “turnover” in Section 27(b) of the Competition Act refers to “relevant turnover,” which is derived from the sale of goods or services that were found to be in violation. COMPAT’s order was challenged at the Supreme Court.

On May 8, 2017, the Supreme Court (Judges A.K. Sikri and N.V. Ramana) upheld the ‘relevant turnover’ principle for determining penalties for competition law violations. This decision resolved a critical issue in India’s antitrust jurisprudence that had been debated for over five years.

Automobiles Dealers Association v. Global Automobiles Ltd. & Anr

The Automobile Dealers Association (Informant) and Global Automobiles Limited (Global Automobiles) signed a Letter of Intent (LoI) to be the exclusive dealer for Global Automobiles. This private limited company manufactures and sells two-wheelers. According to the LoI, services delivered were to meet Global Automobiles’ standards, and as stated in Clause 6, the showroom was to be utilised only for Global Automobiles products. The informant was unable to trade with items from other producers. The informant said the LoI restricted him from dealing with other two-wheeler manufacturers. The Informant contended that the LOI violated Section 3 (4) of the Act and that Global Automobiles exploited its dominating position.

Global Automobiles defended exclusive dealership terms, citing a recent management change and efforts to address dealer concerns. Global Automobiles argued that the technological nature of vehicle sales and marketing necessitated specialised expertise. Therefore, conditions in the LoI were necessary to provide superior customer service.

The Commission determined that a prima facie case had been presented and issued an order instructing the DG to begin an inquiry. The DG observed in his report (Global Automobile Report) that the LOI had restricted conditions. The DG determined that such restrictive terms created hurdles for new entrants and would further restrict the product’s availability and pricing in the relevant market. The DG further remarked that the LOI put the Informant at a competitive disadvantage with Global Automobiles by imposing exit obstacles on its dealers. Thus, the DG decided that the limiting terms significantly negatively impacted competition.

However, based on the records of Global Automobiles and other market participants, the DG noted that Global Automobiles had only dispatched 611 units of two-wheelers in the recent past, that it was not a member of the Society of Indian Automobile Manufacturers, and that its financials were not comparable to established manufacturers such as Hero Honda, Bajaj, and TVS. As a result, the DG stated that Global Automobiles could not be accused of abusing or holding a dominating position.

UPSE Securities Limited v. National Stock Exchange of India Limited

The informant is a corporate body and a wholly owned subsidiary of UP Stock Exchange Limited (UPSE), a Regional Stock Exchange (RSE). The opposite party is a national-level stock exchange. As per the informant, since the operationalisation of the opposite party in 1994, the turnover of the RSEs (including UPSE) started eroding, adversely affecting their operations. In 1999, the Securities and Exchange Board of India (SEBI) envisaged a route to rescue the RSEs.

The suggested route required the RSEs to form a subsidiary company. This subsidiary was permitted to acquire membership in stock exchanges such as NSE (the opposite party), BSE (Bombay Stock Exchange), etc., and the members of the RSEs could obtain sub-brokership of the subsidiary company and trade there. UPSE accordingly formed a subsidiary (the informant) in 2000 and obtained membership in BSE. In response to the constant demand from its members, the informant obtained membership of NSE in 2009 by paying a high deposit (Rs. 2.71 crores) to enable the members of UPSE to trade at the opposite party stock exchange as sub-brokers.

The informant’s definition of a relevant market,’ securities market in India’, was held to be valid. The Competition Act, 2002, unlike the Monopolies and Restrictive Trade Practices Act, 1969, does not ban dominance in its own right. The Act solely prohibits misuse of dominance. Undoubtedly, the opposite side regarded RSE members (including the informant) differently than other corporate members. However, unequal treatment may not always imply discrimination. The concept of equality established in the Indian Constitution recognises justifiable classification and allows for differential treatment of various classes. In light of the above, the limitations placed by the opposing party on RSE members (including the informant) were required for investor protection.

Shamsher Singh Kataria v. Honda Siel Cars India Ltd.

In this case, the information has been submitted claiming anti-competitive behaviour on the part of the OPs, in which authentic spare parts for autos manufactured by OP-1, OP-2, and OP-3, respectively, are not freely available on the open market. It has also been claimed that the technological information, diagnostic equipment, and software programmes essential to maintain, service, and repair the technologically advanced autos produced by each of the aforementioned OPs were not readily available to independent repair shops. As a matter of policy, the OPs and their respective dealers refuse to offer authentic spare parts and technological equipment to provide maintenance and repair services on the open market and to independent repairers.

By restricting the sale and supply of genuine spare parts, diagnostic tools/equipment, and technical information required to maintain, service, and repair the automobiles manufactured by the respective OPs, they have effectively created a monopoly over the supply of such genuine spare parts and repair/maintenance services, indirectly determining the prices of spare parts and repair/maintenance services. Furthermore, such restrictive practices by the OPs and their respective authorised dealers restrict market access to independent repair workshops.

It was ruled that independent service providers were OEM aftermarket clients who competed with OEMs for repairs and maintenance services in the aftermarket. Such acts constitute a denial of market access by OEMs under Section 4(2)(c) of the Act.¹⁸ Furthermore, such denial of market access was explicitly designed to eliminate a rival from the market by ways other than genuine competition, allowing OEMs to enhance and abuse their dominating position.

As a result, because the exception under Section 3(5)(i) of the Act¹⁹ did not apply to agreements between OEMs and OESs, the Commission established a violation under Sections 3(4)(c)²⁰ and (d),²¹ as well as Section 3(1) of the Act. Furthermore, the Commission noted that refusal to access branded or alternate spare parts and technical manuals/repair tools required to repair sophisticated consumer durable products, such as automobiles, was frowned upon in both mature and developing competition law regimes around the world because such practices limited consumer choice while also closing the market for repairs/maintenance contracts by independent repairers. OEM practices were found to restrict customer choice and foreclose on markets deemed anti-competitive.

An owner of any automobile brand made by an OEM can have his car serviced or repaired at any repair shop in India. Whether such repair shops are authorised dealer outlets or run by independent repairers, the conditions of competition for selling spare parts and after-sales repair and maintenance services are uniform across India. Thus, the relevant geographic market for the present case encompasses the entire country. As a result, the Commission determined that the relevant geographic market, as defined under Section 2(s) of the Act, included the whole territory of India.²² As a result, the Commission concluded that there were two distinct relevant markets in India’s automobile market: one for car manufacturing and sale and another for the sale of spare parts and repair services.

Belaire Owners’ Association v. DLF Ltd.

DLF builders developed a home complex, ‘Belaire’, which, according to the initial proposal, would consist of 368 apartments in total in 5 multi-story residential buildings with 19 stories each in DLF City, Gurgaon. The payment plan was tied to the project’s anticipated stage-by-stage competition, with some due at the time of booking the flat, some due two months later, and the remainder due according to the project’s scheduled stage-by-stage competition.

The builder’s marketing promised additional facilities, including a clubhouse and gymnasium, and completion within 36 months after the project debut. Five buildings were built when construction began, but the number of floors in each structure went from 19 to 29, resulting in a total of 564 apartments, up from 368. Furthermore, owing to space constraints, the builders’ facilities were compressed, and the apartments were delivered to the owners two years later, even though the unit owners paid their payments on schedule.

The Belaire Owners Association (BOA) filed a complaint against DLF Ltd. with the Competition Commission of India (CCI), accusing them of abusing their dominant position through contracts with flat owners. The BOA claimed numerous provisions in the Apartment Buyer’s Agreement (ABA) signed with the developer to purchase units were arbitrary, unjust, and unreasonable. The CCI found evidence of abuse of dominance and asked the Director General (DG) to investigate further. DLF quickly disputed the CCI’s jurisdiction but eventually abandoned the case. The DG conducted a thorough investigation and determined that the conditions set by DLF violated various parts of the Competition Act. Based on the DG’s extensive investigation, the CCI determined that the Act applies. It defined the real estate market based on the services offered by developers for the development of high-end buildings in Gurgaon.

As per the CCI decision, the COMPAT issued a penalty of INR 6,300 million, equivalent to 7% of DLF’s turnover, for abusing its dominating position in the real estate market. However, the COMPAT rejected CCI’s decision to impose a fee for comparable cases in other apartments such as Park Place and Magnolia, since all three buyers’ agreements were identical, and the penalty could not be imposed on DLF for the same reason again.

Bharti Airtel v. Reliance Jio

In this case, Bharti Airtel filed a complaint against Reliance Jio. Bharti Airtel makes three main claims:

• Reliance Industries was accused of abusing its dominant position by entering the telecom industry through Reliance Jio, which violated section 4(2)(e) of the Competition Act, 2002.²³
• Furthermore, Reliance Jio’s free services violated section 4(2)(a)(ii) of the Competition Act, 2002 and constituted predatory pricing.²⁴
• Finally, the complaint alleges an anti-competitive agreement between Reliance Industries and Reliance Jio in violation of Section 3 (1) of the Act of 2002, in which Reliance Jio had unrestricted access to Reliance Industries’ funds and resources, causing a significant adverse effect on competition in the telecom industry

Reliance Jio’s entry into the telecom market included a ‘Jio Welcome Offer’ that provided free data, voice, video, and applications. This enticed consumers to switch to Reliance Jio, as it was more affordable than other networks. CCI began the proceedings with a preliminary discussion with both parties, after which it examined each claim in light of the facts presented by Bharti Airtel and Reliance Jio. In this case, the CCI has provided a narrow interpretation of the term ‘relevant market.’ The Commission has determined that wireless telecom services are the relevant geographical market, emphasizing Reliance Jio’s dominance.

According to market data, Reliance Jio has no more than 7% market share in any of India’s 22 telecom circles. The market is dominated by multiple players with comparable financial and technical capabilities, including Vodafone, Idea, Tata, and MTNL. There was enough competition in the market, and customers were not reliant on a single source. The CCI concluded that Reliance Jio is not dominant in the relevant market. Because it was not in a dominating position, there is no evidence of predatory pricing in the relevant market.

Union of India And Ors v. Hindustan Development Corporation & Ors

The Railway Board contracts with manufacturers annually for cast steel bogies, which are then utilised to make wagons. Cast steel bogies are a specialty commodity bought by the railways from recognised sources with proven capabilities. 12 key vendors routinely supplied things to the railways.

Two new companies, Simplex and Beekay, joined the market. Following that, offers were to stay open for 90 days. The Railways Tender Committee evaluated all circumstances and decided that three tenderers, M/s H.D.C, Mukand, and Bhartiya, who quoted identical prices of Rs 77,666 per bogIe without any escalation cushion between July 1, 1991 and September 1, 1991, had formed a cartel.

The Tender Committee recommended accepting the tender. Before finalising the bids, the Government of India made two significant concessions: reducing customs tax on steel scrap imports and dispensing the goods equalisation fund for steel.

The Financial Commissioner found that the three manufacturers had formed a cartel. The Railways had reserved the right to order up to 30% of the ordered quantity during the contract period at the same price and terms, with appropriate delivery extensions. The pricing was subject to a provision allowing for price variations.

A telegraph was sent to the three manufacturers with a counter-offer of Rs 65,000 per bogie. In response to the telegram, M/s H.D.C and Mukand responded to the Minister of Railways, stating that they were unwilling to accept the counter-offer of Rs 65,000 and offered to deliver the bogies for Rs 67,000 each. It’s worth noting that some units are unwell and have significant debts to nationalised banks, making it in the national interest to accept. As a result, the case was resubmitted to the authorising authority, who agreed with the Financial Commissioner’s and Tender Committee’s recommendations and recommended adopting them.

The High Court ordered the Ministry to adopt the Tender Committee’s suggested allotment of bogies and pay Rs 67,000 for each bogie. This would also be subject to the writ petition’s outcome. The Supreme Court declined to intervene at that preliminary stage. However, it instructed that while the writ petition is pending if any of the suppliers included in the distribution package specified by the High Court request an “on-account” payment, which represents the difference between the price of Rs 67,000 determined by the High Court and the price of Rs 76,000 envisioned by the railways, the High Court’s order should not prevent the Government from making such on-account payments to the suppliers for each wagon, provided that a bank guarantee is in place to ensure the prompt repayment of the on-account payment of Rs 9000 per bogie, along with an interest rate of 20 percent per annum, in case the on-account payment cannot be accommodated in the price structure that will ultimately be determined following the final decision in the writ petitions.

It is important to emphasize that following a thorough and meticulous examination of the comprehensive record and the relevant facts and circumstances of this specific case, the Supreme Court concluded that all the authorities of the railways, including the Minister, acted in good faith when taking the position that the three manufacturers had formed a cartel. Furthermore, the court also determined that the railways’ decision to implement dual pricing under these particular circumstances was in good faith, not bad faith. Additionally, the court directed the railways to reassess the allocation fairly and to extend the deadline for completing the supply until March 31, 1993.

Conclusion

The Competition Commission of India has played a key role in formulating and implementing competition legislation in India. The CCI has handled different anti-competitive behaviours, defended consumer interests, and promoted fair market competition through a proactive approach and the prudent use of its authorities. However, ongoing vigilance, effective enforcement, and a solid regulatory framework are critical to sustaining a competitive market environment favourable to economic progress and consumer welfare in India.

References

• Duties-powers-and-functions-of-the-competition-commission-of-india-cci/
• India Law Journal
• The Big(Data) Problem with the Competition Act, 2002 by Urbi Sinha
• Competition-law/Competition-law.html

Endnotes

1. The Competition Act, 2002, s.7(1), No.12, Acts of Parliament, 2002 (India)

2. AIR 2005 SC 730

3. The Competition Act, 2002, s.8(2), No.12, Acts of Parliament, 2002 (India)

4. The Competition Act, 2002, s.61, No.12, Acts of Parliament, 2002 (India)

5. The Competition Act, 2002, s.18, No.12, Acts of Parliament, 2002 (India)

6. The Competition Act, 2002, s.19(1), No.12, Acts of Parliament, 2002 (India)

7. The Competition Act, 2002, s.26, No.12, Acts of Parliament, 2002 (India)

8. The Competition Act, 2002, s.33, No.12, Acts of Parliament, 2002 (India)

9. The Competition Act, 2002, s.3, No.12, Acts of Parliament, 2002 (India)

10. The Competition Act, 2002, s.4, No.12, Acts of Parliament, 2002 (India)

11. The Competition Act, 2002, s.3(1), No.12, Acts of Parliament, 2002 (India)

12. The Competition Act, 2002, s.4(1), No.12, Acts of Parliament, 2002 (India)

13. The Competition Act, 2002, s.32, No.12, Acts of Parliament, 2002 (India)

14. The Competition Act, 2002, s.19(3), No.12, Acts of Parliament, 2002 (India)

15. The Competition Act, 2002, s.3(3), No.12, Acts of Parliament, 2002 (India)

16. The Competition Act, 2002, s.3(3)(a), No.12, Acts of Parliament, 2002 (India)

17. The Competition Act, 2002, s.3(3)(b), No.12, Acts of Parliament, 2002 (India)

18. The Competition Act, 2002, s.4(2)(c), No.12, Acts of Parliament, 2002 (India)

19. The Competition Act, 2002, s.3(5)(i), No.12, Acts of Parliament, 2002 (India)

20. The Competition Act, 2002, s.3(4)(c), No.12, Acts of Parliament, 2002 (India)

21. The Competition Act, 2002, s.3(4)(d), No.12, Acts of Parliament, 2002 (India)

22. The Competition Act, 2002, s.2(s), No.12, Acts of Parliament, 2002 (India)

23. The Competition Act, 2002, s.4(2)(e), No.12, Acts of Parliament, 2002 (India)

24. The Competition Act, 2002, s.4(2)(a)(ii), No.12, Acts of Parliament, 2002 (India)