In August 2022, the Government of India introduced the Competition (Amendment) Bill, 2022 (Bill) in the Parliament.[1] This is one of the most eagerly awaited developments in India and is expected to be enacted in Spring 2023.
The Bill, which draws on the 2019 Report of the Competition Law Review Committee, proposes several significant amendments to the Competition Act, 2002 (Competition Act). These include:
The Bill was referred to the Parliamentary Standing Committee on Finance (Standing Committee on Finance), which issued its report in early December and made several comments and recommendations for further amendments.[2] The Ministry of Corporate Affairs will decide if recommendations made by the Standing Committee on Finance in this report and its later December report on Anti-Competitive Practices by Big-Tech Companies (see below) should be reflected in the Bill.
The CCI Chairperson, Ashok Kumar Gupta, retired in October 2022. Pending the appointment of a new Chairperson, CCI Member Sangeeta Verma was appointed as Acting Chairperson. The search for a replacement continues and this has severely handicapped the CCI. Section 22 of the Competition Act requires a quorum of three Members at meetings. As there are currently only two Members (including the Acting Chairperson), the CCI has not been quorate and has been unable to exercise its adjudicatory role in enforcement cases and to make orders in merger cases.[3] However, in February 2023, after seeking guidance from government, the CCI decided to invoke the “doctrine of necessity” to enable it to examine and clear combination cases. Enforcement cases remain held up.
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In July, the Supreme Court disposed of an appeal by PES Installation Private Limited (PES)[4] against a 2013 judgment of the COMPAT (the predecessor of the National Company Law Appellate Tribunal (NCLAT)) upholding a CCI order finding that PES and others had rigged bids in a tender for the supply of medical equipment.[5] The Supreme Court, while refusing to modify the CCI’s directions to cease and desist from anti-competitive conduct, stated that any concerns that PES might be blacklisted or debarred by any authority could be addressed in independent proceedings before an appropriate forum.
The NCLAT dismissed appeals made by participants in the Beer Cartel.[6] It rejected the argument that the CCI order[7] was liable to be set aside in the absence of a judicial member, simply pointing out that the Competition Act did not expressly provide for the inclusion of a judicial member. It held that, since the appellants had already admitted their involvement in a cartel in their (successful) leniency applications, they were not able to challenge the CCI order. It also found that a lenient approach had been taken in imposing penalties. In February 2023, the Supreme Court of India conditionally stayed the recovery of penalty proceedings, subject to a deposit of an additional 10% of the total penalty over and above the amount already deposited.[8]
In November, the NCLAT disposed of 73 appeals against the CCI’s 2019 Order[9] finding bid rigging in the supply of LPG cylinders.[10] The NCLAT affirmed that the cylinder manufacturers had engaged in cartelisation. However, as several of the manufacturers were micro, small or medium-sized enterprises (MSMEs), it called on the CCI to take a lenient view on penalties. It also held that the penalty should have been calculated based on the three financial years preceding the year in which the violation occurred and remanded the cases back to the CCI for re-computation/review of the penalty. The NCLAT also considered that, as a general practice, it was improper to proceed on the basis of anonymous complaints. Entertaining such complaints would promote rivalry and make it difficult for the business sector to grow. Although it did not set aside the CCI order on this ground, it asked the CCI to take appropriate care in the future.
In January 2022, the CCI found that four maritime transport companies had cartelised in providing motor vehicle transport services to automobile manufacturers on various routes.[11] It found evidence of an agreement which followed a “respect rule”, implying the avoidance of competition between the four and protecting the business of incumbents. They also shared commercially sensitive information including freight rates. The CCI calculated penalties on the basis of 1.5 times the profit or 5% of turnover for each year of continuance of the cartel, whichever was higher. Complicit individuals were penalised on the basis of 5% of the average of their income over three years. Three of the companies applied for leniency and their individuals respectively received the maximum available reductions of 100%, 50% and 30%. The CCI rejected arguments that, as the second and third applicants for leniency were in the same group, both should enjoy a 50% reduction.
In February 2022, the CCI published its August 2018 order finding that five Indian tyre manufacturers and the Automotive Tyre Manufacturers Association had acted in concert to increase the prices of cross ply/bias tyre variants sold in the replacement market for the truck/bus segment and to limit and control production and supply of these tyres.[12] It found that the Association had acted as a platform for the exchange of sensitive information. The CCI imposed penalties on the manufacturers of 5% of their average turnover over three years and on the Association of 5% of its average income over the same period. Certain complicit individuals were also liable to pay penalties on the same basis.
The CCI order was appealed to the NCLAT which allowed the appeals in its judgment of 1 December 2022.[13] The NCLAT found that arithmetical errors had been made by the Director General (DG) and the corrected data showed there was no price parallelism. It remitted the matter to the CCI to re-examine the calculations.
In October, the CCI found that associations of corrugated box manufacturers had been involved in increasing and deciding the price of kraft paper and in deciding on the collective shut-down of mills from at least 2011 to 2017/18, and that many mills implemented industry association directives.[14] There was ample evidence of such conduct, including WhatsApp messages and admissions on oath made by representatives of the mills. 31 lesser penalty applicants had admitted to the conduct. The CCI refrained from imposing financial penalties in light of the COVID-19 pandemic, and admissions of wrongdoing. It also noted arguments that the cartel was formed as a result of prevailing market circumstances due to rising input costs and lack of individual bargaining power.
In successive orders, the CCI found that suppliers had cartelised in tenders for bushes,[15] protective tubes[16] and axle bearings[17] to the Indian Railways. In relation to bushes, the CCI imposed penalties on the suppliers of 5% of their average turnover for the last three preceding financial years and corresponding penalties on complicit individuals. Four of the suppliers had applied for leniency and received reductions ranging from 20% to 80%. One of the applicants had disclosed the existence of another cartel and this was taken into account in setting the reduced penalty (“leniency plus”). Similar levels of penalty were imposed in the protective tubes order, though some escaped penalty given their status as MSMEs and the fact they had already been penalised in an earlier matter. One of the suppliers had sought leniency up front and was granted a 100% reduction in penalty. In the axle bearings case, the suppliers were MSMEs under financial stress following the COVID-19 pandemic. They had stopped the conduct after an investigation in another case had started and some had admitted their involvement and sought leniency. The CCI decided not to impose penalties and limited itself to a “cease and desist” order.
The CCI rejected at prima facie stage arguments by consumer body CUTS that a proposed merger between film exhibitors PVR Limited and INOX Leisure Limited, which was not notifiable to the CCI under the merger control provisions of the Competition Act, was prohibited under Section 3(1) as it was likely to cause an appreciable adverse effect on competition (AAEC) in India.[18] The CCI pointed to the need to show an agreement of a nature which might result in an AAEC or in the likelihood of an AAEC. In looking at such a likelihood, there had to be “conduct in terms of an agreement, not a likelihood of conduct itself”. As there was no actual conduct by the parties (save entering into the merger agreement), Section 3 was not attracted. It added that Section 4 of the Competition Act, prohibiting abuse of a dominant position, could not apply where the proposed combined entity had not taken form. In this case there was no combined entity, let alone a dominant one, in existence.
In March 2022, the CCI dismissed, at prima facie stage, allegations by the All-India Online Vendors Association (AIOVA) that Amazon Seller Services Private Limited (Amazon) and a number of related companies had acted in breach of Section 3(4) of the Competition Act by engaging in “deep discounting” and failing to ensure “platform neutrality”.[19] It observed that AIOVA had failed to provide sufficient evidence for it to form a prima facie view and closed the matter. In another case, the CCI decided not to proceed with a case on private label brands related to Amazon sold on the Amazon India marketplace.[20]
Following a complaint by the National Restaurant Association of India (NRAI), the CCI in April 2022 ordered an investigation against online food delivery platforms Zomato Limited (Zomato) and Bundl Technologies Private Limited (Swiggy).[21] Observing that the two operated as online intermediaries for food ordering and delivery, the CCI found that allegations of preferential treatment of their own cloud kitchen brands and restaurant partners, exclusivity for certain partners and price parity clauses of the platforms merited further investigation. It rejected allegations of bundling and of unfair and one-sided contracts.
In January 2022, the NCLAT dismissed an appeal against the 2017 CCI order[22] finding that ANI Technologies Private Limited (Ola) had not abused its dominant position in the radio-taxi services market in Bengaluru.[23] On the question of dominance, the NCLAT found that Ola’s high market share was not consistent or lasting as it faced competition from Uber. It was not dominant since it could not operate independently of competitive forces in the market. Although the question of abuse did not arise, the NCLAT considered that Ola’s below-cost strategy could be justified as a response to Uber’s low prices. Offering consumer discounts and incentives could not be seen as predatory pricing but was rather justified as a strategy to meet market conditions and grow Ola’s business.
In August 2022, the NCLAT dismissed an appeal against a 2017 CCI Decision[24] rejecting, at the threshold stage, allegations that WhatsApp LLC (WhatsApp) had abused its dominant position in relation to its 2016 Update to its Terms of Service and Privacy Policy.[25] It held that, although WhatsApp was dominant in the market for consumer communication apps, simply updating terms and conditions, with consumers consenting or not consenting, did not amount to an abuse. This was a common practice in the digital age.
In October 2022, the CCI passed orders finding that Google had abused its dominant position in markets in the Android Mobile Device Ecosystem and in the Google Play Store Billing System. In the Android order,[26] the CCI noted that Google had abused its dominance in multiple markets by requiring smartphone and tablet manufacturers to pre-install, give prominent placing to and make as default its bundle of apps. In addition to imposing a provisional penalty on Google of nearly INR 1337.6 crores (approx. USD 164 million), the CCI issued immediate cease and desist orders and directed Google to modify its conduct within a prescribed timeline. Google challenged the CCI’s order before the NCLAT including seeking a stay of the behavioural remedies directed. Both the NCLAT[27] and thereafter the Supreme Court[28] refused to stay these remedies. However, the NCLAT has been directed to conclude the appellate proceedings by 31 March 2023. A decision on Google’s appeal is expected very soon.
In the Play Store Billing System order,[29] the CCI found Google liable for anti-competitive practices relating to its Play Store billing and payment policies. It found that Google had abused its dominant position in multiple markets by requiring the use of its Billing System for paid-app downloads and in-app purchases. It also preferred use of its own UPI payment app, Google Pay. The CCI imposed a provisional penalty of nearly INR 937 crores (approx. USD 114 million). It also directed Google to allow app developers/users to process payments through third party payment processors and to cease discriminatory practices. Here too, Google challenged the CCI’s order before the NCLAT including seeking a stay of the behavioural remedies directed. Again, the NCLAT refused to stay these remedies.[30]
In the meanwhile, Google has announced some changes to its Android ecosystem and Play Store payments. These have been widely criticised for not being in compliance with the letter and spirit of the CCI’s directions. As mentioned previously, the CCI is not currently quorate to examine the issue of compliance.
Earlier, in January 2022, the CCI directed an investigation against Google in respect of complaints by the Digital News Publishers Association of alleged abuse of dominance in the digital advertising space.[31] In October, a complaint by the News Broadcasters and Digital Association addressing these issues was joined to the investigation.[32]
In October 2022, the CCI found that online travel agency (OTA) MMT-Go had abused its dominant position in the market for online intermediation services provided by OTAs.[33] The CCI considered allegations of abuse including price and room parity obligations, predation, misrepresentation and exclusivity, and held that MMT-Go had imposed wide room rate parity on its hotel partners. It concluded that the parity obligations coupled with deep discounts created an ecosystem that reinforced MMT-Go’s dominant position and amounted to an abuse.
The CCI also held that MMT-Go and franchisee provider Oravel Stays Private Limited (OYO) had agreed to the delisting of certain franchisee hotels on MMT-Go’s portal in breach of Section 3(4) of the Competition Act. The CCI imposed penalties on the parties of 5% of the average of their turnover over three years.[34] In addition, it prescribed broad behavioural remedies on MMT-Go in order to return to an environment that supported fair competition. The NCLAT in appeal has refused to stay these remedies.[35]
In September 2022, the CCI rejected, after investigation, allegations by JSW Paints Private Limited (JSW Paints) that Asian Paints Limited (Asian Paints) had abused its dominant position by denying JSW Paints access to distribution channels in the decorative paint segment.[36] Although Asian Paints was found to be dominant, it was held it had not denied access to JSW Paints; the appointment of a significant number of dealers by JSW showed that its entry into the market had not been impeded. The CCI also rejected allegations of coercion of dealers by Asian Paints and of denial of access by JSW Paints to infrastructural facilities.
In February 2022, the CCI considered allegations by Asianet Digital Network Private Limited (Asianet), that Star India Private Limited and several of its subsidiaries (Star), which broadcasted satellite-based TV channels in India, had abused its dominant position by not giving Asianet discounts offered to Asianet’s competitors.[37] The CCI prima facie found that Star (a part of Disney) was dominant in the market for the provision of broadcasting services in the state of Kerala and that it had abused its dominant position by discriminatory pricing and denial of market access. It therefore directed the DG to investigate the matter.
In June 2022, the CCI ordered an investigation against movie ticket portal/website BookMyShow after finding prima facie that it had abused its dominant position in the market for online intermediation services for the booking of movie tickets in India by entering into exclusive and restrictive agreements with certain cinemas, thereby limiting access by other portals.[38]
In March 2022, the CCI summarily dismissed, at prima facie stage, allegations that Spinn India Private Limited, which operated the e-commerce platform Shopee, had, in offering “deep discounts” for various products on its platform, abused its dominant position.[39] The CCI noted that Shopee was a new entrant in a market that already included established e-commerce companies. It did not appear that it possessed significant market power, let alone dominance.
The CCI also rejected a claim that bringing a copyright infringement claim was abusive.[40] It stated that, to be termed a sham, such litigation had to be initiated by a dominant undertaking to cause anti-competitive harm. Two conditions had to be satisfied. First, the legal action had to be shown on an objective view to be baseless and to be an instrument to harass the other party. Second, it had to be shown that the action was conceived with an intent or plan to eliminate/thwart competition in the market. The CCI was of the prime facie view that the litigation was brought in good faith.
In April 2022, the CCI dismissed at prima facie stage allegations that Zomato had abused its dominant position in relation to its cancellation policy and exclusion of liability in its terms of service.[41] The CCI noted its findings in an earlier case[42] that Zomato and another food delivery platform operator operated as “online intermediaries for food ordering and delivery” and competed with each other in the same segment in various ways.
In April 2022, the CCI made significant changes to the confidentiality regime in order to reduce delays in treating confidentiality claims and to secure the rights of the defence.[43] The key changes were: (a) the introduction of self-certification of confidentiality claims, replacing the earlier regime of assessment by the CCI/DG and shifting the burden onto parties claiming confidentiality; (b) the treatment of certain documents/materials as confidential by default; and (c) the formal introduction of “confidentiality rings”, balancing the need to preserve confidentiality whilst providing an effective right of defence.
In August 2022, the Division Bench of the Delhi High Court[44] rejected WhatsApp/Meta’s appeal against the April 2021 order of a single judge dismissing writ petitions challenging the CCI’s jurisdiction to investigate WhatsApp’s 2021 Update.[45] A petition for leave to appeal was rejected by the Supreme Court in October.[46] The CCI investigation could thus continue despite a number of challenges to the 2021 Update pending before the Supreme Court of India and the Delhi High Court.
In September 2022, the Karnataka High Court dismissed a writ petition filed by Intel Technology India Private Limited and Intel Corporation (together Intel) challenging the CCI’s jurisdiction to investigate its product warranty policy in India.[47] Stating that it was loath to interfere in such cases “subject to just exceptions”, it rejected arguments that the CCI had departed from earlier positions on warranties taken by it and the Delhi High Court and that the investigation was “draconian”. It found that Intel had failed to make out a case of “manifest arbitrariness”. Seeing the writ petition as an abortive attempt to delay CCI proceedings, it imposed costs on Intel of INR 10 lakh (approx. USD 12,000) and directed that the CCI investigation should be concluded at the earliest.
In October 2022, the Telangana High Court dismissed a writ petition filed by GMR Hyderabad International Airport challenging the jurisdiction of the CCI to order an investigation into alleged abuse of dominance.[48] It noted that CCI proceedings should be interfered with only in rare cases, where prima facie it was evident that the investigation would lead to an abuse of process or it appeared that the investigation was ordered in bad faith.
In December 2022, the NCLAT allowed an appeal against a CCI order closing a case against real estate developer DLF.[49] In that case, the DG had found in its investigation report that DLF had abused its dominant position. The CCI directed further investigation by the DG under Regulation 20(6) of the General Regulations, 2009 and, in its supplementary report, the DG concluded that DLF was not dominant. The NCLAT held that the CCI could direct a further investigation only where the DG had found that there was no breach of the Competition Act. This was not the case here. The NCLAT found that the CCI order was void as it was based on the supplementary report which had been conducted on a void order of the CCI. It therefore remitted the matter back to the CCI to pass an order based on the first DG Report.
In March, the CCI found that Tata Power Company Limited (TPCL) had failed to notify three acquisitions in the electricity distribution sector.[50] TPCL stated that it believed that the electricity regulator in the Indian state of Odisha (OERC) had the exclusive jurisdiction to regulate combinations in the electricity sector. The CCI rejected arguments that provisions in the Electricity Act, 2003 overrode those in the Competition Act which was enacted earlier (in 2002). It also found that the OERC had recognised the CCI’s jurisdiction and had directed TPCL to notify to the CCI. Taking account of mitigating factors, including the ambiguity arising from overlapping provisions in the two Acts, the CCI imposed a nominal penalty of INR 5 lakh (approx. USD 6,000) for each case of non-notification.
In April 2022, the Bombay High Court considered challenges to a CCI order finding prima facie that a number of trusteeship companies had cartelised and ordering investigation by the DG. The sectoral regulator, the Securities and Exchange Board of India (SEBI), was investigating the matter and the High Court considered that there was a risk of conflicting orders if parallel investigations were to proceed. After initially directing the CCI and DG to refrain from taking any further steps in the matter and directing SEBI a chance to arrive at a prima facie view within a reasonable period,[51] the Court in February 2023 directed the CCI to decide on the issue of its own jurisdiction.[52]
In July 2022, the Delhi High Court disposed of a writ petition by Vifor International Limited (Vifor) challenging a CCI order seeking information on Vifor’s patents on the ground that the CCI had no jurisdiction to consider a case involving the rights of a patent holder under the Patents Act, 1970.[53] It held that this would be the case only if the case dealt exclusively with rights and liabilities under the Patents Act and did not pertain to an issue falling within the scope of the Competition Act. Following the approach of the Delhi High Court in a previous case,[54] it affirmed that the jurisdiction of the CCI was not ousted just because the complaint related to patents.
The Delhi High Court also dismissed arguments that disclosure of the information sought would expose it/or to criminal penalties under Swiss law. It held that entities operating in multiple jurisdictions could not claim immunity or exemptions from laws not shown to be in breach of the international treaty obligations of nations.
In October, the CCI dismissed at prima facie stage allegations that Vifor had, in refusing to give a licence of its patented medicines, acted in breach of the Competition Act.[55]
In March 2022, the Government of India extended the 2017 Target Exemption until 28 March 2027.[56] This exempts from notification combinations where: (a) the value of the assets being acquired, taken over, merged or amalgamated is not more than INR 350 crores (approx. USD 42.3 million) in India; or (b) turnover of the target is not more than INR 1,000 crores (approx. USD 121 million) in India. It should be noted that these conditions are alternative, so the exemption will apply if either the assets or the turnover of the target are below these thresholds.
In June 2022, the NCLAT rejected[57] a number of appeals against the CCI’s December 2021 order imposing penalties on Amazon.com NV Investment Holdings LLC (Amazon) in relation to its 2019 notification of the acquisition of a 46% shareholding in Future Coupons Private Limited (FCPL).[58] The CCI had found that FCPL was a vehicle for Amazon to acquire an interest in Indian retail giant Future Retail Limited and that Amazon had failed to notify a relevant agreement and other commercial arrangements. The NCLAT agreed with the CCI that Amazon had intentionally not made clear the “real ambit and purpose” of the transaction. It maintained the INR 200 crores (approx. USD 24 million) penalty imposed by the CCI for failure to notify but halved the penalty of INR 2 crores (approx. USD 240,000) for suppressing the scope and purpose of the transaction. This case is pending appeal before the Supreme Court.
In January 2022, the CCI published its November 2021 order clearing the merger of Veolia Environnement S.A. (Veolia) and Suez S.A. (Suez), and the sale of New Suez to a consortium of primarily French investors.[59] The consortium members applied “materiality thresholds”, taking into account only entities in which they held a direct or indirect shareholding of 10% or more, a right or ability to exercise a right not available to ordinary shareholders, or a right or ability to nominate a director or observer. Two (linked) consortium members had a current shareholding in Veolia and a proposed shareholding of 18-20% in New Suez with nomination rights on its Supervisory Board. The CCI considered that any concerns about the common stake would be addressed by internal rules to prevent exchanges of commercially sensitive information within entities in which joint controlling stakes were held, including Chinese walls and IT systems clearances.
In March 2022, the CCI published its December 2021 order clearing the acquisition by Talace Private Limited (Talace), a wholly owned subsidiary of Tata Sons, of 100% of the equity share capital and sole control of Air India Limited (Air India) and Air India Express Limited and 50% of the equity share capital and joint control of Air India SATS Airport Services Private Limited (collectively, the Target).[60]
The CCI found horizontal overlaps in the provision of passenger air transport services and air cargo services. The CCI had no competition concerns in relation to cargo services. For passenger air transport services, the CCI considered overlapping origin-destination pairs and found certain pairs where concentration was increasing. However, there were mitigating factors – both market-based forces and target-specific factors – which meant that the potential benefits would outweigh the possible harm resulting from the transaction. These mitigating factors were considered in the context of concerns about the viability of debt-laden Air India were it not acquired by a private entity.
In October 2022, the CCI cleared the amalgamation of Zee Entertainment Enterprises Limited (ZEE) and Bangla Entertainment Private Limited (BEPL) with and into Culver Max Entertainment Private Limited (CME).[61] BEPL and CME are indirect wholly owned subsidiaries of the Sony Group Corporation.
The CCI cleared the transaction subject to structural modifications offered by the parties entailing the divestment of three TV channels engaged in the Hindi general entertainment and Hindi films segments.
In March 2022, the CCI found that Adani Green Energy (Adani) had, in its 2021 acquisition of S. B. Energy Holding Limited, engaged in gun jumping before CCI approval had been given.[62] The share purchase agreement allowed the parties to discuss the ongoing business of the target and provided for acquirer inputs into the target’s business. Despite a “clean team” protocol and the fact that the acquirer inputs were non-binding, the CCI considered that this potentially facilitated the exchange of commercially sensitive information with the potential for tacit collusion, which went beyond what was necessary to preserve the economic value of the business. A nominal penalty of INR 5 lakhs (approx. USD 6,000) was imposed on Adani.
In July, the CCI found that SABIC International Holdings BV (SABIC) had acquired a 6.15% shareholding in Clariant AG via an escrow mechanism, under which the shares were credited into an escrow account before notification to the CCI, with the shares to be released to SABIC on receipt of merger clearance.[63] Following its approach in the SCM Solifert Case,[64] as endorsed by the Supreme Court,[65] the CCI found that the use of the escrow mechanism constituted gun jumping. Taking account of a number of mitigating factors, the CCI imposed a “token” penalty of INR 5 lakhs (approx. USD 6,000).
In May 2022, the CCI also found that Veolia had failed to notify its acquisition of a 29.9% shareholding in Suez from an existing Suez Shareholder, Engie Block S.A., as part of its proposed takeover of Suez.[66] This was a hostile takeover and Suez raised the question of non-notification with the CCI. In submissions to the CCI, Veolia argued that, based on publicly available information and its own knowledge and best estimates, the Target Exemption applied. This was rejected by Suez. In subsequent gun jumping proceedings, the CCI rejected Veolia’s arguments that it had acted in good faith and had made reasonable attempts to ascertain Suez’s assets and turnover in assessing the applicability of the Target Exemption. It pointed out that it had earlier indicated the inapplicability of the Target Exemption and that Veolia could have sought clarification from it. It also pointed out that the question of good faith was not relevant, and that the Supreme Court had made it clear that mere breach of the requirement to notify would attract the penalty.[67] Taking account of mitigating factors, the CCI imposed a penalty of INR 1 crore (approx. USD 121,000).
In July 2022, the CCI separately held that SABIC had wrongly considered that an acquisition of a 24.99% equity stake in Clariant AG (Target) fell within the exemption from notification of acquisitions of less than 25% of the total shares/voting rights made “solely as an investment” or “in the ordinary course of business” and where there is no acquisition of control (the minority acquisitions exemption).[68] This exemption applies where, amongst other matters, the acquirer is not a member of the target’s board and has no right or intention to nominate a director on the target’s board, and does not intend to participate in the affairs or management of the target. The CCI found that SABIC intended to participate in the affairs and management of the Target, which was corroborated by the fact that it was vested with the right to appoint up to four persons for election as directors in the Target. Finding a failure to notify, the CCI imposed a penalty of INR 40 lakhs (approx. USD 48,000).
In October, the CCI found that two alternative investment funds (Acquirers) acquiring a 6.3% shareholding in Future Retail Limited had failed to notify the transaction to the CCI.[69] They had argued that the acquisition was covered by the minority acquisitions exemption. The CCI found that the acquisition could not be treated “solely as an investment” since the Acquirers had acquired a board seat soon after the sale purchase agreement and their intention to participate in the management and affairs of the target could not be ruled out. The CCI also held that the transaction was not “in the ordinary course of business”, which would apply only to revenue transactions, since the acquisition involved an investment which constituted a capital transaction. The CCI imposed a penalty of INR 20 lakh (approx. USD 24,000) on the Acquirers.
In April 2022, the CCI introduced changes to Form II, the long-form notification recommended to be filed for combinations where the parties have more than 15% combined market shares in horizontally overlapping markets or more than 25% (individual or combined) market shares in vertically related markets.[70] The CCI did away with several information/data requests that were not very relevant for its review of market dynamics in relation to a transaction. However, it increased the duration of market-facing data from three to five years. It also required a detailed analysis of vertical and complementary activities as well as details of shareholdings/rights held in any other entity in overlapping, vertical or complementary markets.
The ability and willingness of the CCI to take on the challenges of applying competition law to e-commerce and digital technologies has been shown in cases covered in the sections above.
The CCI’s broad approach was exemplified by its Chairperson, Ashok Kumar Gupta, in his contribution to the 13th Annual Competition Day in May 2022. He recognised that new skill sets were needed in areas such as AI, machine learning, data analytics and algorithm design. Given the size and rapid growth of India’s digital consumer base, the regulatory toolkit for antitrust and merger control cases had to be sharpened and chiselled to account for data-centric ecosystems. Whilst market distortions had to be promptly corrected, it was important not to compromise incentives for innovation. The CCI Chairperson also referred to the importance of looking at global developments, where ex-ante measures were increasingly supplementing ex-post antitrust tools.
In June 2022, the Rajya Sabha’s Parliamentary Standing Committee on Commerce (Standing Committee on Commerce) published a wide-ranging report on the Promotion and Regulation of E-Commerce in India.[71] It made a number of recommendations relating to competition law and the promotion of competition in e-commerce markets. The Committee addressed issues of platform neutrality and recommended a number of changes for platforms operating under marketplace and inventory models. In relation to the relationship between consumer protection and competition, it recommended a clear division between regulators to avoid overlaps and a robust mechanism for cooperation. More generally, the fragmented governance of e-commerce meant there was a need for a framework to enable periodic interaction and information between the CCI and other regulators/Ministries and for the creation of a Digital Markets and Data Unit within the CCI. The Committee pointed to difficulties with ex post enforcement, especially with regard to “gatekeepers”. It recommended the development of an ex-ante regime and mechanisms for identifying such gatekeepers. The CCI should also formulate a mandatory code of conduct to cover relations between e-marketplace operators and business users/consumers. The Committee finally called for the prompt enactment of data protection legislation.
In September 2022, the CCI Chairperson announced that the CCI was in the process of setting up a Digital Markets and Data Unit which would act as a centre of expertise for digital markets. The Unit would engage with stakeholders, provide inputs on policy issues and support data analytics/management.
In December, the Standing Committee on Finance issued a wide-ranging Report on Anti-Competitive Practices by Big Tech Companies.[72] The Committee observed that digital markets were essentially different from traditional markets given increasing returns to scale and network effects, which led to “winner takes all” markets evolving in short timeframes. It recommended that competitive behaviour in these markets needed to be evaluated ex ante rather than, as at present, after the event. Leading players that could negatively influence competitive conduct in the digital ecosystem should be designated as “Systemically Important Digital Intermediaries” (SIDIs) and be subject to a number of mandatory obligations. The Finance Committee identified ten anti-competitive practices by SIDIs with corresponding obligations covering: (a) anti-steering provisions preventing users from moving to other platforms; (b) self-preferencing; (c) bundling and tying; (d) data usage; (e) mergers and acquisitions, including “killer acquisitions”; (f) dynamic pricing and deep discounting; (g) exclusive tie-ups; (h) search and ranking preferencing; (i) restricting third-party applications; and (j) advertising policies.
The Finance Committee recommended the introduction of a Digital Competition Act to ensure a fair and contestable digital ecosystem. It also recommended revamping the CCI (including strengthening the capacities of its Digital Markets and Data Unit), to focus on SIDIs and unfair practices of other digital players.
Following the inputs from the various Parliamentary Standing Committees, in February 2023, the Government constituted a Committee on Digital Competition Law (CDCL) to evaluate the need for a separate competition law for digital markets.[73] The Firm’s Managing Partner, Mrs. Pallavi Shroff, has been nominated by the Government as a Member of the CDCL.
The CDCL is to review whether the existing Indian competition law regime is sufficient to deal with the challenges emerging from the digital economy. The CDCL will: (a) examine whether there is need for a separate legislation providing for ex-ante regulation in digital markets; and (b) study the practices of SIDIs. The CDCL is required to submit its report, along with a draft Digital Competition Act, to the Government by May 2023.
The CCI published Key Findings and Recommendations on a Market Study on Competition and Regulatory Issues related to the Taxi and Cab Aggregator Industry.[74] This study, focusing on surge pricing, recommended: (a) greater transparency in the definition and components of “total fares”; (b) addressing aberrations in pricing through regulation and ensuring greater transparency; and (c) addressing information asymmetries between cab aggregators and riders/drivers. The CCI issued a short advisory setting out self-regulatory measures to address information asymmetry and transparency concerns.[75]
The CCI published its key findings and observations in its Market Study on the Film Distribution Chain in India.[76] The CCI identified a range of competition issues in relation to revenue-sharing arrangements, box office collections for the theatrical exhibition of films, digital cinema equipment and trade associations. The CCI noted imbalances of bargaining power of various elements in the film distribution value chain and stated that promoting fair competition required the attenuation of such imbalances. Whilst committing to continuing to address these issues within the scheme of the Competition Act, the CCI saw a vast potential for players to adopt self-corrective mechanisms. It therefore devised a charter of self-regulation for stakeholders in order to minimise future interventions by the CCI and to encourage the development of a thriving film industry with minimum friction.
Footnote
[1] The Competition (Amendment) Bill, 2022 (http://164.100.47.4/BillsTexts/LSBillTexts/Asintroduced/185_2022_LS_Eng.pdf). Please see our separate briefing for a more detailed analysis (https://www.amsshardul.com/ insight/competition-amendment-bill-a-modern-law-for-modern-markets/).
[2] Standing Committee on Finance (2022-2023), 52nd Report, “The Competition (Amendment) Bill, 2022” (http://164.100.47.193/lsscommittee/Finance/17_Finance_52.pdf). Please see our separate briefing for a more detailed analysis (https://www.amsshardul.com/insight/standing-committee-on-finance-presents-report-on-competition-amendment-bill/).
[3] The combinations notified under the “Green Channel” route were being “deemed approved” upon filing, since such transactions are not put up for approval at CCI meetings.
[4] PES Installation Private Limited v. MDD Medical Systems Private Limited and Others, Supreme Court, Civil Appeal No. 4040 of 2014 (29 July 2022).
[5] MDD Medical Systems India Private Limited v. Foundation for Common Cause and People Awareness and Others, Competition Appellate Tribunal, Appeal No. 93 of 2012 (25 February 2013).
[6] Pawan Jagetia v. Competition Commission of India and Others, NCLAT, Competition Appeal (AT) No. 16 of 2021, etc. (23 December 2022).
[7] Alleged Anti-Competitive Conduct in the Beer Market in India, CCI, Suo Motu Case No. 06 of 2017 (24 September 2021).
[8] United Breweries Limited v. Competition Commission of India, Supreme Court, Civil Appeal No. 747 of 2023 (17 February 2023).
[9] Alleged cartelisation in supply of LPG Cylinders procured through tenders by Hindustan Petroleum Corporation Limited (HPCL), CCI, Suo Motu Case No. 01 of 2014 (9 August 2019).
[10] Sahuwala Cylinders Private Limited and Another v. Competition Commission of India, NCLAT, Competition Appeal (AT) No. 38 of 2019, etc. (10 November 2022).
[11] In Re: Cartelisation by Shipping Lines in the matter of provision of Maritime Motor Vehicle Transport Services to the Original Equipment Manufacturers, CCI, Suo Motu Case No. 10 of 2014 (20 January 2022).
[12] Ministry of Corporate Affairs v. Apollo Tyres Limited and Others, CCI, Reference Case No. 08 of 2013 (31 August 2018). Publication was delayed by the fact that one of the manufacturers had challenged the CCI proceedings – this challenge was finally dismissed by the Supreme Court in January 2022.
[13] Ceat Limited v. Competition Commission of India, NCLAT, Competition Appeal (AT) No. 05 of 2022, etc. (1 December 2022).
[14] Federation of Corrugated Box Manufacturers of India and Others v. Gujarat Paper Mills Association and Others, CCI, Case No. 24 of 2017 (12 October 2022).
[15] Chief Materials Manager, North Western Railway v. Moulded Fibreglass Products and Others, CCI, Reference Case No. 03 of 2018 (4 April 2022).
[16] Cartelisation in the supply of Protective Tubes to Indian Railways, CCI, Suo Motu Case No. 06 of 2020 (9 June 2022).
[17] Chief Materials Manager (Stores), Eastern Railway v. Krishna Engineering Works and Others, CCI, Reference Case No. 02 of 2020 (11 October 2022). The CCI had earlier found bid rigging in the supply of axle-bearings to Eastern Railways in Eastern Railway, Kolkata v. Chandra Brothers and Others, CCI, Reference Case No. 02 of 2018 (12 October 2021).
[18] Consumer Unity & Trust Society v. PVR Limited and Another, CCI, Case No. 29 of 2022 (13 September 2022).
[19] AIOVA v. Amazon Seller Services Private Limited and Others, CCI, Case No. 29 of 2020 (3 March 2022).
[20] In Re: Allegations pertaining to private label brands related to Amazon sold on Amazon India marketplace, CCI, Suo Motu Case No. 04 of 2021 (7 and 11 March 2022).
[21] NRAI v. Zomato and Swiggy, CCI, Case No. 16 of 2021 (4 April 2022) (NRAI case).
[22] Fast Track Call Cab Private Limited and Another v. ANI Technologies Private Limited, CCI, Cases No. 6 and 74 of 2015 (19 July 2017).
[23] Meru Travel Solutions Private Limited v. Competition Commission of India and Another, NCLAT, Competition Appeal (AT) No. 19 of 2017, etc. (7 January 2022).
[24] Vinod Kumar Gupta v. WhatsApp Inc., CCI, Case No. 99 of 2016 (1 June 2017).
[25] Vinod Kumar Gupta v. Competition Commission of India and WhatsApp LLC, NCLAT, Competition Appeal (AT) No. 13 of 2017 (2 August 2022).
[26] Umar Javeed and Others v. Google LLC and Another, CCI, Case No. 39 of 2018 (20 October 2022).
[27] Google LLC v. Competition Commission of India, NCLAT, Competition Appeal (AT) No. 01 of 2023 (4 January 2023).
[28] Google LLC v. Competition Commission of India, Supreme Court, Civil Appeal No. 229 OF 2023 (19 January 2023.)
[29] XYZ (Confidential) v. Alphabet Inc. and Others, CCI, Case No. 07 of 2020, etc. (25 October 2022).
[30] Alphabet Inc v. Competition Commission of India, NCLAT, Competition Appeal (AT) No. 04 of 2023 (11 January 2023).
[31] Digital News Publishers Association v. Alphabet Inc. and Others, CCI, Case No. 41 of 2021, etc. (7 January 2022).
[32] News Broadcasters and Digital Association v. Alphabet Inc. and Others, CCI, Case No 36 of 2022 (6 October 2022).
[33] Federation of Hotel and Restaurant Associations of India and Another v. MakeMyTrip India and Others, CCI, Case No. 14 of 2019, etc. (19 October 2022).
[34] For OYO, this penalty was in respect of the Section 3(4) breach. MMT-Go’s penalty was also in respect of its abuses of its dominant position.
[35] MakeMyTrip (India) Private Limited and Another v. Competition Commission of India and Others, NCLAT, Competition Appeal (AT) No. 57 of 2022 (6 December 2022).
[36] JSW Paints Private Limited v. Asian Paints Limited, CCI, Case No. 36 of 2019 etc. (8 September 2022).
[37] Asianet Digital Network Private Limited v. Star India Private Limited and Others, CCI, Case No. 09 of 2022 (28 February 2022). (Separate orders were issued under Section 26(1) and Section 33 of the Competition Act.)
[38] Vijay Gopal v. Big Tree Entertainment Private Limited (BookMyShow) and Others, CCI, Case No. 46 of 2021 (16 June 2022).
[39] Vaibhav Mishra v. Spinn India Private Limited, CCI, Case No. 01 of 2022 (3 March 2022).
[40] Cryogas Equipment Private Limited v. Inox India Private Limited, CCI, Case No. 08 of 2021 (8 March 2022).
[41] Rohit Arora v. Zomato, CCI, Case No. 54 of 2020 (4 April 2022).
[42] See n. 22, above.
[43] The Competition Commission of India (General) Amendment Regulations, 2022 (No. 2 of 2022) (8 April 2022). Please see our April 2022 client alert for a more detailed analysis.
[44] WhatsApp LLC v. Competition Commission of India and Another, Delhi High Court, LPA No. 163 of 2021, etc. (25 August 2022).
[45] WhatsApp LLC v. Competition Commission of India, Delhi High Court, W.P.(C) No. 4378 of 2021, etc. (22 April 2021).
[46] Meta Platforms Inc. v. Competition Commission of India and Another, Supreme Court, SLP (C) No. 17121 of 2022 (14 October 2022).
[47] Intel Technology India Private Limited and Intel Corporation v. Competition Commission of India and Another, High Court of Karnataka, Writ Petition No. 50727 of 2019 (23 August 2022).
[48] GMR Hyderabad International Airport Limited and Others v. Competition Commission of India and Another, Telangana High Court, Writ Petition No, 22467 of 2019 (12 October 2022).
[49] Amit Mittal v. DLF Limited and Others, NCLAT, Competition Appeal (AT) No. 82 of 2018 (21 December 2022).
[50] Proceedings against Tata Power Company Limited under Section 43A of the Competition Act, CCI, Ref. No. C-2021/03/824, C-2021/02/825 and C-2021/03/826 (17 March 2022).
[51] Trustees Association of India v. CCI and Others, Bombay High Court, Writ Petition No. 3781 of 2022, etc. (8 and 11 April 2022).
[52] Trustees Association of India v. CCI and Others, Bombay High Court, I.A. No. 20251 of 2022 with W.P. No. 3781 of 2022 (21 February 2023).
[53] Vifor International Limited v. Competition Commission of India, Delhi High Court, W.P.(C) No. 11263 of 2022 (28 July 2022).
[54] Monsanto Holdings Private Limited and Others v. Competition Commission of India and Others, Delhi High Court, W.P.(C) No. 1776 of 2016 (20 May 2020).
[55] Swapan Dey v. Vifor International (AG) and Another, CCI, Case No. 05 of 2022 (25 October 2022).
[56] Gazette of India, 16 March 2022.
[57] Amazon.com NV Investment Holdings LLC v. Competition Commission of India and Others, NCLAT, Competition Appeal (AT) No. 01 of 2022, etc. (13 June 2022).
[58] Proceedings against Amazon.com NV Investment Holdings LLC under Sections 43A, 44 and 45 of the Competition Act, 2002, CCI (17 December 2021).
[59] Notice jointly given by Veolia Environnement S.A., Meridiam Global Infrastructure Management, LLC, Caisse des Dépôts et Consignations and CNP Assurances, CCI, Ref. No. C-2021/07/852 (23 November 2021).
[60] Talace Private Limited, CCI, Ref. No. C-2021/11/883 (20 December 2021).
[61] Culver Max Entertainment Private Limited, Zee Entertainment Enterprises Limited, Bangla Entertainment Private Limited, and Essel Group Participants, CCI, Ref. No. C-2022/04/923 (4 October 2022).
[62] Proceedings against Adani Green Energy Limited under Section 43 A of the Competition Act, CCI, Ref. No. C-2021/05/837 (9 March 2022).
[63] Proceedings against SABIC International Holdings BV under Section 43A of the Competition Act, 2002, CCI (19 July 2022).
[64] SCM Solifert Limited, CCI, Ref. No. C-2014/05/175 (10 February 2015).
[65] SCM Solifert and Another v. Competition Commission of India, Supreme Court, Civil Appeal No. 10678 of 2016 (17 April 2018).
[66] Proceedings Against Veolia Environnement S. A. under Section 43A of the Competition Act, CCI (17 May 2022).
[67] Competition Commission of India v. Thomas Cook (India) Limited, Supreme Court, Civil Appeal No. 13578 of 2015 (17 April 2018).
[68] Proceedings against SABIC International Holdings BV under Section 43A of the Competition Act, 2002, CCI (15 July 2022).
[69] Proceedings against PI Opportunities Fund – I and Pioneer Investment Fund under Section 43A of the Competition Act, 2002, CCI, Ref. No. M&A/Q1/2018/18 (30 September 2022).[71] Promotion and Regulation of E-Commerce in India (https://rajyasabha.nic.in/rsnew/Committee_site/Committee_File/ReportFile/13/159/172_2022_7_14.pdf.) Please see our June 2022 client alert for a more detailed analysis (https://www.amsshardul.com/insight/indian-competition-law-roundup-june-2022/).
[72] Standing Committee on Finance (2022-2023), 53rd Report, “Anti-Competitive Practices by Big Tech Companies” (http://164.100.47.193/lsscommittee/Finance/17_Finance_53.pdf).
[73] Ministry of Corporate Affairs, “Constitution of the Committee on Digital Competition Law” (https://images.assettype.com/barandbench/2023-02/7e93ae0c-05b9-4565-9b5b-a9a6103ac6ff/Order.pdf).
[74] CCI, Market Study on Competition and Regulatory Issues related to the Taxi and Cab Aggregator Industry: With Special Reference to Surge Pricing in the Indian Context. Key Findings and Recommendations (9 September 2022).
[75] CCI, Advisory on Self-Regulatory Measures (9 September 2022).
[76] CCI, Market Study on the Film Distribution Chain in India: Key Finding and Observations (14 October 2022). Please see our October 2022 client alert for a more detailed analysis (https://www.amsshardul.com/insight/indian-competition-law-roundup-october-2022/).
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Contributed by: John Handoll, National Practice Head; Aman Singh Sethi, Partner
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