INDIA – COMPETITION COMMISSION OF INDIA (‘CCI’)
CCI Imposes Penalty on Hyundai Motor India Limited for Anti-Competitive Dealer Agreements
June 14, 2017
Fx Enterprise Solutions India Pvt. Ltd. and St. Antony’s Cars Pvt. Ltd. filed information before the Competition Commission of India against Hyundai Motor India Limited (‘HMIL’).
HMIL was alleged to have imposed anti-competitive arrangements upon its dealers resulting in resale price maintenance practices.
The CCI observed that HMIL exercised control over dealer discounts through a “Discount Control Mechanism” and imposed penalties for non-compliance.
HMIL also appointed a Mystery Shopping Agency to monitor discount practices of dealers.
The arrangements further required dealers to purchase lubricants and oils only from designated suppliers:
- Indian Oil Corporation Limited
- Shell Oil Company
The Commission held that the arrangements violated Section 3(4)(e) read with Section 3(1) of the Competition Act.
Accordingly, the CCI directed HMIL to cease and desist from the anti-competitive conduct and imposed a penalty of ₹87 crore.
CCI Rules Against Airtel Alleging Abuse of Dominant Position by Reliance Jio
June 09, 2017
Bharti Airtel Limited filed information against Reliance Industries Limited and Reliance Jio Infocomm Limited alleging contravention of Sections 3 and 4 of the Competition Act.
The Informant alleged that Reliance Jio invested approximately ₹1,60,000 crore to establish telecom infrastructure across India and offered free telecom services in a predatory manner.
It was contended that Reliance Jio rapidly acquired nearly 72 million subscribers within four months.
The Competition Commission observed that the telecom market in India was highly competitive and that reduction in tariffs was common due to market rivalry.
The Commission further noted that Reliance Jio held only around 7% market share and therefore could not be considered dominant.
The CCI concluded that offering free services does not itself amount to anti-competitive conduct unless offered by a dominant enterprise with anti-competitive intent.
Accordingly, the Commission held that no contravention of Sections 3 or 4 of the Competition Act was established.
CCI Dismisses Complaint Against WhatsApp Alleging Abuse of Dominant Position
June 01, 2017
Mr. Vinod Kumar Gupta filed information against WhatsApp Inc. alleging abuse of dominant position under Section 4 of the Competition Act.
The complaint challenged WhatsApp’s updated privacy policy introduced after Facebook’s acquisition of WhatsApp.
The Informant alleged that WhatsApp forced users to share personal information with Facebook and that such data sharing facilitated targeted advertising.
It was also alleged that WhatsApp engaged in predatory pricing by discontinuing subscription fees.
The Competition Commission defined the relevant market as the market for instant messaging services using smartphone communication applications in India.
The CCI observed that although WhatsApp held a dominant position in the relevant market, the application provided users with safeguards including:
- Option to opt out of information sharing within 30 days
- End-to-end encryption of messages
- No sharing of user messages with Facebook or third parties
- Availability of alternative communication apps
The Commission further noted that free services were common industry practice among messaging applications.
Accordingly, the CCI held that no abuse of dominant position under Section 4 of the Competition Act was established.
UNITED STATES OF AMERICA (‘U.S.A.’) – FEDERAL TRADE COMMISSION (‘FTC’)
FTC Approves Final Order Preserving Competition in Industrial Valves and Switchboxes Market
June 12, 2017
The Federal Trade Commission approved a final order settling anti-competitive concerns relating to Emerson Electric Co.’s proposed acquisition of Pentair plc.
Both parties were engaged in manufacturing industrial valves, switchboxes and control products used in oil, gas, petrochemical and power industries.
The FTC observed that the proposed acquisition would combine two leading switchbox manufacturers in the United States with a combined market share of approximately 60%.
The Commission further noted that switchboxes perform critical safety functions and consumers heavily relied on the reputation and reliability of established manufacturers.
The FTC concluded that new market entry would not sufficiently restore competition because of:
- High investment requirements
- Time needed to establish brand reputation
- Technical and manufacturing barriers
Under the final order, Emerson was required to divest Pentair’s switchbox business, Westlock Controls, to Crane Co.
FTC Approves Final Order Preserving Competition in Pesticides Market
June 13, 2017
The Federal Trade Commission approved a final order addressing anti-competitive concerns arising from the merger between ChemChina and Syngenta AG.
The FTC identified competition concerns in the markets for the following pesticides:
- Paraquat herbicide
- Abamectin insecticide
- Chlorothalonil fungicide
The Commission observed that Syngenta held substantial branded market share while ADAMA, a ChemChina subsidiary, was one of the largest generic suppliers.
The FTC concluded that the merger would eliminate direct competition and could result in higher prices and reduced service quality.
To settle the concerns, ChemChina agreed to divest ADAMA’s rights and assets relating to the pesticides to AMVAC.
EUROPEAN UNION (‘EU’)
European Commission Fines Google 2.42 Billion Euros for Abuse of Dominant Position
June 27, 2017
The European Commission imposed a fine of 2.42 billion Euros on Google for abusing its dominant position in the general internet search market.
The investigation related to Google’s comparison shopping service known as Google Shopping.
The EC found that Google systematically gave prominent placement to its own comparison shopping results while demoting rival services in search rankings.
Evidence showed that rival comparison shopping services often appeared only on later pages of search results where user traffic was significantly lower.
The Commission concluded that Google’s conduct resulted in:
- Increased traffic for Google Shopping
- Reduced visibility for competing services
- Distortion of competition
- Consumer harm across the European Economic Area
The EC directed Google to cease the illegal practices within 90 days of the decision.
REPUBLIC OF INDIA – ANTI-COMPETITIVE AGREEMENTS AND ABUSE OF DOMINANT POSITION
Indian Sugar Mills Association and Others v. Indian Jute Mills Association and Others
MANU/CO/0092/2014
The Informants alleged anti-competitive agreements involving Indian Jute Mills Association and Gunny Trade Association concerning fixation of jute bag prices through Daily Price Bulletins.
The Competition Commission agreed with the Directorate General’s findings that the associations acted in concert to determine and control prices.
The Commission held that the conduct violated Sections 3(3)(a), 3(3)(b) read with Section 3(1) of the Competition Act.
The CCI imposed penalties upon the associations and their executive committee members.
The Commission further observed that mandatory use of jute packaging under statutory policy restricted market access and distorted competition.
Collective Boycott by Chemists & Druggists Association Goa
MANU/CO/0086/2014
The Competition Commission examined allegations that Chemists & Druggists Association Goa continued anti-competitive practices despite earlier Commission orders.
It was alleged that pharmaceutical companies were pressured to stop dealing with non-authorised stockists.
The Commission found that CDAG continued engaging in anti-competitive conduct by:
- Restricting supplies through stockists
- Threatening pharmaceutical companies
- Forcing suspension of supplies
- Enforcing collective boycott practices
The CCI directed CDAG to cease and desist from anti-competitive conduct and imposed a penalty of INR 10,62,062.
Shri Bijay Poddar v. Coal India Limited and Subsidiaries
MANU/CO/0087/2014
The Informant challenged provisions of the Spot e-Auction Scheme 2007 introduced by Coal India Limited and its subsidiaries.
The allegation focused on forfeiture clauses imposing penalties upon buyers for non-lifting of coal without corresponding liability upon Coal India for non-delivery.
The Commission held that the terms constituted unfair conditions under Section 4(2)(a)(i) of the Competition Act.
The CCI directed Coal India and its subsidiaries to modify the scheme and cease anti-competitive conduct.
Sai Wardha Power Company Ltd. v. Western Coalfields Ltd.
MANU/CO/0085/2014
The Informant alleged that Western Coalfields Ltd. and Coal India Ltd. imposed unfair and one-sided Fuel Supply Agreements for supply of non-coking coal.
The Commission observed that the opposite parties enjoyed dominant position in the market for production and supply of non-coking coal to thermal power producers.
The CCI held that the Fuel Supply Agreements imposed unfair conditions in violation of Section 4(2)(a)(i) of the Competition Act.
The opposite parties were directed to modify the agreements and cease the anti-competitive conduct.
HT Media Limited v. Super Cassettes Industries Limited
MANU/CO/0080/2014
HT Media Limited alleged that Super Cassettes Industries Limited abused its dominant position by imposing excessive royalty charges and minimum commitment charges for broadcasting music content.
The Informant argued that the conditions restricted market access for competing music companies and reduced consumer choice.
The Commission held that the minimum commitment charges constituted unfair conditions under Section 4(2)(a)(i) of the Competition Act.
The CCI directed the opposite party to cease imposing such conditions and imposed a penalty of INR 2,83,28,000.
MARKET DEVELOPMENTS
FTC Issues Complaint Against Proposed Merger of Fantasy Sports Sites
June 19, 2017
The FTC issued a complaint against DraftKings and FanDuel regarding their proposed merger.
The parties were dominant providers of daily fantasy sports contests in the United States.
The FTC alleged that the merger would substantially lessen competition in the DFS market by reducing consumer choices and limiting competition on:
- Entry fees
- Contest sizes
- Prize offerings
- Variety of sports contests
The FTC further concluded that entry by new competitors was unlikely to sufficiently restore competition in the market.
CCI Approves Acquisition of Share Capital of Flipkart Ltd. by Aceville Pte Ltd.
May 12, 2017
The Competition Commission approved acquisition of 6.02% fully diluted paid-up share capital of Flipkart Ltd. by Aceville Pte Ltd.
The Commission observed that no horizontal overlap or vertical relationship existed between the parties.
Accordingly, the CCI held that the proposed combination was not likely to cause appreciable adverse effect on competition in India.
Notification Regarding Exemption from Combination Notification Timeline
June 29, 2017
The Central Government exempted parties to combinations under Section 5 of the Competition Act from the thirty-day notification requirement under Section 6(2).
The exemption remained valid for five years from publication in the Official Gazette.
CMA Accepts Acquisition of Virgin Active Gyms by David Lloyd Clubs Limited
June 13, 2017
David Lloyd Clubs Limited proposed acquisition of 16 Virgin Active gyms was reviewed by the Competition and Market Authority.
The CMA identified competition concerns in Brighton and Brentwood where the parties closely competed.
The authority concluded that acquisition in those locations could substantially lessen competition and adversely affect consumers.
David Lloyd subsequently agreed not to acquire the gyms in the affected locations.
Following the commitments, the CMA accepted the merger.
IN-HOUSE CONTRIBUTORS
Avsi Malik Sharma
Parnika Medhekar
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Doc ID: CL/21/17
