CCI'S FUNCTIONING DURING COVID-19


The Competition Commission of India mainly aims at promoting competition by also regulating the anti-competitive practices. The CCI is especially a quasi-judicial body which mainly delivers its concerns to the executive bodies for effective implementation. It has also been authorised to offer directions and opinions on the competition issues which arise within the market. The “buyer welfare” was the main aim of the competition commission during the pandemic times and to make sure that there have been implementation of effective competition policies. Introduction The Competition Commission of India’s (“CCI”) regular functioning is continuously facing suspension amid the COVID-19 pandemic since March 2020. The Indian antitrust regulator however was quick to adapt to the changed circumstances and adopted a routine which allowed parties to submit merger notifications also as responses in on-going investigations and new information online. From the last five months the CCI have cleared an outsized number of combinations and has also eliminated several information and pronounce final orders. CCI’S Performance During The COVID-19 Pandemic Two of the last word orders recently pronounced by the CCI in which finding parties was a part in violation of the cartel and bid-rigging provisions of the Competition Act, 2002 (“Act”) have come as a surprise to many. While the CCI found clinching evidence regarding the existence of an agreement to cartelize and rig bids, that to for the first time during a case of cartelization, the CCI avoided imposing penalties and instead solely issued ‘cease and refrain’ orders. In the case of In Re: Cartelisation in Industrial and Automotive Bearings (Case no. 05 of 2017) by way of a whistle-blower application, the CCI found four industrial and automotive bearing manufacturers to possess an agreement in regard to price revisions and minimum percentage of increase to be quoted to automotive and industrial original equipment manufacturers (“OEMs”). This fact was established by way of e-mail communication between the cartelists also as minutes of meetings attended by the representatives of the numerous companies where such price-related discussions happened. The bearing makers argued that there was no considerable adverse impact on competition (“AAEC”) and as a result of the discussions amongst them. Firstly, the price-related information discussed was never implemented, and secondly the OEMs themselves exert significant countervailing buyer power which could not leave any such agreement to subsist amongst the bearing manufacturers. The CCI however, was of the view that the above arguments don’t rebut the presumption of AAEC actually, the very factum that the parties met with each other to form a choice, the price revisions to be quoted to the OEMs, compromised their independence. It enabled them to quote price revisions to the OEMs, different than what they could have otherwise quoted independently. Recently, the CCI continued this approach within the case of In Re: Chief Materials Manager, South Eastern Railway v. Hindustan Composites Limited & Ors. (Reference Case no. 03 of 2016) the knowledge during this case was filed by the chief managers of the numerous divisions of the Indian railways against ten manufacturers and suppliers of brake blocks for alleged bid-rigging within the tenders floated by the Indian railways. It had been alleged that the companies quoted identical prices and subsequently identical reductions within the course of the negotiations in the railway tenders. Further, even the rates quoted within the tenders issued by different divisions were same despite differences in the geographic locations. Legalities of The Filings Under Section 3 and 4 of the Competition Act, 2002 Sections 3 and 4 of the Competition Act, 2002 (‘Act’) affect anti-competitive agreements and abuse of dominance, respectively. As per the Notice dated 23rd March 2020, all filings related to Section 3 and Section 4 of the Act was suspended. Further, vide notice dated 30th March 2020, stated that all filings or compliances due on or before 14th April 2020 in respect of pending cases were suspended till 14th April, 2020. The notice dated 13th April 2020 allowed for the filing of knowledge with regard to the provisions of Section 3 and Section 4 of the Competition Act, 2002 electronically. Further, the notice issued on 20th April 2020, provided for the difficulty of fresh dates for all other compliances up to 2nd May 2020. The Director General (“DG”) through WhatsApp communications and SMS have found the indispensable proof of merging amongst the businesses for the years 2007-2019 and therefore the detailed records of the personnel of the businesses were recorded additionally as matters of investigation and admissions by the corporate representative. The costs quoted and therefore the quantity which is to be allocated was decided only through the investigation process simultaneously by bidding within the tenders. The companies argued that the alleged bid-rigging didn’t end in an AAEC given the monopsony market condition; wherein the Indian railways is the only purchaser whereas there are an outsized number of suppliers of the given product and thus the companies are almost on edge for impact prices. The CCI remained unimpressed with these arguments and given the evidence of cartelization, held that there’s nothing which could be more incriminating to conclude the guilt of the companies. For a second time during a row, the CCI avoided imposing any penalty upon cartel participants and directed the companies to directly discontinue and desist from engaging during this conduct again. The CCI during this case considered mitigating factors like cooperation by the companies, admission of anti-competitive agreement and thus the role played by the business entities just like the middle, small and medium enterprises (MSMEs) with small annual turnover because the economy was on downturn on account of COVID-19 and also to not impose financial penalties. Given the results and impact of cartelization, in the past the CCI has always imposed monetary penalties for this conduct. The CCI under the Act has the power to impose variety of the absolute best financial penalties in India. The Act prescribes a penalty of up to three times the profit for the duration of the agreement to cartelize. The penal provisions of this act guarantee that this particular statute perceives cartels to be the foremost essentialities of antimonopoly offences and consequently punishes them with exemplary penalties, just like the international antimonopoly legislations. Another facet of the cartel investigation which is significant to spotlight is that the Act being a civil legislation doesn't require a very high threshold for the standard of proof for such cases. The CCI appreciates that it's near impossible to urge evidence of a cartel unless the knowledge is brought forth by a whistle-blower and thus doesn't require evidence which proves the quantity of violation caused without reasonable doubt. This is often accepted as the stand of proof adopted in criminal cases. As long as the circumstantial evidence satisfies the CCI that the conduct of the parties can't be explained within the absence of an agreement to cartelize, a violation is presumed. At this stage, the burden of proof shifts to the parties who will currently rebut the presumption of guilt. And unless the presumption is rebutted, the violation stands well-tried. Conclusions Considering the penalty powers of the CCI and thus the quite evidence required in cartel cases it's astounding that the CCI decided to not impose any penalty in two bid-rigging cases where evidence was available. While within the brake blocks case, the CCI mentions the economic strain on industries during the pandemic, and quotes these factors for not penalizing them. However, it does raise the question whether this new approach sets an honest precedent or not. During this regard, it’s important to note that: (i) In the brake blocks case the cartel operated for nearly 8 years; (ii) both the cases were initiated way before the pandemic and (iii) the anti-competitive conduct had no correlation with the pandemic. It remains to be seen whether this is often a COVID-19 specific concession being granted by the CCI or whether the CCI goes to urge greater emphasis on demanding an amendment in business practices and not simply impose high penalties. It would even be interesting to determine whether parties are becoming to be equally invested in appealing cases where the CCI has rendered a finding on violation with no penalty consequences or not.

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