Tag Archives: competition act 2002

Competition Act

PIB press release dated 28th March, 2020

The Competition Commission of India (CCI) has revised guidance notes to Form I with a view to incorporate the changes made in Green Channel. The revised Form I, under the Green Channel, will be used to file the notice under Section 6(2) of the Competition Act, 2002 (Act) and Regulation 5(2) of the Combination Regulation.

The guidance notes provide the scope of information and documents to be submitted along with the form. It also provides clarification regarding eligibility criterion for Green Channel. The CCI issues guidance notes for parties to facilitate them to make a filing before it.

As part of its ongoing and regular efforts to streamline M&A filings process and make it simpler and faster, in August 2019, the CCI introduced an automatic system of approval for combinations under Green Channel and revised Form I to file the notice under Section 6(2) of the Competition Act, 2002 (Act) and Regulation 5(2) of the Combination Regulation.

In case of any other guidance on the information requirement in the Form I, the parties may request Pre-Filing Consultation (PFC) with the officers of the CCI. The parties are encouraged to seek PFC as per the guidelines available on the CCI’s website.

The revised notes to Form I are available at https://www.cci.gov.in/sites/default/files/page_document/Form1.pdf

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CCI order on Hyundai – Rs.420 crores penalty

The Competition Commission of India (‘the Commission’), in its order dated 27.7.15 has found 3 Car Companies, namely, Hyundai Motor India Ltd. (Hyundai), Mahindra Reva Electric Car Company (P) Ltd. (Reva) and Premier Ltd. (Premier) to be in contravention of the provisions of the Competition Act, 2002 (‘the Act’). The instant order is in continuation of Commission’s main order in the same case dated 25.08.2014 vide which the Commission had inter alia imposed penalties on fourteen out of the seventeen car companies under Section 27 of the Act.

The order against Hyundai has remained pending pursuant to the writ petition filed by it in the Madras High Court challenging the jurisdiction of the Commission. In regards, Reva and Premier, the order remained pending because of the applications filed by them requesting for striking out of their names from the array of parties. Accordingly, the Commission decided to pass a separate order against these three car companies after affording them reasonable opportunity to make their submissions in respect of the findings of the Director General (DG) in its investigation.

After taking into account the findings of the DG and the detailed submissions by these three car companies, the Commission found their conduct to be in violation of the provisions of section 3(4) of the Act with respect to their agreements with local Original Equipment Suppliers (OESs) and agreements with authorized dealers whereby they imposed absolute restrictive covenants and completely foreclosed the aftermarket for supply of spare parts and other diagnostic tools. Further the Commission found that the said car companies, who were found to be dominant in the aftermarkets for their respective brands, abused their dominant position under section 4 of the Act. The car companies were found to be indulging in practices resulting in denial of market access to independent repairers as the latter were debilitated to provide services in the aftermarket for repair and maintenance of cars for want of genuine spare parts. Further, these car companies were also found to be using their dominant position in the market for spare parts and diagnostic tools to protect their market for repair services, thereby distorting fair competition.

The Commission has prescribed the same corrective measures to Hyundai, Reva and Premier as were prescribed in the main order dated 25.08.2014 to infuse competition in the after sales market in the automobile sector. To reiterate, the order directed the car companies to cease and desist from indulging in conduct which has been found to be in contravention of the provisions of the Act. The car companies were also directed to adopt appropriate policies which shall allow them to put in place an effective system to make the spare parts and diagnostic tools easily available in the open market to customers and independent repairers. Further, the Commission directed the car companies to not to put any restrictions or impediments on the operation of independent repairers/garages.

The Commission imposed a penalty calculated at the rate of 2% of its average turnover on Hyundai amounting to Rs. 420.2605 crores (Rupees Four Hundred and Twenty Crores, Twenty Six Lakhs and Five Thousand only) which is to be deposited within 60 days of receipt of the order. Considering the mitigating factors that worked in favour of Reva and Premier, the two car companies were absolved from paying monetary penalty.

Detailed order can be seen at Commission’s website http://www.cci.gov.in

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CCI order on Hiranandani Hospital – abuse of dominance position

The Competition commission of India has passed a path breaking order against Dr. Hiranandani Hospital in the case relating to abuse of dominant position under section 27 of the competition act, 2002. The facts of the case are that a lady was registered with Dr. Hiranandani Super Speciality Hospital for delivery of her second child and at the same time she had made arrangements with Life Cell India Private Limited for banking of her stem cells. The Hospital had made an exclusive arrangement with Cryobanks International India and therefore refused to entertain the lady’s plea to allow Life Cell representatives to visit the hospital in order to collect the stem cells. 

1) The hospital was found to be a dominant player in the relevant market of provision of maternity services.

2) Due to its dominance in the relevant market, the hospital was able to influence the consumers by imposing unfair conditions

3) The agreement between the Hospital and Cryo Banks was in violation of section 3(4) of the Competition Act, 2002 being an anti competitive agreement which had an appreciable adverse effect on competition.

The CCI passed an order, gist of which is as follows:

(a) The agreement of hospital with Cryobank for the years 2011-12 & 2012-13 are
declared null & void.
(b) The hospital shall not enter into a similar agreement with any stem cell bank in
future.

This para 34 of the order clinches the issue completely

34. The plea advanced by the counsel is misconceived in as much as it is not the case of OP hospital that the patients were free to avail the services of any stem cell bank. The OP hospital’s only argument is that if a patient was not willing to take services of Cryobank, the patient was free to leave the hospital and avail maternity services of another hospital. In fact, this is not a mitigating factor rather it is another aggravating factor. The hospital knew the difficulty of a patient in leaving the hospital where the patient had all along been taking services of maternity consultant and had developed a bond with the consultant. In fact, most of such patients are afraid of going to another consultant and resign to the fate.

Order was passed for Rs.3.82 crores penalty. Since there are not many stem cell banks in India, I believe this is the first of its kind order of CCI in that category. 

Copy of the CCI order can be found here http://www.cci.gov.in/May2011/OrderOfCommission/27/392012.pdf

 

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