Respondent Memo Antitrust 2014

TEAM CODE: 34
BEFORE THE SUPREME COURT OF BOHEMIA AT RIVERDALE
Special Leave Petition filed under Article 136 of the Constitution of Bohemia & Appeals filed
under Section 53T of the Competition Act,2002
MEMORIAL FILED ON BEHALF OF THE RESPONDENTS
SLP(C) No. 101/2015

Competition Commission of Bohemia … Petitioner
V.
HCF Medi Machines AG … Respondent No. 1
Takshi Inc. … Respondent No. 2
Parry Limited … Respondent No. 3
CLUBBED WITH
Appeal No. 1/2015
Mr. Amandeep Sondhi … Petitioner
V.
HCF Medi Machines AG … Respondent No. 1
Takshi Inc. … Respondent No. 2
Parry Limited … Respondent No. 3
CLUBBED WITH
Appeal No. 2/2015
Ms. Debjoy Bhattacharya … Petitioner
V.
Bohemian Medical Association … Respondent
Most Respectfully Submitted to the Hon’ble Judges of the Supreme Court of Bohemia at
Riverdale
COUNSEL APPEARING ON BEHALF OF ‘RESPONDENTS
-MEMORIAL ON BEHALF OF THE RESPONDENTS-

TABLE OF CONTENTS - -Page i
TABLE OF CONTENTS
TABLE OF C O N T E N T S .............................................................................................................. i
LIST OF A B B R E V I A T I O N S .................................................................................................... iii
INDEX OF A U T H O R I T I E S ...................................................................................................... iv
STATEMENT OF J U R I S D I C T I O N ....................................................................................... viii
ISSUES FOR C O N S I D E R A T I O N ............................................................................................ ix
STATEMENT OF F A C T S .......................................................................................................... x
SUMMARY OF A R G U M E N T S ............................................................................................... xiii
W R I T T E N S U B M I S S I O N S ........................................................................................................ 1
I. WHETHER THE ORDER OF THE RIVERDALE HIGH COURT DECLARING THE DIRECTOR
GENERAL’S REPORT AND THE ENSUING COMPETITION COMMISSION OF BOHEMIA’S (CCB)
ORDER VOID IS CORRECT IN LAW? ................................................................................................. 1
1.1. THAT THE INVESTIGATIVE POWER OF THE DG IS RESTRICTED TO THE DIRECTIONS HE

RECEIVES FROM THE CCB. ......................................................................................................... 1
1.2. THAT THE PRINCIPLES OF NATURAL JUSTICE STAND TO BE VIOLATED IF THE DG IS
ALLOWED TO EXPAND THE SCOPE OF HIS INVESTIGATION. ....................................................... 4
II. WHETHER THE AGREEMENT BETWEEN THE MRI MANUFACTURERS AND THE SERVICE
PROVIDERS IS ANTI-COMPETITIVE IN NATURE? ............................................................................. 5
2.1. THAT THE AGREEMENT IN ITSELF IS NECESSARY AND HAS THE ABILITY TO PROMOTE
COMPETITION. ............................................................................................................................. 5
2.2. THAT THE CLAUSE STIPULATING PRIOR APPROVAL TO DEAL IN GOODS OF COMPETING
MANUFACTURERS HAS PRO-COMPETITIVE EFFECTS AND IS NOT LIKELY TO HAVE ANY
ADVERSE EFFECT ON COMPETITION. .......................................................................................... 7
2.3. THAT THE ALLOCATION OF SERVICE PROVIDERS TO A PARTICULAR GEOGRAPHICAL
AREA OPERATES TO THE BENEFIT OF THE CONSUMER AND IT IS NOT LIKELY THAT ANTI-
COMPETITIVE EFFECTS WILL ENSUE FROM THE SAME............................................................... 9

TABLE OF CONTENTS - -Page ii
2.4. THAT THE RECOMMENDATION OF A MINIMUM RESALE PRICE IS NOT
ANTICOMPETITIVE. ................................................................................................................... 11
2.5. THAT MR SODHI’S DECLINE IN BUSINESS IS NOT INDICATIVE OF THE
ANTICOMPETITIVE NATURE OF THE AGREEMENTS. ................................................................. 15
2.6. THAT THE COMPAT’S DECISION HOLDING THAT THE AGREEMENT WAS NOT ANTI-
COMPETITIVE IS CORRECT IN LAW. .......................................................................................... 16
III. WHETHER THERE WAS ABUSE OF DOMINANT POSITION BY THE MANUFACTURERS’
UNDER SECTION 4 OF THE COMPETITION ACT, 2002? ................................................................. 17
3.1. THAT THE RELEVANT MARKET EXTENDS TO THE SPARE PARTS OF ALL
MANUFACTURERS’ AND THE SERVICES PROVIDED BY THE INDEPENDENT SERVICE PROVIDERS.
17
3.2. THAT THE MANUFACTURERS’ DID NOT EXERCISE A POSITION OF DOMINANCE IN THE
RELEVANT MARKET................................................................................................................... 20
3.3. THAT THE MANUFACTURERS’ DID NOT ABUSE THEIR POSITION OF DOMINANCE. ....... 21
IV. WHETHER THE BOHEMIAN MEDICAL ASSOCIATION ACTED AS A PLATFORM FOR
CARTELIZATION? .......................................................................................................................... 25
4.1. THAT RESOLUTION DOES NOT AMOUNT TO A PRICE FIXING AGREEMENT. .................. 26
4.2. THAT THE MAXIMUM PRICE AGREEMENT IS NOT PER SE ILLEGAL. ............................. 27
4.3. THAT THE RESOLUTION TO EXCLUSIVELY AVAIL THE SERVICES OF THE ASP IS
JUSTIFIABLE. ............................................................................................................................. 29
P R A Y E R ...................................................................................................................................... xv

LIST OF ABBREVIATIONS- -Page iii
LIST OF ABBREVIATIONS
Abbreviation Description
AAEC Appreciable Adverse Effects on Competition
BMA Bohemia Medical Association
CCB Competition Commission of Bohemia
CCI Competition Commission of India
COMPAT Competition Appellate Tribunal
DG Director – General
EC European Commission
ICN International Competition Network
MRTP Monopolies and Restrictive Trade Practices
RPM Resale Price Maintenance
SLP Special Leave Petition
TFEU Treaty on the Functioning of the European Union
THE ACT The Competition Act, 2002

INDEX OF AUTHORITIES - -Page iv
INDEX OF AUTHORITIES
Cases
A.K. Kripak v. Union of India, AIR 1970 SC 150 .......................................................................... 4
Aberdeen Journals Ltd. v. Director General of Fair Trading, (No.1) [2002] CAT 4............ 18, 20
Allied Tube & Conduit Corporation v. Indian Head, Inc., 486 U.S. 492 ..................................... 29
Appalachian Coals Inc. et al v. United States, 288 US 344(1933). ............................................. 15
Arizona v. Maricopa County Medical Society, 457 U.S. 332 (1982). .......................................... 28
Barr Labs, Inc. v. Abbott Labs, 978 F.2d 98, 111 (3d Cir.1992).................................................... 7
Carbour SA et Nord Distribution Automobile, SA v. Arnor SOCO SARL, [1998] ECR I-2055... 11
Chi. Prof’l Sports Ltd. P'ship v. NBA, 961 F.2d 667, 674 (7th Cir. 1992). .................................. 23
Digital Equip. Corp. v. Uniq Digital Techs.. Inc., 73 F.3d 756, 763 (7th Cir.1996).................... 13
District Collector, Chittor & Ors v. Chittoor District Groundnut Traders, 1989 (2) SCC 58. ..... 3
Eastman Kodak Company v. Image Technical Services, Inc., 504 U.S. 451 (1992).................... 13
Eliason Corp. v. Natl. Sanitation Foundation, 449 U.S. 826 (1980). .......................................... 30
FICCI - Multiplex Association of India v. United Producers/ Distributors Forum, Case No. 01 of
2009. .......................................................................................................................................... 27
Grasim Industries Limited v. CCI, 2014 (206) DLT 42. ................................................ 2, 4, 19, 27
Groupement d’achat Edouard Leclerc v. Commission, [1996] ECR II- 1961. .............................. 9
In Re: M/s HT Media Ltd., Case No. 40 of 2011. ......................................................................... 23
In Re: Mr. Ashish Ahuja, Case No. 17 of 2014............................................................................. 23
In Re: Suo-moto case against LPG cylinder manufacturers, Case No. 03 of 201, decided on
February 24, 2012. ..................................................................................................................... 14
Institute of Chartered Accountants of India v. Price Waterhouse, AIR 1998 SC 74. .................... 2

INDEX OF AUTHORITIES - -Page v
Kananen v. Matthews, 643 F.2d at 555 ........................................................................................ 28
Lee v. Life Ins. Co. of North America, 130 L.Ed.2d 340 (1994). ............................................ 13, 25
M/s. Hiralal Ratanlal v. STO, AIR 1973 SC 1034 ......................................................................... 2
Manappuram Jewellers Pvt. Ltd. v. Kerala Gold & Silver Dealers Association, Case No. 13 of
2011 ........................................................................................................................................... 24
Marin v. Citizens Memorial Hospital, 700 F.Supp. 354 (1988). ................................................. 29
Menasha Corp. v. News America Marketing In-Store, Inc., 354 F.3d 661 (7th Cir.2004). ........... 6
MTNL v. Telecom Regulatory Authority Of Delhi, AIR 2000 Del. 208 ......................................... 3
National Society of Professional Engineers v. United States, 435 US 679 (1978). ..................... 16
Paddock Publ'ng, Inc. v. Chicago Tribune Co., 103 F.3d 42 (7th Cir.1996). ................................ 6
Prevention and Control of Water Pollution v. Andhra Pradesh Rayons Ltd., AIR 1989 SC 611. 2
Prime’s Brief for Judgment N.O.V., E.D. Mich., Case 89-CV-71762, 29 November 1990, at p.7
................................................................................................................................................... 14
Psi Repair Services, Inc., v. Honeywell, Inc., 104 F.3d 811 (6th Cir.1997). ................................ 14
Race Tires America, Inc. v. Hoosier Racing Tire Corp., 2011 U.S. Dist. LEXIS 48847 .............. 8
Roofire Alarm Co. v. Royal Indemnity Co., 373 U.S. 949 (1963). ............................................... 29
Sh. Dhanraj Pillay & Ors. v. M/S Hockey India, Case No. 73 of 2011 ....................................... 23
Shailesh Kumar v. M/S Tata Chemicals Limited & Ors , Case 66/2011 decided on April 16,
2013. .......................................................................................................................................... 14
Shri Jyoti Swaroop Arora v. M/S Tulip Infratech Ltd. & Ors., Case No. 59 of 2011 .................. 27
Shri Shamsher Kataria v. Honda Siel Cars India Ltd. & Ors., 2014 Comp LR001 (CCI). ......... 20
Southern Pac. Communications Co. v. AT&T, 740 F.2d 980 (D.C.Cir. 1984). ............................. 8
State of U.P. v. Neeraj Awasthi & Ors., (2006) 1 SCC 667. .......................................................... 4

INDEX OF AUTHORITIES - -Page vi
State Oil v. Khan, 522 US 3 (1997). ............................................................................................. 16
Surinder Singh Barmi v. Board for Control of Cricket in India, Case No. 61 of 2010. ............... 18
TELCO v. RRTA, AIR 1977 SC 1973. .................................................................................... 10, 16
Toys ‘R’ Us, Inc. v. Federal Trade Commission, 221 F.3d 928 (7th Cir. 2000). ................... 23, 24
United States v. Colgate & Co., (1919) 250 US 300. ..................................................................... 8
United States v. Dentsply International, Inc., 399 F.3d 181 (3rd Cir. 2005). .............................. 23
Vogel v. American Socy. Of Appraisers, 744 F.2d 598. ............................................................... 30
Other Authorities
C. Edward Fee & Shawn Thomas, Sources of Gains in Horizontal Mergers: Evidence from
Customer, Supplier, and Rival Firms, 74 J. FIN. ECON. 423, 424-27 (2004). ........................ 22
Competition and Market Authority, Guidance on Trade Associations, professions and self-
regulating bodies........................................................................................................................ 26
D.P Mittal, Competition Law and Practice 409 (2nd edn., 2007). ................................................. 7
Eugene Buttigieg, Competition Law:Safeguarding the Consumer Interest, Vol. 40(2009). ........ 11
Green Paper on Vertical Restraints in EC Competition Policy, ¶ 59............................................ 13
Joshua D. Wright, The Economics of Resale Price Maintenance & Implications for Competition
Law and Policy (2014) .............................................................................................................. 12
OECD, Policy Roundtables on Trade Associations (2007) .......................................................... 26
Robert Pitofsky, Self Regulation and Antitrust, Prepared Remarks before the 34 Annual
Symposium on Associations and Antitrust (Feb. 18, 1998). ..................................................... 30
SVS Raghavan Committee, Report of High Level Committee on Competition Law & Policy
(2000) ¶ 2.8. ................................................................................................................................. 3

INDEX OF AUTHORITIES - -Page vii
United Kingdom Office of Fair Trading, Market Definition: Understanding Competition Law, in
COMPETITION LAW (2004) .................................................................................................. 18
Treatises
Commission Notice, Guidelines on Vertical Restraints, ¶125 ........................................................ 8
European Commission, Council Regulation No. 1/03, Recital 4 (2002). ..................................... 11

STATEMENT OF JURISDICTION- -Page viii
STATEMENT OF JURISDICTION
THE PETITIONER HAS APPROACHED THIS HON’BLE COURT UNDER ARTICLE 136 OF THE
CONSTITUTION OF BOHEMIA.
“136: Special leave to appeal by the Supreme Court
(1) Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant
special leave to appeal from any judgment, decree, determination, sentence or order in any
cause or matter passed or made by any court or tribunal in the territory of India.
Nothing in clause (1) shall apply to any judgment, determination, sentence or order passed or
made by any court or tribunal constituted by or under any law relating to the Armed Forces.”
THE APPELLANTS HAVE APPROACHED THIS HON’BLE COURT UNDER SECTION 53T OF THE
COMPETITION ACT, 2002.
“53T: Appeal to Supreme Court.
The Central Government or any State Government or the Commission or any statutory authority
or any local authority or any enterprise or any person aggrieved by any decision or order of the
Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of
communication of the decision or order of the Appellate Tribunal to them;
Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by
sufficient cause from filing the appeal within the said period, allow it to be filed after the expiry
of the said period of sixty days.”

ISSUES FOR CONSIDERATION- -Page ix
ISSUES FOR CONSIDERATION
ORDER VOID IS CORRECT IN LAW?
PROVIDERS IS ANTICOMPETITIVE IN NATURE?
III. WHETHER THE MANUFACTURERS HAVE ABUSED THEIR DOMINANT POSITION UNDER SECTION
4 OF THE ACT?
IV. WHETHER THE BMA ACTED AS A PLATFORM FOR CARTELIZATION?

STATEMENT OF FACTS- -Page x
STATEMENT OF FACTS
1. HCF Medi Machines AG (HCF) is an international conglomerate operating out of Germany,
specializing in the manufacture and supply of high-cost medical equipment, particularly
magnetic resonance imaging (MRI) machines. These machines are purchased by hospitals,
high specialty clinics and diagnostic clinics. HCF is a key market player for the manufacture
and supply of MRI machines, with other notable competitors being Takshi Inc. and Parry
Ltd.
2. HCF, Takshi and Parry together account for approximately 50% of the global market share,
and approximately 70% of the Bohemian market share. HCF, as a general rule, required the
MRI machines manufactured by it to be repaired only using genuine parts. Also, such
installation of the spare parts and other components was to be carried out by Authorized
Service Providers (ASP) expressly authorized by HCF. In the event of violation of these
terms, the consumers (i.e., the hospitals and super speciality clinics) would stand in breach
of the warranty provided by HCF (otherwise for a period of three years). A similar practice
was adopted by Takshi and Parry as well.
3. HCF had entered into agreements with selective suppliers on the basis of their technical
expertise, financial strength and affiliation from standardizing agencies and thus, the
consumers were required to procure the spare parts of the MRI machines through these ASP
only.
4. In December, 2012, Bohemia Medical Association (BMA) passed a resolution that
instructed the hospitals to avail the services on authorised service providers employed by
HCF, Takshi and Parry only.

STATEMENT OF FACTS- -Page xi
5. Mr. Amandeep Sodhi, the sole proprietor of Fantasy Medicare Service Limited, based in
Riverdale, had been providing hospitals with medical supplies, equipment and spare parts
for close to 45 years. However, since early 2013, Mr. Sodhi had seen a gradual decline in his
business with the emergence of the ASPs which had been steadily garnering the market
share, particularly after the BMA resolution passed in December 2012.
6. Mr. Sodhi, contacted HCF to become an ASP but refused as he became aware of the terms
and conditions of the agreement. Alternately, he was allowed by HCF to enter into
agreement for the supply of spare parts at a price 1.5 times higher than the others.
7. Aggrieved, Mr. Sodhi filed an application under Section 19(1) (a) of the Competition Act
before the CCB against HCF, Takshi and Parry alleging that the agreements entered into
between HCF, Takshi and Parry and their respective ASPs amounted to an exclusive supply
agreement and were thus, anti-competitive.
8. The CCB ordered the office of the Director-General (DG) to investigate, the alleged
violation. The DG, in his report, found HCF, Takshi and Parry to be in violation of section
3(4) of the Competition Act. In addition to this, he also found them to be in violation of
section 4 due to their dominant position in the market being abused for the supply of spare
parts of their respective MRI Machines. The Competition Commission Board (CCB) upheld
these findings. As a result, Takshi and Parry appealed the order to the Competition Appellate
Tribunal (COMPAT) (Appeal No. 1/2014), while HCF challenged the jurisdiction of the
DG to expand the scope of its investigation to a violation of Section 4 before the Riverdale
High Court.

STATEMENT OF FACTS- -Page xii
9. The Riverdale High Court ruling in favour of the petitioner ordered that the DG’s
investigation and the resulting final order of the CCB was void as the DG did not have any
authority to extend its investigation to a violation of Section 4.
10. Meanwhile, in April 2013, Ms. Debjoy Bhattacharya, a retired Major with the Bohemian
National Navy was at the Athena Specialty Hospital in Riverdale for getting an MRI done.
However, she was informed that her medical insurance, did not include MRI diagnostics,
and hence, as a result, Ms. Bhattacharya was forced to pay for the high cost herself. She also
discovered that other hospitals were charging similarly exorbitant rates for their MRI
diagnostic services, since the BMA meeting in December 2012.
11. Aggrieved, she filed an application alleging that the hospitals were involved in price-fixing
arrangement with the BMA. The DG Report found the BMA to be in violation of Section 3
of the Competition Act for entering into anti-competitive practices in the nature of a cartel,
through price-fixing by virtue of agreeing upon negotiated prices among HCF, Takshi and
Parry. The CCB, as a result, upheld these findings.
12. The BMA and the hospitals appealed before the COMPAT (Appeal No. 2/2014). The
COMPAT found that the two sets of appeals to be inter-connected and decided to hear the
appeals together and ruled in favour of the petitioners.
13. The CCB filed a Special Leave Petition before the Supreme Court of Bohemia challenging
the order of COMPAT. Meanwhile, Mr. Sodhi and Ms. Bhattacharya also appealed against
the order of COMPAT.

SUMMARY OF ARGUMENTS- -Page xiii
SUMMARY OF ARGUMENTS
1. WHETHER THE ORDER OF THE RIVERDALE HIGH COURT DECLARING THE DIRECTOR
GENERAL’S REPORT AND THE ENSUING CCB ORDER VOID IS CORRECT IN LAW?
It is humbly submitted that as per the Competition Act, 2002, the Competition Commission has
the power to direct the Director General to investigate into any matter where the Commission
finds a prima facie infringement of the sections of this Act. In the instant matter, the Director
General investigated into a violation of Section 4 when he had been given a direction to
investigate into a violation of Section 3(4). It is contended that the statutory provision is
unambiguous and the legislative intent is clear as to the extent of power bestowed on the Director
General. Formation of an opinion that there is a prima facie contravention of the provisions of
the Act is sine qua non for an investigation by the Director General. The scheme of the Act
provides for hearing at multiple stages. The law entitles the parties the opportunity to be heard
before the Director General as well as the Commission. Therefore, allowing the Director General
to expand the scope of investigation results in the violation of the principles of natural justice.
Thus the Riverdale High Court’s order declaring the Director General’s report and the ensuing
CCB order void is correct in law.
2. WHETHER THE AGREEMENT BETWEEN THE MRI MANUFACTURERS AND THE SERVICE
PROVIDERS IS ANTICOMPETITIVE IN NATURE?
It is humbly submitted that the agreement between the MRI manufacturers and the authorised
service providers is not likely to cause an appreciable adverse effect on competition, therefore it
does not contravene Section 3(1) of the Act. It is contended in this regard that the order of the
COMPAT finding no violation should be upheld and the agreement be declared as valid. It is

SUMMARY OF ARGUMENTS- -Page xiv
submitted that the agreement in question has pro-competitive effects in the form of accrual of
benefits to the consumers. Further any anti-competitive effect as enshrined in Section 19(3) of
the Act is not a likely result of the agreements in question. The agreement enhances competition
and efficiency in the primary manufacturing market as well as the aftermarket for spare parts and
services. The exclusive supply clause, the territorial allocation and the minimum recommended
resale price have sound business justifications and ultimately provide enhanced services to the
consumer.
3. WHETHER THE MANUFACTURERS’ ABUSED THEIR POSITION OF DOMINANCE UNDER
SECTION 4 OF THE COMPETITION ACT, 2002?
It is submitted that the relevant market in the present matter is the market for all the spare parts
and repair and maintenance services in the market. The manufacturers’ are not the only source of
spare parts in the relevant market and hence, possess limited market share. Therefore, they do not
exercise a position of dominance in the relevant market. Moreover, the manufacturers’ have not
abused their position of dominance as they have not imposed discriminatory pricing, engaged in
exclusionary or exploitative abusive conduct or used their position in the market for spare parts
to leverage their position in the market for repair and maintenance services.
4. WHETHER THE BMA ACTED AS A PLATFORM FOR CARTELIZATION?
It is submitted that the BMA is a trade association that has acted as a representative of its
members. The BMA exercises buying power and hence, negotiated rates of services with the
ASPs. It is contended that the encouragement to recover the negotiated rate from the consumer
was recommendatory in nature and therefore, not binding. Hence, the price rise in the industry
may only be attributed to the use of the ASP and not the recovery of the negotiated rates.
Moreover, the resolution to exclusively avail of the services of the ASP is justifiable. It is

SUMMARY OF ARGUMENTS- -Page xv
submitted that the association may engage in self-regulatory conduct to ensure quality standards
in the relevant sector. Hence, the BMA has not acted as a platform for cartelization.

WRITTEN SUBMISSIONS- -Page 1 of 30
WRITTEN SUBMISSIONS
ORDER VOID IS CORRECT IN LAW?
It is humbly submitted that as per Section 26(1) of the Competition Act, 2002,1 the CCB has the
power to direct the Director General2 to investigate any matter where it finds a prima facie
infringement of the sections of the Act. In the instant case, the CCB passed an order under
Section 26(1) of the Act, directing the DG to investigate into a violation of Section 3(4). The
DG, along with a violation of Section 3(4) also reported a violation of Section 4 of the Act. It is
contended that the High Court’s order declaring the investigation and the subsequent CCB order
void3 is correct in law. This contention is sought to be substantiated on the grounds of, a) the
DG’s power to investigate being limited to the directions he receives from the CCB and b) the
violation of principles of natural justice in allowing the DG to expand the scope of his
investigation.
1.1. THAT THE INVESTIGATIVE POWER OF THE DG IS RESTRICTED TO THE DIRECTIONS HE
RECEIVES FROM THE CCB.
1.1.1. It is submitted that according to Section 26(1) of the Act, the CCB alone is given the
power to decide whether certain information amounts to prima facie infringement of the
provisions of the act and may accordingly direct the DG to investigate or may reject such
information. The DG only has the limited power to investigate on the basis of such
1
Hereinafter the Act.
2
Hereinafter DG.
3
Proposition ¶ 10.

directions. This limited scope of power may be established through a) a literal
interpretation of the provision of the statute itself and b) determination of the intention of
the legislature.
1.1.2. It is humbly submitted that when a statutory provision is unambiguous and if from the
words, the intention of the legislature can be gathered, the Court must use the literal rule
of interpretation. 4 There is a presumption that words are used in an Act of the Parliament
correctly and exactly and not loosely and inexactly.5It is therefore clear that a plain
reading of the Section 26 yields that the direction from the Commission is a prerequisite
for the DG to conduct investigation. Further, the Act has not restricted the kind of
direction that may be given by the Commission. Hence, if the direction is issued in
regards to a violation of one section, only that violation must be investigated and
reported. Moreover, it has been held that since Regulation 20(4) of the CCB (General)
Regulations, 20096 requires the DG to report his findings on each of the allegations made
in the information, the DG is to be confined to the allegations made in the information. In
the instant case, Mr. Sodhi only alleged a violation Section 3(4) of the Act. Therefore, the
DG has acted beyond the scope of Regulation.
1.1.3. It is humbly submitted that when the provisions of a statute requires an act to be done in a
particular manner, such an act can be done only in the prescribed manner and not
otherwise.7 It is contended that formation of an opinion that there is a prima facie
4
M/s. Hiralal Ratanlal v. STO, AIR 1973 SC 1034; Institute of Chartered Accountants of India
v. Price Waterhouse, AIR 1998 SC 74.
5
Prevention and Control of Water Pollution v. Andhra Pradesh Rayons Ltd., AIR 1989 SC 611.
6
Hereinafter the 2009 Regulations.
7
Grasim Industries Limited v. CCI, 2014 (206) DLT 42.

contravention of the provisions of the Act, is sine qua non,8 for an investigation by the
DG. Therefore allowing the DG to investigate in excess of an express direction of the
Commission allows for the mandatory requirement of prima facie opinion to be
circumvented. It is an established legal principle that what cannot be done directly,
cannot be allowed to be done indirectly as that would be an evasion of the statute.9 When
the Act has made it clear that a prima facie opinion is necessary, allowing the DG to
investigate a Section 4 violation when no prima facie opinion has been formed regarding
its violation amounts to permitting an evasion of the law.
1.1.4. It is humbly submitted that the word suo moto is ordinarily defined as ‘on its own
motion.’ In the instant case, it is contended that the act of the DG reporting in excess of
his direction is an act done suo moto and such suo moto exercise of power is not allowed
under the scheme of the Act. The Raghavan Committee report, 2000, provides that the
DG will have no suo moto powers of investigation. He is authorized to only look into the
complaints received from the Competition Commission of India (CCI) and submit his
10
findings to the Commission. It is further submitted that though MRTP Act, 1969
empowered the DG to exercise suo moto power of investigation, the said power has been
expressly denied to him under the Competition Act. This shift can be reasonably inferred
to be a deliberate act of the legislature carried out in order to limit the authority of the
DG. If the parliament wished to retain the wide scope of the power that was previously
granted, the pre-existing provision would have been retained. Thus, it is submitted that in
8
Id.
9
MTNL v. Telecom Regulatory Authority Of Delhi, AIR 2000 Del. 208; District Collector,
Chittor & Ors v. Chittoor District Groundnut Traders, 1989 (2) SCC 58.
10
SVS Raghavan Committee, Report of High Level Committee on Competition Law & Policy
(2000) ¶ 2.8.

light of the unambiguous provision of law and its legislative intent, the DG has
transgressed his authority.
1.2. THAT THE PRINCIPLES OF NATURAL JUSTICE STAND TO BE VIOLATED IF THE DG IS
ALLOWED TO EXPAND THE SCOPE OF HIS INVESTIGATION.
1.2.1. It is humbly submitted that of Regulation 41(4) of the 2009 Regulations empowers the
DG to call for the parties to lead evidence by way of affidavit or oral evidence. The
principles of natural justice demand the administrator to provide for a reasonable
opportunity to be heard (audi alterum partem) before making a decision concerning
quasi-judicial matters.11Where the CCI argued that the DG’s report for the contravention
of Section 4 must be examined although it was in excess of the Commission’s direction,
it was held to be in violation of the Act.12 The Court discussed it in a detailed manner,
stating that “the scheme of the Act provides for hearing at multiple stages. The law
entitles the parties the opportunity to be heard by the before the DG as well as before the
Commission. Moreover further inquiry under Section 26 by the Commission is not
mandatory and Commission can pass his order based under Section 27 on the basis of the
DG Report. In such a case if the party is deprived of adequate opportunity to defend his
case at the stage of DG investigations, he will not be able to lead evidence and to cross-
examine the witnesses of the opposite party, even before the Commission”.13 Hence, in
the instant case taking a stance contrary to that of the High Court would result in allowing
violation of the principles of natural justice.
11
A.K. Kripak v. Union of India, AIR 1970 SC 150; State of U.P. v. Neeraj Awasthi & Ors.,
(2006) 1 SCC 667.
12
Grasim, supra note 7.
13
Id.

1.2.2. Therefore, it is contended that the DG acted in excess of his authority by reporting a
violation of Section 4.
PROVIDERS IS ANTI-COMPETITIVE IN NATURE?
It is humbly submitted that Section 3(1) of the Act provides that any agreement which causes or
is likely to cause appreciable adverse effect on competition14 shall be void. Section 3(4) of the
Act provides that any agreement amongst persons or enterprises at different levels of the
production chain shall be in contravention of Section 3(1) if it causes or is likely to cause AAEC.
It is humbly submitted that the agreement between the MRI manufacturers and the authorised
service providers15has not and is not likely to cause AAEC. Therefore, it does not contravene
Section 3(1) of the Act. Further, the agreement in question has pro-competitive effects as
provided under Section 19(3) of the Act. Such pro-competitive effects are observed the form of
accrual of benefits to the consumer. This is established through a thorough analysis of the
agreement as a whole and of the seemingly restrictive clauses contained in it. Therefore, it is
contended that the order of the COMPAT finding no violation16 should be upheld and the
agreement be declared as valid.
2.1. THAT THE AGREEMENT IN ITSELF IS NECESSARY AND HAS THE ABILITY TO PROMOTE
COMPETITION.
14
Hereinafter AAEC.
15
Hereinafter ASP.
16
Proposition ¶ 14(i)

2.1.1. It is submitted that the manufacturers enter into agreements with select service providers
on the basis of certain criteria such as affiliation with quality standard agencies, technical
expertise and knowhow of employees, and financial strength of the entities.17 In the case
of Menasha Corp. v. News America Marketing In-Store, Inc.,18 it was held that where
organizations in good faith have freely adopted their own equipment rules and then freely
entered into exclusive contracts with the respective suppliers, the resulting exclusive
contract does not violate the antitrust laws, even if the supplier has a high market share
and offers money for the exclusivity. It has been appropriately explained that the
competition to be an exclusive supplier may constitute “a vital form of rivalry, and often
the most powerful one, which the antitrust laws encourage rather than suppress.”19 Since
the agreement entered into is based on qualitative assessment, the opportunity to become
an ASP is uniformly available to everyone. Therefore, such vertical integration must be
encouraged to foster competition and efficiency in the aftermarket for service.
2.1.2. Further, the terms and conditions are formulated in order to cater to the existing customer
base. Most of the hospitals providing MRI services pride themselves in providing the best
medical facilities to their patients.20 In order to retain their customer base, it becomes
imperative for the manufacturers to prioritize quality assurance. Thus, it is contended that
the agreement in question has been formulated based on such market considerations.
17
Proposition ¶ 4.
18
Menasha Corp. v. News America Marketing In-Store, Inc., 354 F.3d 661 (7th Cir.2004).
19
Paddock Publ'ng, Inc. v. Chicago Tribune Co., 103 F.3d 42 (7th Cir.1996).
20
Proposition ¶ 6.

2.2. THAT THE CLAUSE STIPULATING PRIOR APPROVAL TO DEAL IN GOODS OF COMPETING
MANUFACTURERS HAS PRO-COMPETITIVE EFFECTS AND IS NOT LIKELY TO HAVE ANY
ADVERSE EFFECT ON COMPETITION.
2.2.1. It is humbly submitted that the clause stipulating that the service providers require prior
written approval to deal in MRI machines of competing manufactures 21 is a necessary
exclusive supply agreement having pro-competitive effects. Further, it is not likely that
the said clause will have any adverse effect on competition that is not more than
compensated by the pro-competitive effects that is generated.
2.2.2. It is humbly contended that the legitimacy of a vertical restraint has to be having due
regard to business requirements, the probable development of industry, consumer
demands, and other characteristic of the market.22Therefore, existence of legitimate
business justifications for the legality of a contract has been recognized. 23 A balance has
to be drawn between risks of inefficiency and poor quality of service on one hand and the
dealers’ autonomy on the other hand. Since the manufacturing market is oligopolistic,
each manufacturer needs to capitalize on economies of scale available to him. The dealers
carry the weight of protecting the manufacturers’ reputation, goodwill and thereby their
future market performance. The system of approval ensures that the quality of service
provided to the consumer is not compromised while ensuring that the manufacturer’s
reputation remains intact.
2.2.3. Further, it is submitted that the indispensability test has been used to justify vertical
restraints. In order for a restraint to be indispensable it must be demonstrated why
21
Proposition ¶ 4, clause v.
22
D.P Mittal, Competition Law and Practice 409 (2nd edn., 2007).
23
Barr Labs, Inc. v. Abbott Labs, 978 F.2d 98, 111 (3d Cir.1992).

seemingly realistic and significantly less restrictive alternatives would be significantly
less efficient. If the application of what appears to be a commercially realistic and less
restrictive alternative would lead to a significant loss of efficiencies, the restriction in
question is treated as indispensable.24 In the instant case, the MRI manufacturers have
entered into agreements with the service providers. Therefore, the manufacturers are
aware of the capacity of the service providers. A less restrictive alternative in the form of
laying out specifications to the ASP dilutes the purpose of the ESA. In such a set-up, the
manufacturers are less equipped to check compliance of the ASPs. Therefore, considering
the sensitive nature of the industry concerned, it is submitted that the customers are better
off in a system where compliance can be guaranteed.
2.2.4. It is humbly submitted that in United States v. Colgate & Co.25, the Court held, “the
purpose of the Sherman Act is not to restrict the long recognized right of a trader or
manufacturer engaged in an entirely private business freely to exercise his own
independent discretion as to parties with whom he will deal.26 An undertaking has
freedom to choose customers, the circumstances and conditions to deal with; it also has
the right to refuse to supply its production in its business interest.27In the instant case, it is
contended that natural entry barriers inherent to the industry exist in the form of high
capital investment, R&D and reputation. An enterprise which overcomes these natural
barriers has the potential to compete effectively in the market. In the present case,
24
Commission Notice, Guidelines on Vertical Restraints, ¶125, available at
http://ec.europa.eu/competition/antitrust/legislation/guidelines_vertical_en.pdf [last accessed on
February 24th 2015].
25
United States v. Colgate & Co., (1919) 250 US 300.
26
Race Tires America, Inc. v. Hoosier Racing Tire Corp., 2011 U.S. Dist. LEXIS 48847.
27
Southern Pac. Communications Co. v. AT&T, 740 F.2d 980 (D.C.Cir. 1984).

simultaneous penetration of the aftermarket for services is unnecessary. The presence of
varied distribution formats such as Independent Service Providers,28multi-brand ASPs
and the ISPs who may want to become ASPs ensures that no additional cost is accrued by
competitors. Further, there is no anti-competitive foreclosure in the aftermarket that is
likely as the criteria to become a multi-brand dealership are solely determined on
objective grounds. Therefore, in the absence of any anti-competitive effects, the
autonomy of the MRI manufacturers must not be interfered with.
2.2.5. It is respectfully submitted that the manufacturers’ condition that an authorized dealer
would maintain a separate area within the showroom for the manufacturer’s parts and
employ separate trained personnel for its products is reasonable. It has further been held
in Groupement d'achat Édouard Leclerc v. Commission29 that it is generally accepted that
suppliers may require distributors to have suitable premises, adequately trained staff and
other service requirements in respect of complex consumer products and luxury products,
where such requirements are necessary to preserve quality of service around the products
and/or ensure their proper use. In the instant case, servicing an MRI machine requires
expertise. Further, since the parts of each brand of machine are not substitutable,30
specialized knowledge regarding installation and maintenance of each is necessary.
2.3. THAT THE ALLOCATION OF SERVICE PROVIDERS TO A PARTICULAR GEOGRAPHICAL AREA
OPERATES TO THE BENEFIT OF THE CONSUMER AND IT IS NOT LIKELY THAT ANTI-
COMPETITIVE EFFECTS WILL ENSUE FROM THE SAME.
28
Hereinafter ISP.
29
Groupement d’achat Edouard Leclerc v. Commission, [1996] ECR II- 1961.
30
Point 4, Clarification to the Proposition.

2.3.1. It is submitted that the clause stipulating that the service provider shall be given a
geographical area of responsibility where the designated service provider would be the
sole service provider31 is necessary and creates pro-competitive effects.
2.3.2. It is respectfully submitted that within a given product market each distribution system is
competing with every other distribution system and all products in a given market are
competing for the purchasing dollar of the ultimate consumer. In the present case, the
manufacturers aim to provide the customers the alternative that is best for them.
Therefore, the distribution system should find the optimum balance between competitive
pricing and quality assurance. Price competition results in discounting. However,
competitive pricing continues to exist due to the presence of the ISPs. In order to retain
customer loyalty post the warranty period, the ASP will not charge monopolistic prices.
They restrain the ASPs from engaging in monopolistic pricing. Further, to ensure quality,
an incentive in the form of geographical allocation has been provided. Such incentives are
widely held to facilitate specialisation and improvement in after-sales service.32
Therefore, it is humbly submitted that intra-brand competition within this distribution
system would be to the detriment of the customer and shift the focus away from quality.
The service provider would have to engage in cost savings in order to provide services at
a discounted rate. Such savings may compromise the quality of the services that the
manufacturers aim to provide.
2.3.3. It is submitted the benefits of territorial restrictions are widely recognised. Where dealers
are required to make heavy investments in stocking spare parts and in the maintenance of
31
Proposition ¶ 4, clause iii.
32
TELCO v. RRTA, AIR 1977 SC 1973.

after sale service stations, it has been held that territorial restrictions did not hinder
competition but promoted it.33 Various justifications for selective and exclusive
distribution in the supply of new cars have been brought forward. The European Court of
Justice discussed these in the Cabour case.34 The main reason is to allow manufacturers
to continue to influence the quality of their product by offering a high standard of service
to the consumer.35 The Commission itself used consumer protection as a justification for
the restrictions allowed in the block exemption. Citing the nature of the product
concerned, it provided that a number of restrictions of a selective and exclusive kind on
distributors were indispensable in order to allow some rationalization and as a result

36
better vehicle distribution and servicing. It is humbly submitted that such an
explanation may be extended to the present case considering the complex nature of the
MRI machine and the utmost necessity in ensuring its superior quality. Therefore, it is
contended that the territorial restriction is necessary to benefit the consumer.
2.4. THAT THE RECOMMENDATION OF A MINIMUM RESALE PRICE IS NOT ANTICOMPETITIVE.
2.4.1. It is submitted that the clause stipulating that the service provider should comply with the
recommended minimum price of the spare parts, as set and revised by the manufacturer
and while the service provider is free to sell at prices below the recommended minimum
price, doing so would make the service provider ineligible for the discount37 is necessary
33
Id.
34
Carbour SA et Nord Distribution Automobile, SA v. Arnor SOCO SARL, [1998] ECR I-2055.
35
Eugene Buttigieg, Competition Law:Safeguarding the Consumer Interest, Vol. 40(2009).
36
European Commission, Council Regulation No. 1/03, Recital 4 (2002).
37
Proposition ¶ 4 clause iv.

and procompetitive. Further, the clause is not likely to have an adverse effect on
competition.
2.4.2. It is humbly submitted that a practice, which strikes the balance between incentivizing the
dealer and promoting consumer welfare, must be adopted. In the instant case, the standard
of service that is expected from an ASP involves substantial investment on their part. The
service provider must maintain a stock of the manufacturer’s spare parts for the MRI
machines, which is to be replenished on an ongoing basis through request orders placed
with the manufacturer.38 Moreover, in case that they are recognised as being capable of
being a multi-brand retail, the ASP would maintain a separate area within the showroom
for the manufacturer’s parts and employ separate trained personnel for its products at its
own cost.39 The manufacturers therefore recommend a minimum resale price providing a
fifteen percent rebate if the said price is conformed to.40 These is done to ensure that the
dealers make the best possible effort in ensuring quality to their consumers and are
prevented from being put in a position in which quality will be compromised.
2.4.3. Further, from a consumer welfare perspective, measuring the impact of a minimum resale
price alone tells us little about the competitive effects of the same. 41 In the instant case, it
is observed that the pricing format has been successful, and the consumers are satisfied
with the services being provided by the ASPs. A general perception that the authorized
38
Proposition ¶ 4.
39
40
41
Joshua D. Wright, The Economics of Resale Price Maintenance & Implications for
Competition Law and Policy (2014) available at
http://www.ftc.gov/system/files/documents/public_statements/302501/140409rpm.pdf[last
accessed on 2 March 2015].

service providers are more reliable and provide better services than independent service
providers has emerged.42 This is an indicator of consumer satisfaction and the pro-
competitive effect of the agreement
2.4.4. It is humbly asseverated that the minimum price that the manufacturers set and revise is
inherently competitive and therefore does not result in double marginalisation. A
"double" markup results from the fact that each firm takes its pricing decision
independently, without taking into consideration the impact of its decision on its partner
in the vertical structure. As a result, the price is likely to be too high.43 In the instant case,
such an eventuality would not arise due to two reasons (a) the accounting of lifecycle
prices by consumers and (b) presence of countervailing buying power
2.4.5. It is humbly submitted that courts have interpreted the finding in the Kodak44 case with
regards to a customers’ indifference to life cycle costs, to be limited to situations in which
the seller's policy was not generally known.45 In Lee v. Life Ins. Co. of North America,46 it
has been held that the Court did not doubt in Kodak that if spare parts had been bundled
with Kodak's copiers from the outset, or Kodak had informed customers about its policies
before they bought its machines, purchasers could have shopped around for competitive
life-cycle prices. The material dispute that called for a trial was whether the change in
policy enabled Kodak to extract supra-competitive prices from customers who had
42
Proposition ¶ 6.
43
Green Paper on Vertical Restraints in EC Competition Policy, ¶ 59 available at
http://europa.eu/documents/comm/green_papers/pdf/com96_721_en.pdf [last accessed on 7th
March 2015].
44
Eastman Kodak Company v. Image Technical Services, Inc., 504 U.S. 451 (1992).
45
Digital Equip. Corp. v. Uniq Digital Techs.. Inc., 73 F.3d 756, 763 (7th Cir.1996).
46
Lee v. Life Ins. Co. of North America, 130 L.Ed.2d 340 (1994).

already purchased its machines. The timing of the ‘lock in’ at issue in Kodak was central
to the Supreme Court's decision. 47 In the instant case the MRI manufacturers have made
their policy regarding service providers clear from the start.48 Since this information was
previously available to the consumers, it is only reasonable to assume that they would
have made a life cycle cost analysis. Since this is an occurrence in the market, the
following argument must be accepted- “The quality and price of post-sale service are
critical to the competitiveness of each firm’s computer systems. No firm has the power or
incentive to take advantage of its current system users by lowering the quality or raising
the price of such service. Any firm attempting to do so would quickly lose future system
sales and place its entire business at risk.”49
2.4.6. It is humbly contended that the minimum resale price that is set and revised is subject to
market forces. Countervailing power by definition implies the ability to exert influence
on suppliers.50 In the case of Shailesh Kumar v. M/S Tata Chemicals Limited & Ors51 it
was noted that the suppliers could not engage in exploitative behaviour as there were a
large number of customers having bargaining strength vis-à-vis the sellers due to their
size, commercial importance to the seller and ability to switch to alternative suppliers. In
the instant factual matrix, it is found that 90% of hospitals/clinics that provide MRI
47
Psi Repair Services, Inc., v. Honeywell, Inc., 104 F.3d 811 (6th Cir.1997).
48
Proposition ¶ 3
49
Prime’s Brief for Judgment N.O.V., E.D. Mich., Case 89-CV-71762, 29 November 1990, at
p.7
50
In Re: Suo-moto case against LPG cylinder manufacturers, Case No. 03 of 201, decided on
February 24, 2012.
51
Shailesh Kumar v. M/S Tata Chemicals Limited & Ors , Case 66/2011 decided on April 16,
2013.

services are a part of the Bohemian Medical Association (BMA). 52 The BMA has
negotiated a rate on behalf of the all the hospitals. Further, it is noticed that individual
53
hospitals may negotiate greater discounts. The ASPs are commercially dependent on
these hospitals. Alternative forms of distribution such as the ISPs and the numerous mom
and pop shops continue to exist in the market. Thus, the ASPs cannot afford to price their
services in a monopolistic fashion.
2.5. THAT MR SODHI’S DECLINE IN BUSINESS IS NOT INDICATIVE OF THE ANTICOMPETITIVE
NATURE OF THE AGREEMENTS.
2.5.1. It is humbly submitted that an enterprise is not to be condemned of undue restraints
because it may affect changes in the market conditions,54 where the change would be in
mitigation of recognized evils and would not impair, but rather foster fair competitive
opportunities.55 The question is one of intent and effect, not to be determined by arbitrary
assumptions, but by close scrutiny of the particular conditions and purpose of each case.56
In the instant case, the market being dealt with falls under the umbrella of health sector.
In order to be a competitive player in such an industry, assimilation of reliability becomes
the primary requirement. For such reliability to be acquired, the highest possible quality
standard must be assured. It is contended that the manufacturing market and aftermarket
are interlinked. The business strategy of the upstream market is bound to influence the
downstream market. A downstream market must be flexible enough to adapt these
52
53
Proposition ¶ 5.
54
Appalachian Coals Inc. et al v. United States, 288 US 344(1933).
55
Id.
56
Id.

changes. The introduction of this new system has only intensified existing competition.
The emergence of an additional distribution format has created competition among the
service providers to be a part of that format and those outside the format to ensure that
they remain competitive. The ISPs losing out on buyer loyalty may not be attributed to
the acts of the MRI manufacturers. Therefore, a decline in Mr. Sodhi’s business or an
increase in the market share of the ASPs cannot be taken to be indicative of the anti-
competitive nature of the agreement.
2.6. THAT THE COMPAT’S DECISION HOLDING THAT THE AGREEMENT WAS NOT ANTI-
COMPETITIVE IS CORRECT IN LAW.
2.6.1. The COMPAT held that the agreement was not anticompetitive stating that nature of the
terms and conditions resulted in “fewer repairs because of the increased longevity of
57
components and longer intervals between services. It is submitted that assessment of
vertical agreements must be made through a rule of reason analysis. The true test of
legality is whether the restraint imposed is such that it merely regulates or promotes
competition or whether it is such that it suppresses or destroys competition.58There are
three factors to be considered in this regard,59 a)facts that is peculiar to the business to
which the restraint is applied, b) what was the condition before and after the restraint is
imposed and iii)what is the nature of the restraint and what is its actual and probable
effect.”60
57
Proposition ¶ 14.
58
National Society of Professional Engineers v. United States, 435 US 679 (1978).
59
TELCO, supra note 32.
60
State Oil v. Khan, 522 US 3 (1997).

2.6.2. It is humbly contended that this approach has been adhered to while establishing the anti-
competitive nature of the agreement. Therefore, it is seen that the pro-competitive effect
generated by the agreement outweighs any possible anti-competitive effect that it may
create.
III. WHETHER THERE WAS ABUSE OF DOMINANT POSITION BY THE MANUFACTURERS’ UNDER
SECTION 4 OF THE COMPETITION ACT, 2002?
In the present matter, it has been alleged that the manufacturers’ exercise a position of
dominance in the relevant market of spare parts and have abused their position of dominance in
contravention of Section 4 of the Act.61
In order to inquire into the issues of dominance and abuse under the provisions of the Act, it is
necessary to, (a) determine the relevant market under Section 2(r) of the Act, (b) assess
dominance in the relevant market under Section 4(a) of the Act, and (b) establish abuse of
dominance under Section 4 of the Act.
3.1. THAT THE RELEVANT MARKET EXTENDS TO THE SPARE PARTS OF ALL MANUFACTURERS’
AND THE SERVICES PROVIDED BY THE INDEPENDENT SERVICE PROVIDERS.
It is humbly submitted that Section 2(r) of the Act defines “relevant market” as “the
market which may be determined by the Commission with reference to the relevant
product market,” Further Section 2(t) of the Act defines “relevant product market” as “a
market comprising all those products or services which are regarded as interchangeable
or substitutable by the consumer, by reason of characteristics of the products or services,
their prices and intended use;”
61
Proposition ¶ 16.

3.1.1. It is humbly submitted that the relevant market must be identified according to the
particular facts of the case at hand.62 The relevant market in the present matter is
determined by the choice of spare parts and repair and maintenance service made
available to the (i) potential customers of the manufacturers’ and (ii) existing customers
of the manufacturers’. In the instant case, the manufacturers’ require owners of the MRI
machines to use genuine spare parts when replacing parts of the MRI machine and avail
the services of ASPs during the warranty period.63 In the event these terms and conditions
are not met the owners would stand in breach of a warranty64 which extends to a period of
three years.65
3.1.2. It is submitted that the CCI has applied the hypothetical monopoly test to determine the
scope of the relevant product market.66 The hypothetical monopoly test is an economic
calculation to observe whether a small increase in price would provoke a significant
number of consumers to switch to another product.67 The important factor is whether the
number of consumers likely to switch is large enough to prevent a hypothetical
monopolist profitably sustaining prices significantly above competitive levels.68 If the
consumers are likely to switch, the product they switch to comprises the relevant market.
62
Aberdeen Journals Ltd. v. Director General of Fair Trading, (No.1) [2002] CAT 4.
63
Proposition ¶ 3.
64
Id.
65
Id.
66
Surinder Singh Barmi v. Board for Control of Cricket in India, Case No. 61 of 2010.
67
United Kingdom Office of Fair Trading, Market Definition: Understanding Competition
Law,(2004),available at
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/284423/oft403.pd
f (last accessed on 14th March, 2015).
68
Id.

3.1.3. In the present matter, assuming that each manufacturer is a monopolist in the market for
spare parts it needs to be proven that an increase in the price of the spare parts and repair
and service maintenance would (a) reduce demand for the MRI machines, or (b) provoke
customers to switch from the use of genuine spare parts and services provided by the
ASPs, hence, preventing the manufacturers’ from profitably sustaining prices above
competitive levels.
3.1.4. It is humbly contended that in the event that the price for the spare parts and repair and
maintenance services is increased above the competitive level, the demand for the MRI
machines shall be affected. This is because potential owners of the MRI machines shall
engage in whole life costing. Whole life costing means that customers view the purchase
of the primary and secondary product as a unified deal.69 It is reasonably inferred that
since the machine is a durable good the potential customers will anticipate the cost of
necessary future purchases when buying the MRI machine. Further, it is contended that a
manufacturer will not wish to facilitate an increase in prices of its spare parts and repair
and maintenance services if doing so would earn it a reputation for exploitation and
hence, significantly reduce its ability to attract new customers.
3.1.5. It is humbly contended that in the event that the price for the spare parts and repair and
maintenance services is increased above the competitive level, the owners whose
warranty periods have expired are free to purchase non-genuine spare parts and avail the
service of ISPs. They are not constraint by the terms and conditions of the
manufacturers’. Hence, a rise in price would provoke these customers to switch from the
69
Supra note 7.

use of genuine spare parts and availing the services of the authorized service providers.
For the owners whose warranty periods have not expired, a rise in price would not only
cause them to purchase genuine spare parts from ISPs70 but impair the ASPs ability to
retain these customers in the post warranty period.
3.1.6. Moreover, it is submitted that competitive conditions may change over time. Policy
changes may make substitution between products easier and so change the market
definition.71 In the present matter, upon the expiration of the warranty period the MRI
machine owners are under no obligation to avail the services of the ASPs or purchase
genuine spare parts. Hence, it is submitted that in accordance with the hypothetical
monopolist test, the relevant market extends to non-genuine spare parts and the services
provided by the ISPs.
3.1.7. Therefore, there are two separate relevant markets that have been identified in the present
matter; (a) the ‘primary market’ comprising the manufacturing and sale of MRI
machines; and (b) the ‘aftermarket’ comprising the spare parts and after sale repair and
maintenance services of the MRI machines. Where, an ‘aftermarket’ is defined as the
market comprising complementary or secondary products and services which are
purchased after another product i.e. the primary product which they relate to.72
3.2. THAT THE MANUFACTURERS’ DID NOT EXERCISE A POSITION OF DOMINANCE IN THE
RELEVANT MARKET.
3.2.1. It is submitted that Section 4 of the Act defines “dominant position” as, “a position of
strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to:
70
Proposition ¶ 8.
71
Supra note 62.
72
Shri Shamsher Kataria v. Honda Siel Cars India Ltd. & Ors., 2014 Comp LR001 (CCI).

(i) operate independently of competitive forces prevailing in the relevant market; or (ii)
affect its competitors or consumers or the relevant market in its favour.”
3.2.2. In the present matter, the relevant market for spare parts comprises parts manufactured by
the respondent manufacturers’ and other manufacturers. Therefore, each manufacturer is
not the only source of spare parts in the aftermarket. Hence, each manufacturer possesses
limited market share and is unable to operate independently in the aftermarket of spare
parts.
Moreover, the ASPs’ are unable to operate independently in the relevant aftermarket of
services. This is so because (i) the ISPs’ offer competitive pricing73, (ii) the ASPs’ are
constrained by their need to retain customers in their post warranty periods and (ii) the
allocation of a geographical area limits the number of customers.74
3.2.3. It is humbly contended that each manufacturer would be unable to affect its competitors
in its favor as the ISPs’ offer competitive pricing. Further, they are constrained by the
need to retain customers in their post warranty periods. Therefore, it is submitted that the
manufacturers’ are not the dominant enterprises in the relevant aftermarket for spare
parts.
3.3. THAT THE MANUFACTURERS’ DID NOT ABUSE THEIR POSITION OF DOMINANCE.
It is humbly submitted that without prejudice to the above contentions, Section 4 of the
Act prescribes types of conduct that will be considered abusive if carried out by a
dominant enterprise. In the instant case, it is contended that the manufacturers’ conduct
73
Proposition ¶ 6.
74
Proposition ¶ 4.

was not in violation of (i) Section 4(2)(a), (ii) Section 4(2)(c), and, (iii) Section 4(2)(e) of
the Act.
3.3.1. It is submitted that Section 4(2) (a) of the Act prohibits (a) unfair or discriminatory
conditions in sale of goods or service and, (b) unfair or discriminatory price in sale of
goods or service. The explanation for Section 4(2) (a) states that any discriminatory or
unfair pricing or condition imposed “shall not include such discriminatory condition or
price which may be adopted to meet the competition.”
(i) In the present matter, the manufacturers’ entered into agreements with service
providers in Bohemia authorizing them to become ASPs.75 The agreements are
entered into on the basis of qualitative criteria such as, technical expertise and
knowhow of employees, and financial strength of the entities.76 It is submitted
that the opportunity to become an ASP is uniformly available to everyone and the
condition imposed is not discriminatory. Moreover, it is contended that the
agreement is a standard form agreement offering competitive terms which lead to
increased competition by (a) making comparison among enterprise offerings
easier and (b) allowing for reduction of transaction costs, because the parties need
not negotiate a new contract for each transaction77.
(ii) It is contended that prices charged by the manufacturers’ are not discriminatory as
they are imposed to prevent free riding. Free riding takes place “when one
75
Proposition ¶ 4.
76
Proposition ¶ 4.
77
C. Edward Fee & Shawn Thomas, Sources of Gains in Horizontal Mergers: Evidence from
Customer, Supplier, and Rival Firms, 74 J. FIN. ECON. 423, 424-27 (2004).

benefits at no cost from what another has paid for.”78 In the present matter,
genuine spare parts are made available in the relevant market via two separate
distribution channels.79 The ISPs’ may free ride on the goodwill of the
manufacturers’ by offering the spare parts at costs lower than the ASPs’. They
may further free ride on the presale service investments of ASPs’ and then using
savings to lure customers away through lower prices. Since these costs may be
captured in the price,80 spare parts are being offered at alternative prices to protect
the interests of the ASPs’. Further, it is submitted that the Commission has held
that in the absence of cost data “it is neigh impossible to term pricing as being
excessive”81. Therefore, a case of excessive pricing cannot be made out against
the manufacturers’.
3.3.2. It is contended that the manufacturers’ cannot be held liable under Section 4(2)(c), that is
denial of market access, under the Act. Denial of market access is any conduct by which
a dominant enterprise forecloses the market or defers entry of new players in the market
and falls afoul of the provisions of the Act.82
3.3.3. The US case of Dentsply83 has held that there should always be scope for a rival to access
the market on a scale sufficient to be a viable competitor. In the instant case, the
78
Chi. Prof’l Sports Ltd. P'ship v. NBA, 961 F.2d 667, 674 (7th Cir. 1992).
79
In Re: Mr. Ashish Ahuja, Case No. 17 of 2014.
80
Toys ‘R’ Us, Inc. v. Federal Trade Commission, 221 F.3d 928 (7th Cir. 2000).
81
In Re: M/s HT Media Ltd., Case No. 40 of 2011.
82
Sh. Dhanraj Pillay & Ors. v. M/S Hockey India, Case No. 73 of 2011.
83
United States v. Dentsply International, Inc., 399 F.3d 181 (3rd Cir. 2005).

manufacturers’ offered ISPs’ with the opportunity to become ASPs’84 and further made
genuine spare parts available to them in the market.
3.3.4. In the case of Snapdeal85 the CCI observed that distributed circulars only clarified that
the warranty services offered by the manufacturer were limited to those products brought
from its authorised distributors, genuine spare parts and services of the same. The CCI
further stated that “the conduct of SanDisk in issuing such circular can only be
considered as part of normal business practice and cannot be termed as abuse of
dominance,”86 Moreover, it has been held that insistence of a manufacturer that
maintenance be carried on by an authorized dealer during the warranty period does not
amount to a tie up as it ensures that that the installation of the after-product does not
affect the performance of the primary product.
3.3.5. It is submitted that the notices issued only informed the member hospitals of the policy
the manufacturers’ followed. In a quality-driven market, brand image and goodwill are
important concerns and it is only prudent business policy that sale of products emanating
from unauthorised sources are not encouraged. Hence, any insistence that hospitals avail
the services of the ASPs’ by itself cannot be considered as abusive.
3.3.5.1.It has been held that if a consumer declines to purchase anything from a customer, it
would not affect the market and could not be treated as causing denial of market access.87
In the present matter, the BMA has resolved to avail the services of the ASPs’ on its’ own
84
Proposition ¶ 8.
85
Supra note 80.
86
Id.
87
Manappuram Jewellers Pvt. Ltd. v. Kerala Gold & Silver Dealers Association, Case No. 13 of
2011, Decided on, 23.04.2012.

accord. The ISPs’ are required to show that all other non-member hospitals were
discouraged from buying from the ISPs’.88 Therefore, the manufacturers’ cannot be held
liable under Section 4(2) (c) of the Act.
3.3.6. It is submitted that the manufacturers’ did not leverage their market power to protect or
enter into the aftermarket for services. In the case of Lee v. Life Ins. Co. of North
America89 specifies that the timing of the alleged ‘lock in’ was at issue. It was held that if
customers are aware that the manufacturers’ implement allegedly restrictive parts-
servicing policy, the manufacturers’ ‘market power,’ i.e., its leverage to induce customers
to buy spare parts is curtailed. Hence, the manufacturers’ were not in a position to use
their dominant position in the market for spare parts to protect the market for repair and
maintenance services.
Therefore, it is submitted that the manufacturers’ did not exercise a position of
dominance in the relevant market and therefore did not abuse this position of dominance
under Section 4 of the Act.
IV. WHETHER THE BOHEMIAN MEDICAL ASSOCIATION ACTED AS A PLATFORM FOR
CARTELIZATION?
In the present matter, the BMA, an association comprising 90% of the hospitals in Bohemia, has
resolved to avail the services of ASPs. This resolution has been adopted after hospitals were
made aware the manufacturers’ policy requiring them to avail the services of the ASPs’. Further,
the BMA has negotiated rates with the ASPs on which the hospitals may negotiate greater
88
Id.
89
Supra note 46.

discounts. It has been alleged that the BMA acted as a platform for cartelization wherein the
hospitals engaged in price-fixing and engaged in anticompetitive conduct by agreeing to
exclusively avail of the services provided by the ASPs.
4.1. THAT RESOLUTION DOES NOT AMOUNT TO A PRICE FIXING AGREEMENT.
4.1.1. It is submitted that trade associations seek to promote, represent and protect the interests
of their members on legislation, regulations, taxation and policy matters likely to affect
them.90 Further, OFT guidelines prescribe that trade associations may provide advice of
commercial nature.91 In the present matter, the BMA (i) negotiated rates with the ASP’s
on which the hospitals could avail further discounts,92 and (ii) encouraged the hospitals to
recover the negotiated rate.93
4.1.2. It is submitted that the BMA was acting in its capacity as a representative of its members
when it negotiated rates for the repair and maintenance services. In the instant case, the
BMA exercises buying power which enabled it to negotiate discounts on behalf of its
members. This buying power is exercised for reason of the BMA being the largest
medical association in the country.94 Moreover, its individual members exercise buying
90
OECD,Policy Roundtables on Trade Associations (2007), available
at http://www.oecd.org/regreform/sectors/41646059.pdf [last accessed on 7th March, 2015].
91
Competition and Market Authority, Guidance on Trade Associations, professions and self-
regulating bodies, available at https://www.gov.uk/government/publications/trade-associations-
and-professionalself-regulating-bodies-and-competition-law,[ last accessed on 7th March, 2015].
92
Proposition ¶ 5.
93
Id.
94

power for reason of market allocation of the ASP.95 Hence, the BMA acted within its
authority when it negotiated rates on behalf of the hospitals.
4.1.3. It is submitted that the latter half of the BMA’s resolution makes use of the phrase
‘encouraged to recover.’96 It is contended that the word ‘encouraged’ must be interpreted
in the literal sense of the word.97 Therefore, the latter half of the resolution is not binding
on the member hospitals and can be categorized as being advice of a commercial nature.
Further, it has been held that a cartel is capable of monitoring the behaviour and conduct
of the members of the cartel.98 In the present matter, there is no mechanism in place for
determining whether the hospitals are adhering to the recommendatory pricing.
Moreover, it has been held that there is always a punishment mechanism in place for
those members of a cartel who do not follow the cartel mandate.99 In this case, there is no
punishing mechanism, that is, threat of expulsion in the event that the members do not
adopt the recommendatory measure.
4.1.4. Furthermore, it is contended that the negotiated rate was to act as a cap for the hospitals.
A reasonable range has been laid out for the member hospitals by the BMA within which
they may charge their consumers.
4.2. THAT THE MAXIMUM PRICE AGREEMENT IS NOT PER SE ILLEGAL.
95
Proposition ¶ 4.
96
Proposition ¶ 5.
97
Supra note 4.
98
Shri Jyoti Swaroop Arora v. M/S Tulip Infratech Ltd. & Ors., Case No. 59 of 2011.
99
FICCI - Multiplex Association of India v. United Producers/ Distributors Forum, Case No. 01
of 2009.

4.2.1. In the alternative that a price fixing agreement is made out it is contended that a
maximum price fixing agreement cannot be held to be illegal per se. It is asseverated that
unless the agreement raises price, it is either harmless or beneficial.
4.2.2. It is submitted that in order to determine whether an agreement can raise prices it needs to
be determined whether the agreement enables the seller to charge more than he could
obtain without the agreement. In the present matter, the answer is in the negative. The
BMA sets a cap on the price that the ASP may charge. This cap is in itself a negotiated
rate. It is contended that in the absence of the agreement the starting point for
negotiations of each member would have been higher, inducing them to charge the
consumer a higher rate. Further, any argument that the maximum price becomes the
minimum price does not hold good as the ASPs are constrained by their need to retain
member hospitals as customers.
4.2.3. Secondly, it needs to be determined whether the price of participants in the maximum
price arrangement is higher than the price of non-members.100 In the instant case, the
uniform increase in the pricing of the services is a consequence of the increase in input
costs of the hospitals and not the recommended price range. The same is inferable
because the recommended price range does not factor into the pricing consideration of
non-member hospitals. In the Maricopa101 case these inquiries indicated that a maximum
price arrangement did not amount to a cartel in disguise. Hence, it is submitted that the
resolution is not a price fixing agreement and that the BMA is not acting as a platform for
cartelization.
100
Kananen v. Matthews, 643 F.2d at 555.
101
Arizona v. Maricopa County Medical Society, 457 U.S. 332 (1982).

4.3. THAT THE RESOLUTION TO EXCLUSIVELY AVAIL THE SERVICES OF THE ASP IS JUSTIFIABLE.
4.3.1. It is contended that in complex markets, such as the healthcare sector, consumers benefit
from the setting of a product or service standards that assure them of at least minimum
reasonable product or service quality. It is submitted that when associations promulgate
safety standards based on the, “merits of objective expert judgment” the private standards
can have significant pro-competitive advantages.”102
4.3.2. In the present matter, the BMA has resolved to avail of the services of the ASPs as a self-
regulatory measure. This resolution to exclusively avail the services of the ASPs is
justifiable based on three arguments, (i) that there exists an asymmetry of information
between hospitals and their customer; (ii) considerations relating to the quality of care
that have an impact not only on the hospitals but also on the final consumer, and (iii) the
nature of the MRI machine services is that of a public good.
4.3.3. Moreover, with regards to the allegation of cartelization, there is a lack of anticompetitive
purpose, that is, (i) the lack of competition between the ASPs’ and BMA, and (ii) that the
hospitals seeks to benefit when the service market is in competition.
4.3.4. It is submitted that the strongest inference of anti-competitive purpose is when all or
substantially all the consumers are in direct competition with the service provider and
stand to benefit from the restraint on its output.103 It has been held that when an
association does not avail of low cost services, despite none of the members having a
financial interest in the production of the service, anticompetitive purpose is absent.104 In
the instant case, the member hospitals do not have any vested interest in the provision of
102
Allied Tube & Conduit Corporation v. Indian Head, Inc., 486 U.S. 492.
103
Marin v. Citizens Memorial Hospital, 700 F.Supp. 354 (1988).
104
Roofire Alarm Co. v. Royal Indemnity Co., 373 U.S. 949 (1963).

services. In fact, the challenged resolution is more likely a praiseworthy effort at self-
regulation than a device for facilitating supra-competitive pricing.105 Even if the hospitals
seek to maximize profits they realize that a practice likely to bring their service into
disrepute will depress profits in the long run.106 Hence, there is a lack of anticompetitive
purpose.
4.3.5. It is submitted that further gains may be realized to the consumer when, (i) there is a
standard settings that helps ensure that consumers can compare prices rather than debate
on the quality of a product,107 (ii) deterrence of undesirable conduct that is not otherwise
unlawful in the form of the use of the ISPs and (iii) provision of a more prompt and
efficient means of industry oversight than government regulation.108 Hence, the
resolution to exclusively avail of the ASP is justified.
4.3.6. Therefore, it is submitted that the BMA did not act as a platform for a price-fixing cartel
or anti-competitive conduct of its members.
105
Vogel v. American Socy. Of Appraisers, 744 F.2d 598.
106
Id.
107
Eliason Corp. v. Natl. Sanitation Foundation, 449 U.S. 826 (1980).
108
Robert Pitofsky, Self Regulation and Antitrust, Prepared Remarks before the 34 Annual
Symposium on Associations and Antitrust (Feb. 18, 1998).

PRAYER- -Page xv
PRAYER
WHEREFORE IN LIGHT OF THE ISSUES RAISED, ARGUMENTS ADVANCED AND
AUTHORITIES CITED, IT IS HUMBLY PRAYED THAT THIS HONORABLE COURT
MAY BE PLEASED TO:
I. HOLD THAT THE DIRECTOR GENERAL EXCEEDED THE SCOPE OF HIS AUTHORITY
IN INVESTIGATING A VIOLATION OF SECTION 4 OF THE ACT.
II. HOLD THAT THE AGREEMENT BETWEEN THE MANUFACTURERS AND AUTHORISED
SERVICE PROVIDERS IS NOT ANTI-COMPETITIVE.
III. HOLD THAT THE MRI MANUFACTURERS HAVE NOT ABUSED THEIR DOMINANT
POSITION.
IV. HOLD THAT THE MANUFACTURERS AND BOHEMIAN MEDICAL ASSOCIATION ARE
NOT GUILTY OF CARTELIZATION.
Counsel for Respondents

Respondent Memo Antitrust 2014

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Respondent Memo Antitrust 2014

Uploaded by

Copyright:

Available Formats

TEAM CODE: 34

BEFORE THE SUPREME COURT OF BOHEMIA AT RIVERDALE

MEMORIAL FILED ON BEHALF OF THE RESPONDENTS

SLP(C) No. 101/2015

COUNSEL APPEARING ON BEHALF OF ‘RESPONDENTS

-MEMORIAL ON BEHALF OF THE RESPONDENTS-

LIST OF A B B R E V I A T I O N S .................................................................................................... iii

STATEMENT OF J U R I S D I C T I O N ....................................................................................... viii

ISSUES FOR C O N S I D E R A T I O N ............................................................................................ ix

SUMMARY OF A R G U M E N T S ............................................................................................... xiii

1.1. THAT THE INVESTIGATIVE POWER OF THE DG IS RESTRICTED TO THE DIRECTIONS HE

1.2. THAT THE PRINCIPLES OF NATURAL JUSTICE STAND TO BE VIOLATED IF THE DG IS

ALLOWED TO EXPAND THE SCOPE OF HIS INVESTIGATION. ....................................................... 4

PROVIDERS IS ANTI-COMPETITIVE IN NATURE? ............................................................................. 5

ADVERSE EFFECT ON COMPETITION. .......................................................................................... 7

2.3. THAT THE ALLOCATION OF SERVICE PROVIDERS TO A PARTICULAR GEOGRAPHICAL

COMPETITIVE EFFECTS WILL ENSUE FROM THE SAME............................................................... 9

-MEMORIAL ON BEHALF OF THE RESPONDENTS-

2.4. THAT THE RECOMMENDATION OF A MINIMUM RESALE PRICE IS NOT

2.5. THAT MR SODHI’S DECLINE IN BUSINESS IS NOT INDICATIVE OF THE

ANTICOMPETITIVE NATURE OF THE AGREEMENTS. ................................................................. 15

COMPETITIVE IS CORRECT IN LAW. .......................................................................................... 16

III. WHETHER THERE WAS ABUSE OF DOMINANT POSITION BY THE MANUFACTURERS’

UNDER SECTION 4 OF THE COMPETITION ACT, 2002? ................................................................. 17

MANUFACTURERS’ AND THE SERVICES PROVIDED BY THE INDEPENDENT SERVICE PROVIDERS.

IV. WHETHER THE BOHEMIAN MEDICAL ASSOCIATION ACTED AS A PLATFORM FOR

-MEMORIAL ON BEHALF OF THE RESPONDENTS-

AAEC Appreciable Adverse Effects on Competition

BMA Bohemia Medical Association

CCB Competition Commission of Bohemia

CCI Competition Commission of India

COMPAT Competition Appellate Tribunal

ICN International Competition Network

MRTP Monopolies and Restrictive Trade Practices

RPM Resale Price Maintenance

SLP Special Leave Petition

TFEU Treaty on the Functioning of the European Union

THE ACT The Competition Act, 2002

-MEMORIAL ON BEHALF OF THE RESPONDENTS-

A.K. Kripak v. Union of India, AIR 1970 SC 150 .......................................................................... 4

Appalachian Coals Inc. et al v. United States, 288 US 344(1933). ............................................. 15

In Re: M/s HT Media Ltd., Case No. 40 of 2011. ......................................................................... 23

In Re: Mr. Ashish Ahuja, Case No. 17 of 2014............................................................................. 23

February 24, 2012. ..................................................................................................................... 14

-MEMORIAL ON BEHALF OF THE RESPONDENTS-

Kananen v. Matthews, 643 F.2d at 555 ........................................................................................ 28

M/s. Hiralal Ratanlal v. STO, AIR 1973 SC 1034 ......................................................................... 2

Marin v. Citizens Memorial Hospital, 700 F.Supp. 354 (1988). ................................................. 29

-MEMORIAL ON BEHALF OF THE RESPONDENTS-

State Oil v. Khan, 522 US 3 (1997). ............................................................................................. 16

TELCO v. RRTA, AIR 1977 SC 1973. .................................................................................... 10, 16

United States v. Colgate & Co., (1919) 250 US 300. ..................................................................... 8

Vogel v. American Socy. Of Appraisers, 744 F.2d 598. ............................................................... 30

Green Paper on Vertical Restraints in EC Competition Policy, ¶ 59............................................ 13

Law and Policy (2014) .............................................................................................................. 12

OECD, Policy Roundtables on Trade Associations (2007) .......................................................... 26

Symposium on Associations and Antitrust (Feb. 18, 1998). ..................................................... 30

(2000) ¶ 2.8. ................................................................................................................................. 3

-MEMORIAL ON BEHALF OF THE RESPONDENTS-

COMPETITION LAW (2004) .................................................................................................. 18

Commission Notice, Guidelines on Vertical Restraints, ¶125 ........................................................ 8

European Commission, Council Regulation No. 1/03, Recital 4 (2002). ..................................... 11

-MEMORIAL ON BEHALF OF THE RESPONDENTS-