Replies/ objections/ submissions of OP-1 20. OP-1 filed its preliminary reply on 11.01.

2016 and
additional submissions on 22.02.2016. Further, written submissions were also filed post-hearing of the
matter on 15.03.2016. 21. OP-1 in its reply dated 11.01.2016 denied all the allegations and submissions
made by the DG. It was averred that the investigation was initiated on a motivated complaint of an
individual i.e. Shri Nirmal Kumar Manshani who has also filed complaints even before NCDEX, FMC,
Income Tax and other departments. It was submitted that NCDEX, FMC and Income Tax Department
could not find anything against OP-1 and that no action was taken. Thus, the Informant has not come
with clean hands before the Commission and the proceedings ought to be dropped. 22. It was further
contended that the Commission has no jurisdiction in this matter since the future contracts - which are
types of the forward contracts - are in the nature of actionable claims and they are expressly excluded
from the definition of “goods” under the Sale of Goods Act and therefore outside the purview of the
Competition Act as well. Reference was made to the provisions of Section 3 of the Competition Act to
contend that the same deals with the anti-competitive practices in respect of “goods” and “services”.
Therefore, the trading on the Commodity Exchanges by way of future contracts are not “goods”.
Further, the transactions on the commodities exchange are in respect of future goods as the
transactions are merely agreements to sell and there is no sale or purchase. 23. It was also submitted
that even assuming, without in any manner admitting to the same that there has been some
contravention of the provisions of Section 3(1) and 3(3) of the Competition Act by OP-1, it would still be
exempted as per the provisions of Section 3(5)(ii) of the C. No. 76 of 2012 Page 11 of 62 Competition Act
as the commodity in question is being exported out of India to the extent of 95% of its production. In
any event, there is no appreciable adverse effect on competition in India. OP-1 also contended that that
buyer-seller transactions fall under agreements in the vertical chain covered under Section 3(4) of the
Competition Act and not in the horizontal chain. It was submitted that all allegations made qua the
Opposite Parties are not in nature of seller-seller agreements or buyerbuyer arrangements/agreements
so as to be covered under horizontal agreements falling within the ambit of Section 3(3) of the
Competition Act. Further, OP-1 reiterated that any party dealing on the commodity exchange deals only
with the Exchange as the counter party of any trade and there cannot be any trade between two parties
in the commodity exchange as alleged in the instant case by the DG. 24. OP-1 also alleged violation of
principles of natural justice. It was submitted that the DG while conducting the investigation has relied
on the replies of number of third parties, Exchanges etc. without even giving an opportunity to OP-1 to
rebut the same before arriving at the conclusion. 25. On merits, OP-1 argued that the related entities of
OP-1 have been trading in a number of commodities in NCDEX apart from Guar Gum and Guar Seeds for
a number of years now. It was pointed out that no allegations have ever been levelled against OP-1 in
respect of any other commodity. Further, the trading volume of the related entities in Guar Gum and
Guar Seeds was miniscule in comparison to the total volume of (all) commodities traded in NCDEX. As
such, it was only reasonable to assume that the related entities have also acted in a fair and transparent
manner while trading in Guar Gum and Guar Seeds. 26. It was submitted that the prices of Guar seeds in
the spot market and the future market on the NCDEX platform were moving in close tandem C. No. 76 of
2012 Page 12 of 62 signifying similar trends of price rise in both the markets i.e. spot and futures. OP-1
enclosed tables showing date-wise spot prices and future prices on NCDEX of Guar Seeds and Guar Gum
for the period January 2011 to March 2012 and the graphs showing the spot and future prices of Guar
Gum and Guar Seeds for the above period to prove that the sharp rise in prices of Guar Gum and Guar
Seeds during the relevant period was not due to any alleged actions on the part of Opposite Parties but
primarily due to the fundamental economic considerations of demand and supply. Furthermore, it was
submitted that at every given point of time, there are millions of users logged in to the Commodity
Exchange and, as such, it is not possible for a few players to control the price movement in the market.
27. It was stated that there are stringent penalties provided for in the Futures Contracts itself, which
make it very difficult for any trader to try and influence or manipulate the prices. To elaborate further,
OP-1 explained that Spot Prices are determined in the most transparent manner after duly taking into
account a number of factors including the prices prevalent in the physical market. OP-1 also submitted
that it has an absolutely negligible market share in the physical market and is in fact not involved in
regular trading in the physical market. As such, it is in no position to determine or in any manner affect
the spot prices. Further, it was stated that in relation to all those entities which were alleged to be acting
in concert, FMC had issued revised guidelines on clubbing of positions on 10.01.2012. Thereafter, the
positions of those entities were clubbed group-wise to a Single Client Level Limit w.e.f.
18.01.2012/21.01.2012 thereby seriously curtailing their ability to participate in the futures market. OP-
1further elaborated with few more highlights like daily price fluctuation limit as 3%, expiry date as per
contract being the 20th day of the delivery of the month, penalties on delivery default, traders trading
only with the exchange and not with the Opposite parties, the person buying the commodity would not
know who the seller is, etc. In view of