SHAMSHER KATARIA V HONDA SIEL CARS LTD

IN THE COMPETITION COMMISSION OF INDIA

NEW DELHI

Case No. 03/2011

Decided On: 25.08.2014

Appellants: Shamsher Kataria

Vs.

Respondent: Honda Siel Cars India Ltd.

Hon'ble Judges/Coram:

Ashok Chawla, Chairman, Anurag Goel, Member (AG) and M.L. Tayal,Member (T)

Shamsher Kataria vs. Honda Siel Cars India Ltd. (25.08.2014 - CCI) : MANU/CO/0066/2014

ORDER

1. Factual Background

The present information has been filed by Shri Shamsher Kataria (hereinafter, referred to as the
"Informant") under Section 19(1)(a) of the Competition Act, 2002 (hereinafter, referred to as the
"Act") against Honda Siel Cars India Ltd. (hereinafter, referred to as "Honda" or OP-1), the
Volkswagen India Pvt. Ltd. (hereinafter, referred to as "Volkswagen" or OP-2) and Fiat India
Automobiles Ltd. (hereinafter, referred to as "Fiat" or OP-3), alleging anti-competitive practices
on part of the OPs whereby the genuine spare parts of automobiles manufactured by OP-1, OP-2
and OP-3, respectively, are not made freely available in the open market. OP-1 to OP-3 are
involved in the business, inter alia, of manufacture, sale, distribution and servicing of passenger
motor vehicles in India. It has been averred that the Opposite Parties also
operate/authorize/regulate or otherwise control the operations of various authorized workshops
and service stations which are in the business of selling automobile spare parts, besides,
rendering after sale automobile maintenance services.

1.1 The Informant has also alleged, that even the technological information, diagnostic tools and
software programs required to maintain, service and repair the technologically advanced
automobiles manufactured by each of the aforesaid OPs were not freely available to the
independent repair workshops. The repair, maintenance and servicing of such automobiles could
only be carried out at the workshops or service stations of the authorized dealers of OP.
1.2 The Informant has further alleged that the restriction on the availability of genuine spare
parts and the technical information/know-how required to effectively repair, maintain or service
the automobiles manufactured by the respective OPs is not a localized phenomenon. The OPs
and their respective dealers, as a matter of policy, refuse to supply genuine spare parts and
technological equipment for providing maintenance and repair services in the open market and in
the hands of the independent repairers. In support of his allegations, the Informant has submitted
letters from some independent service stations, where they have expressed their inability to
service the Informant's vehicle due to the lack of access of such independent repairers to genuine
spare parts and other technological information required to service/maintain the automobiles
manufactured by the respective OPs. It has been stated by the Informant that he earlier owned a
Maruti Suzuki vehicle and could easily get it repaired at independent workshops because the
spare parts and the technological tools required to repair and maintain a Maruti Suzuki vehicle
were freely made available by the company in the open market.

1.3 It has been further alleged that the OPs 1-3, by restricting the sale and supply of the genuine
spare parts, diagnostic tools/equipment, technical information required to maintain, service and
repair the automobiles manufactured by the respective OPs, have effectively created a monopoly
over the supply of such genuine spare parts and repair/maintenance services and, consequently,
have indirectly determined the prices of the spare parts and the repair and maintenance services.
Additionally, the Informant has alleged, that such restrictive practice carried out by the OPs in
conjunction with their respective authorized dealers, amounts to denial of market access to
independent repair workshops.

1.4 The Informant has stated that the cost of getting a car repaired in an independent workshop is
cheaper by 35-50% as compared to the authorized service centers of the OPs. The Informant has
alleged that the OPs charge arbitrary and high prices to the consumers who are forced to avail the
services of the authorized dealers of the OPs for repairing and maintaining their automobiles
since the genuine spare parts, diagnostic tools and the technological information required to
service their cars are not made available by the OPs to independent repair workshops. It has been
also stated that the prices charged for the genuine spare parts and for repair and maintenance
services by the authorized dealers of the OPs are even higher than what they charge in other
markets in Europe. The Informant has alleged that such practices which allow the OPs to charge
arbitrary and high prices result in significant increase in the maintenance cost to car owners.

1.5 It has been stated in the information that the components and parts used in the manufacture of
their respective brand of automobiles are often sourced from independent original equipment
suppliers (hereinafter, referred to as "OESs") and other suppliers who are restrained by the OPs
from selling the parts/components in the open market. Such restriction on the ability of the OESs
to sell the spare parts/components further limits the access of such spare parts/components in the
open market, thereby, allowing the OPs to create a monopoly-like situation wherein they become
the sole supplier of the spare parts/components of their respective brand of automobiles. Such
restrictions allow the OPs to influence and determine the price of the spare parts/components
used to repair and maintain the respective brands of automobiles.

1.6 The Informant has alleged that the restrictive and monopolistic trade practices, as detailed
above, of the OPs and their authorized dealers have a negative effect not only on the consumer
but also on the whole Indian economy since such practices increase the cost of the consumer to
maintain an automobile. The Informant has stated that in a country like India where road
transport is essential for the mobility of people and goods, the increased cost of vehicle
maintenance may hamper the overall economic growth of the country. The Informant has stated
that as per a CII report, the size of the Indian automotive industry is estimated to be US$ 122-
159 billion by the year 2016, which will be larger than the U.S. automotive market. It has been
stated that growth in the market for genuine spare parts and repair and maintenance services is
expected to be proportionate to the growth in the vehicle sales, as enumerated above.

1.7 The Informant has stated that effective competition at each level of automotive aftermarket is
essential for fostering innovation and keeping mobility affordable. It has been contended that if a
consumer is given a choice of getting his vehicle serviced/repaired at a workshop of his choice, it
will foster competition among service providers which will in turn will not only lead to
improvement in quality of service and a competitive pricing policy by the OPs, but also
encourage innovation in the market. The Informant has alleged that due to the restrictive trade
practices of the OPs, effective competition at each level of the Indian automotive industry is
getting adversely affected.

1.8 The Informant has also alleged that the anti-competitive practices by the OPs have resulted in
denial of market access to independent workshops which are usually micro, small and medium
enterprises (MSMEs). The Informant has stated that MSMEs give employment to 45% of
industrial workers. Furthermore, on the one hand the Government has introduced several policies
and initiatives to encourage and support the MSMEs and on the other hand the current practices
of the OPs are adversely affecting the sector.

1.9 The informant has stated that the European Commission has the so called 'Block Exemption
Regulation' in place since the year 2002 to compel auto manufacturers to provide spares and
tools etc., to independent operators. These regulations prohibit discrimination between
authorized service dealers and independent operators. The European Commission had also taken
commitments from auto majors to ensure supply of spares and technological knowhow to
independent operators. To ensure effective competition in the auto repair and maintenance
market, the European Commission issued the new regulation no. 461/2010 in the year 2010,
which included specific guidelines apart from the earlier block exemption rules.

1.10 The Informant has stated that there are regulations in place in United States to ensure that
emissions related diagnostic tools and information is available to independent vehicle repair
shops. Several states of the U.S. have introduced the 'Right to Repair Act' to curb restrictive
practices by automobile manufacturers. The Informant has further stated that all over the world
consumers and governments are seeking to implement a free and fair competition regime in the
automotive sector, with varying degree of success.

1.11 The Informant has alleged that the acts of the OPs in restricting the sale and supply of spare
parts and technical information, diagnostic equipments and tools to independent automobile
service providers indirectly determine the purchase or sale prices of both the price of automobile
spare parts as well as the price of repair and maintenance services. The Informant has alleged
that the anti-competitive acts of the OPs are arbitrary, illegal and devastating to free and fair
competition. The Informant has alleged that such practices are in direct contravention of sections
3(3)(a) and 3(3)(b) of the Act. By refusing to sell the spare parts to independent operators the
OPs are in violation of section 3(4)(d) of the Act. Further, the denial of access to the repair and
maintenance market to the independent service workshops are in violation of section 4(2)(a),
4(2)(b) and 4(2)(c) of the Act.

1.12 The Informant has also filed additional information wherein it has been alleged that that the
OPs and other vehicle manufacturers impose restrictions on their OESs from supplying
automobile parts into the open market. It has been alleged that such practices amount to limiting
and controlling production and supply of components/spares in the Indian automobile
aftermarket and are in violation of section 4(2)(d) of the Act. As per the Informant the European
Commission has effectively tackled the abovementioned restrictive practice aspect under their
block exemption regulations by affording a statutory right to OESs to sell vehicle parts in the
open market.

1.13 The Informant has also alleged in the supplementary information that the restriction by the
OPs on their authorized dealers from taking up dealerships of other competing vehicle
manufacturers is in contravention to the provisions of section 4(2)(a), 4(2)(b) and 4(2)(c) of the
Act.

1.14 The Informant has sought the following reliefs:

"(a) hold an enquiry into the trade practices of the Respondents and/or any other vehicle
manufacturer and their authorized dealers/service centers indulging in similar activities as
detailed herein and give a finding that such parties have committed restrictive and/or unfair trade
practices in contravention of the Act;

(b) order the Respondents to cease and desist from such restrictive, unfair, monopolistic trade
practices and misusing its dominant position;

(c) pass appropriate orders directing the Respondents No. 1-3 and other contravening vehicle
manufacturers and their authorized dealers/services centers to provide spare parts, technical
information, diagnostic tools, software and any other information and goods required for the
repair, maintenance and servicing of the vehicles to independent repair workshops and also make
the same freely available in the open Indian automotive aftermarket;

(d) pass appropriate orders directing the Respondents and other contravening vehicle
manufacturer indulging in similar activities as detailed herein to allow authorized dealers the
right to undertake franchises/dealerships from different vehicle manufacturers without fear of
malevolent action from the respondents or other defaulting vehicle manufacturers;

(e) pass appropriate orders ensuring that access to the spare parts, tools, technical information,
technical training and equipment for repair, maintenance and service of the vehicles and
manufacturers by OESs is provided to the independent service providers, consumers and in the
open market upon request and without undue delay and the price charged from such parts, tools,
equipment should not be fixed by the vehicle manufacturers but be determined by independent
market forces and free and fair competition;

(e) award reasonable amount for costs incurred towards legal fees;

(g) pass such further order as this Hon'ble Commission may deem fit and proper in the facts and
circumstances of the case

20.6.4 The OEMs have denied the existence of any such arrangements between the OEMs and
their overseas suppliers. The OEMs have submitted that since most of the overseas suppliers are
their group companies or overseas parent companies, even if it is assumed but not admitted that
there was an arrangement between the OEMs and their overseas suppliers; the same cannot be
considered as an agreement between two enterprises under section 2(h) of the Act under the
doctrine of 'single economic entity'. The OEMs have referred to the decision of the Commission
in Exclusive Motors v. Lamborghini (Case 52 of 2012); where the Commission has held:

"To establish a contravention under Section 3, an agreement is required to be proven between

two or more enterprises. Agreement between opposite party and its group company 'Volkswagen
India' cannot be considered to be an agreement between two enterprises as envisaged under
section 2(h) of the Act. Agreements between entities constituting one enterprise cannot be
assessed under the Act. This is also in accord with the internationally accepted doctrine of 'single
economic entity'. It was averred by the counsel for the informant that as per opposite parties
letter dated April 2, 2011, Volkswagen India was 'not a subsidiary of the Automobili
Lamborghini S.p.A. but was a separate legal entity owned by Volkswagen Group'. This does not
help the informant's case in any manner whatsoever. As long as the opposite party and
Volkswagen India are part of the same group, they will be considered as single economic entity
for the purposes of the Act. Any internal agreement between them is not considered as an
agreement for the purposes of Section 3 of the Act."

20.6.5 Considering the above decision, the Commission is of the opinion that an internal
agreement/arrangement between an enterprise and its group/parent company is not within the
 purview of the mischief of section 3(4) of the Act. Each OEM has a separate arrangement with
its foreign suppliers and each of such arrangement need to be analyzed separately in order to
ascertain if the doctrine of 'single economic entity' is applicable to such
agreements/arrangements. At the same time, the Commission would like to emphasize that the
exemption of single economic entity stems from the inseparability of the economic interest of the
parties to the agreement. Generally, entities belonging to the same group e.g. holding-
subsidiaries are presumed to be part of a 'single economic entity' incapable of entering into an
agreement, the presumption is not irrebuttable. It is a question which should be decided on the
facts and circumstances of each case. Based upon facts revealed by the DG's investigation in the
present case, OEMs like BMW, Fiat, Ford, General Motors, Honda, Maruti, Mercedes-Benz,
Volkswagen, Hindustan Motors and Toyota have agreements/arrangements with their respective
overseas suppliers which do not contain any specific restrictive clause regarding the rights of the
overseas suppliers to supply spare parts into the Indian aftermarket. OEMs like Skoda has
entered into overseas supplier agreements which contain specific clauses, restricting the ability
of their respective suppliers from supplying spare parts into the Indian aftermarket. OEMs like
Mahindra and Mahindra, Nissan, Tata and Premier do not import spare parts from overseas
suppliers. All the aforesaid OEMs, except Maruti, and Hindustan Motors have arrangements with
their overseas suppliers, which are part of the same corporate group or where such overseas
supplier is the overseas parent company of the OEM. Therefore, such arrangements need not be
scrutinized under section 3 of the Act in view of the 'single economic entity' justification claimed
by them

IN RE: M/S APPLESOFT 

2017 SCC OnLine CCI 75

In the Competition Commission of India
(BEFORE DEVENDER KUMAR SIKRI, CHAIRPERSON AND SUDHIR MITAL, MEMBER, AUGUSTINE
PETER, MEMBER, U.C. NAHTA, MEMBER AND G.P. MITTAL, MEMBER)
In re: M/s Applesoft No. 39, 1st Main, 1st Cross, Shivanagar, West of Chord Road, Bengaluru
-560010 … Informant;
And
1. The Chief Secretary to the Government of Karnataka, Vidhana Soudha, Bengaluru -560001 …
Opposite Party No. 1.

Decided on May 5, 2017

Order under Section 26(2) of the Competition Act, 2002
1. The information in the present matter was filed by M/s Applesoft (hereinafter, the
‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (hereinafter, the ‘Act’)
against the Chief Secretary to the Government of Karnataka (hereinafter, ‘OP 1’), the Principal
Secretary to the Government of Karnataka, E-governance (DPAR-AR) (hereinafter, ‘OP 2’) and
the Secretary, Kannada Ganaka Parishad (hereinafter, ‘OP 3’) [hereinafter, OP 1, OP 2 and OP 3
collectively referred to as ‘OPs’] alleging contravention of the provisions of Sections 3 and 4 of
the Act.
2. OP 1 is the Chief Secretary to the Government of Karnataka. OP 2 is the Principal
Secretary to the Government of Karnataka and has been added in the array of parties but no
separate allegations have been made against it in the information. OP 3 is stated to be a private
registered society under the Registrar of Societies in the State of Karnataka. The Informant is a
software developer in Indian languages having the principal aim to bridge the digital divide in
society that arises due to lack of local language support resulting out of computerisation.
3. In the information, the Informant has highlighted several
directions/circulars/orders/notifications issued by OP 1/OP 2 mandating the use of ‘Nudi’
software in government departments computers (developed by OP 3) to enable communication in
Kannada language within the administration of the State of Karnataka. It is alleged that OP 1/OP
2 by mandating the use of one Kannada language software i.e. ‘Nudi’ software to the exclusion
of other Kannada language softwares are distorting competition and adversely affecting other
software developers like the Informant.
4. One such direction pointed out in the information is the direction issued by the Principal
Secretary to the Government of Karnataka, Department of Personnel and Administrative
Reforms (DPAR) vide circular dated 09.12.2010, whereby all the Principal Secretaries of various
departments of the Government of Karnataka and the Additional Chief Secretary of the Urban
Development Department (encompassing all Corporations, Municipalities and other institutions
and local-bodies under local self-government and other agencies in all urban and semi-urban
areas of the State of Karnataka) were directed to provide all information relating to preparation
of the Governor's Speech at the time of opening of the session of the State Legislature, only by
using ‘Nudi’ software.
5. Another instance pointed out in the information is a circular issued by Bengaluru Electric
Supply Company (BESCOM) Limited dated 02.05.2011 to all its concerned wings and units
stating that henceforth, all offices and units under it should send all information/communications
(letters/responses/other data) in Kannada language by using the ‘Nudi 4’ software only. Further,
the circular stated that as some sub-offices under BESCOM were using some other Kannada
language softwares, serious constraints of compatibility were being experienced. Also, it was
mentioned that as all departments under Government of Karnataka had fully adopted the ‘Nudi
4’ Kannada language software, BESCOM was also to use same only.
6. Apart from the above, the Informant has also highlighted other directions of the State
Government which promote/obligate the use of ‘Nudi’ software. These include obligating the
recruitment of Data Entry Operators conversant with this software, prescribing only ‘Nudi’
software for learning of computer skills in Kannada language in all training and educational
institutions under the Government of Karnataka and also in training under programmes like Sarv
Shiksha Abhiyan and so on. Further, it is averred that the Civil Services Rules, which govern all
the direct recruitment policy guidelines of the Government of Karnataka, have also been
amended so that every fresh entrant is mandated to pass the computer literacy test in Kannada
language by using the ‘Nudi’ software.
7. The Informant has alleged that the cumulative impact of these actions is that no software
other than ‘Nudi’ software would be used within the administration of the Government of
Karnataka. This has also placed a compulsion on private users of IT technology tools or
resources to use the said software only, as otherwise they would not be able to use any other
Kannada language software for communications with any public institution in the State as well
as with others for exchange of data or information or for any other correspondence.
8. The Informant has averred that enabling use of software in the regional or local language
is not and cannot be a sovereign activity and thus, the action by OP 1/OP 2 violates the
provisions of the Act. Further, OP 1/OP 2 in conjunction with OP 3 have established and
continue to sustain a monopoly in favour of the impugned ‘Nudi’ Kannada language software
(and all its versions as developed by OP 3). They have, thus, created an anti-competitive
environment which has imperilled the growth and development of Kannada language softwares
and, in turn, impeded the quality and improvements in the Kannada language softwares. Also, it
has adversely affected all other Kannada language software developers in the State in terms of
loss of financial opportunities to them. Besides, the prevailing scenario has directly conferred an
undue status in favour of the ‘Nudi’ software and OP 3.

13. It is clear from the above that for the purposes of ascertaining whether an entity is an
enterprise or not within the meaning of Section 2(h) of the Act, it is essential to examine the
nature of the activity undertaken by the entity. Further, the assessment of whether an entity is an
‘enterprise’ or not is to be done based on the facts of every case and the conclusion may vary
from case to case depending upon the activity under consideration. In the present case, the
activity under consideration is prescribing the use of ‘Nudi’ Kannada language software in all
government departments' computers to carry out the administrative functions of the Government
of Karnataka. In this regard, it is observed that OP 1/OP 2 appear to be merely carrying out the
policy functions of the Government. They are not suppliers of service in competition with other
players in the market for development of Kannada language software but have merely engaged
OP 3 for development of software for the government's use and improvement of the
government's administrative processes, apparently to further the objective of
digitalisation/computerisation in the administrative processes and procedures.

14. The various circulars/orders/notifications prescribing/obligating the use of ‘Nudi’ Kannada

language software pointed out by the Informant seem to be underlined with the objective to
smoothen the functioning of various administrative bodies, agencies and other related institutions
of the Government in the State of Karnataka and to ensure that there are no software
compatibility issues in communications with any other public institutions in the State for
exchange of data or information in Kannada language. The private users who allegedly are
compelled to use ‘Nudi’ software appear to be doing to ensure seamless communications with
the State Government. Thus, having pondered upon the nature of activity alleged to be anti-
competitive and the facts of the present case, the Commission is of the view that OP1/OP2 are
not engaged in any economic activity covered within the definition of an enterprise and hence,
do not fall within the ambit of Section 2(h) of the Act. Since OP 1/OP 2 are not an enterprise, no
case of contravention of the provisions of Section 4 of the Act is made out against them.

MANU/CO/0019/2013

IN THE COMPETITION COMMISSION OF INDIA

NEW DELHI

Case No: 24/2011

Decided On: 19.03.2013

Appellants: Sonam Sharma

Vs.

Respondent: Apple Inc. USA (OP1) and Ors.

Hon'ble Judges/Coram:

Ashok Chawla (Chairman), H.C. Gupta, Member (G), Geeta Gouri, Member (GG), Anurag Goel,
Member (AG), M.L. Tayal, Member (T), Shiv Narayan Dhingra, Member (D)

ORDER

The instant information filed on 30.05.2011 under section 19(1)(a) of the Competition Act 2007
(Act), having been taken on record by the Commission relates to allegations of anti-competitive
agreements entered into by the OPs as also abuse of dominant position by them, in violation of
various provisions of the Act.

Information

1. As submitted by the Informant, OP1 is an American multinational corporation that designs and
markets consumer electronics, computer software and personal computers, best known for
hardware products like Macintosh line of computers, iPod, iPhone and iPad. OP2 is the Indian
subsidiary of OP1 through which it markets its products in India. OP3 and OP4 are leading
mobile service providers in India, jointly having more than 30 crore Indian subscribers that
account for almost 52% market share in the GSM market. The Informant has categorically
claimed that the information is in regard to a particular variant of iPhone-iPhone 3G/3GS,
manufactured by OP1. It has been submitted by the Informant that iPhone is a line of internet and
multimedia enabled smart phone that functions as video camera, camera phone, portable media
player, internet client with email and web-browsing facilities and is capable of sending texts and
receiving voicemail. Further, more than 350,000 approved third-party as well as Apple
application software, having diverse functionalities including games, reference, GPS navigation,
social networking, security and advertising for television shows, films and celebrities, can be
downloaded from the 'App Store' to the iPhone. The Informant has claimed that during the fiscal
2010, worldwide sale of iPhone was 73.5 million. The Informant has further averred, on account
of its unique features, iPhones cannot be substituted by any other smartphones available in the
market.

2. According to the Informant, OP1 and OP2 entered into some secret exclusive contracts /
agreements with OP3 and OP4 for sale of iPhone in India, even prior to its launch; as a result of
which OP3 and OP4 got exclusive selling rights for undisclosed number of years. The iPhones
sold by OP3 and OP4 were compulsorily locked, thereby meaning that the handset purchased
from either of them shall work only on their respective networks and none other.

3. The Informant has further averred that OP3, in order to maximize its profit, tweaked its
internet services in such a manner that they were no longer usable on iPhones and introduced
iPhone-specific plans. Furthermore, the iPhone-specific internet plans of OP3 and OP4 were
costly than their normal internet plans, thus compelling not only existing customers to pay extra
for using internet on their iPhone but also prospective iPhone purchasers to leave their respective
network providers and to compulsorily opt for expensive mobile telephony services.

4. It has also been submitted that OP1 and OP2 permit iPhone users only those applications on
their iPhones that have been approved by them and available through their own online
application store namely 'App Store'. If a purchaser of iPhone unlocks it to use the network
service of other cellular service provider, or 'jailbreaks' it to use any unapproved third party
applications, the purchaser loses all warranties on the handset. Further, no other third party
applications can be run on iPhone unless the same has been approved by Apple. If, however,
operating system of jailbroken iPhone is upgraded, the iPhone gets re-locked and all third party
applications are deleted by the servers of OP1 and OP2 permanently. Informant has further
alleged that OP 3 & 4 refuse to accept any iPhone for repairs at their authorized service centers if
the same is not purchased from them.

The present case involves a distribution / sales arrangement between Apple and Airtel /
Vodafone is a case of 'contractual tying' wherein the handset manufacturer and service provider
have joined hands to offer a packaged product to a customer. Tying arrangements are common in
the wireless telecommunications industry. Worldwide wireless networks compete for exclusive
contracts to offer popular mobile devices. However, the Commission deliberated on whether
such tying arrangements are anticompetitive. An agreement between two parties in a vertical
chain to be anticompetitive essentially requires that the intention of such an agreement was
foreclosure in both the relevant markets resulting in considerable consumer harm. But as pointed
out that for a vertical agreement to be anti competitive requires the monopolization claim to hold,
and given the minuscule market share of the tying party the monopolization claim will be
contrived. Nevertheless, we assess this agreement in the framework of 19(3)(a) (b) and (c) by
posing the following questions:

• Does this agreement prevent Airtel and Vodafone customers to use other smart phones?

• Does the agreement prevent unlocked iPhone users to use services of other mobile service
provider?

• Consequently, is there a foreclosure effect of the agreement on any of the two markets-
smartphone and mobile services?

METRO SB-GROßMÄRKTE GMBH & CO. KG V COMMISSION OF THE

EUROPEAN COMMUNITIES

european court reports 1977 -01875

ecli identifier: ecli:eu:c:1977:167

SUMMARY
1 . an application directed against a measure which is merely a confir- mation of a
previous measure , so that annulment of the confirmatory measure would follow from
annul- ment of the previous measure , must be considered as devoid of purpose and
accordingly inadmissible .
2 . it is in the interests of a satisfactory administration of justice and of the proper
application of articles 85 and 86 that natural or legal persons who are entitled , pursuant to
article 3 ( 2 ) ( b ) of regulation no 17 , to request the commission to find an infringement
of articles 85 and 86 should be able , if their request is dismissed either wholly or in part ,
to institute proceedings in order to protect their legitimate interests . such persons must
accordingly be considered to be directly and individually concerned , within the meaning
of the second paragraph of article 173 , by the decision of the commission .
3 . shares of between 5 and 10 % of a market in highly technical products which
nevertheless appear to the majority of consumers to be readily interchangeable rule out the
existence of a dominant position unless exceptional circumstances obtain . the fact that the
quality of a product should encourage dis- tributors to include it in the range which they
offer does not in itself constitute a factor capable of permitting the producer to operate to
any great extent without having to take account of the attitude of his competitors and ,
consequently , to secure a dominant position ; rather , it constitutes one means of
competition amongst others . this also applies to the fact that other producers have adopted
or are preparing to adopt systems for the distribution of the goods at issue similar to that
established by the dealer in question .
4 . the requirement contained in articles 3 and 85 of the eec treaty that competition shall
not be distorted implies the existence on the market of workable competition , that is to say
the degree of competition necessary to ensure the observance of the basic requirements
and the attainment of the objectives of the treaty , in particular the creation of a single
market achieving conditions similar to those of a domestic market . in accordance with this
requirement the nature and intensiveness of competition may vary to an extent dictated by
the products or services in question and the economic structure of the relevant market
sectors .
5 . selective distribution systems constitute , together with others , an aspect of competition
which accords with article 85 ( 1 ), provided that resellers are chosen on the basis of
objective criteria of a qualitative nature relating to the technical qualifications of the
reseller and his staff and the suitability of his trading premises and that such conditions are
laid down uniformly for all potential resellers and are not applied in a discriminatory
fashion .
6 . although price competition is so important that it can never be eliminated it does not
constitute the only effective form of competition or that to which absolute priority must in
all circumstances be accorded . for specialist wholesalers and retailers the desire to
maintain a certain price level , which corresponds to the desire to preserve , in the interests
of consumers , the possibility of the continued existence of this channel of distribution in
conjunction with new methods of distribution based on a different type of competition
policy , forms one of the objectives which may be pursued without necessarily falling
under the prohibition contained in article 85 ( 1 ), and , if it does fall thereunder , either
wholly or in part , coming within the framework of article 85 ( 3 ). this argument is
strengthened if , in addition , such conditions promote improved competition inasmuch as
it relates to factors other than prices . nevertheless , the commission must ensure that this
structural rigidity is not reinforced , as might happen if there were an increase in the
number of selective distribution networks for marketing the same product .
7 . any marketing system based upon the selection of outlets necessarily entails the
obligation on wholesalers forming part of the network to supply only appointed resellers
and , accordingly , the right of the relevant producer to check that that obligation is
fulfilled . in so far as the obligations undertaken in connexion with verification are
intended to ensure respect for the conditions of appointment regarding the criteria as to
technical qualifications , they do not in themselves constitute a restriction on competition
but are the corollary of the principal obligation and contribute to its fulfilment . however ,
in so far as they guarantee the fulfilment of more stringent obligations , they fall within the
terms of the prohibition contained in article 85 ( 1 ), unless they , together with the
principal obligation to which they are related , are exempted , where appropriate , pursuant
to article 85 ( 3 ).
8 . the separation of the functions of wholesaler and retailer whereby wholesalers are
prohibited from supplying private customers , in- cluding large-scale consumers , is in
principle in accordance with the requirement that competition shall not be distorted .
 9 . since the function of a wholesaler is not to promote the products of a particular
manufacturer but rather to provide for the retail trade supplies obtained on the basis of
competition between manufacturers , obligations entered into by a wholesaler which limit
his freedom in this respect constitute restrictions on com- petition falling within the ambit
of article 85 ( 1 ).
10 . the obligation on non-specialist wholesalers to open a special department is designed
to guarantee the sale of the products concerned under appropriate conditions and
accordingly does not constitute a restriction on competition within the meaning of article
85 ( 1 ).
on the other hand , the obligation to achieve a turnover comparable to that of a specialist
wholesaler exceeds the strict requirements of the qualitative criteria inherent in a selective
distribution system and it must accordingly be appraised in the light of article 85 ( 3 ).
20 The requirement contained in articles 3 and 85 of the eec treaty that competition shall
not be distorted implies the existence on the market of workable competition , that is to say
the degree of competition necessary to ensure the observance of the basic requirements
and the attainment of the objectives of the treaty , in particular the creation of a single
market achieving conditions similar to those of a domestic market .
in accordance with this requirement the nature and intensiveness of competition may vary
to an extent dictated by the products or services in question and the economic structure of
the relevant market sectors.
In the sector covering the production of high quality and technically advanced consumer
durables , where a relatively small number of large- and medium-scale producers offer a
varied range of items which , or so consumers may consider , are readily interchangeable ,
the structure of the market does not preclude the existence of a variety of channels of
distribution adapted to the peculiar characteristics of the various producers and to the
requirements of the various categories of consumers .
On this view the commission was justified in recognizing that selective distribution
systems constituted , together with others , an aspect of competition which accords with
article 85 ( 1 ), provided that resellers are chosen on the basis of objective criteria of a
qualitative nature relating to the technical qualifications of the reseller and his staff and the
suitability of his trading premises and that such conditions are laid down uniformly for all
potential resellers and are not applied in a discriminatory fashion .

PRONUPTIA DE PARIS GMBH V PRONUPTIA DE PARIS IRMGARD

SCHILLGALLIS.

Judgment of the Court of 28 January 1986. - - Reference for a preliminary ruling:

Bundesgerichtshof - Germany. - Competition - Franchise agreements. - Case 161/84.
SUMMARY

1. a system of franchise agreements for the distribution of goods which allows the
franchisor to derive financial benefit from a set of business methods and the reputation of a
business name does not in itself interfere with competition . the compatibility of such
franchise agreements with article 85 ( 1 ) of the treaty cannot be assessed in abstracto but
depends on the provisions contained therein and on their economic context .
2. the provisions of franchise agreements for the distribution of goods which are strictly
necessary for the functioning of the system of franchises do not constitute restrictions of
competition for the purposes of article 85 ( 1 ) of the treaty . that is true of provisions
which prevent the know-how and assistance provided by the franchisor from benefiting his
competitors . it is also true of provisions which establish the control strictly necessary for
maintaining the identity and reputation of the network identified by the franchisor ' s
business name or symbol .
however , provisions which share markets between the franchisor and the franchisees or
between franchisees constitute restrictions of competition for the purposes of that article .
3 . the fact that the franchisor makes price recommendations to the franchisee does not
constitute a restriction of competition , so long as there is no concerted practice between
the franchisor and the franchisees or between the franchisees themselves for the actual
application of such prices .
4 . franchise agreements for the distribution of goods which contain provisions sharing
markets between the franchisor and the franchisees or between the franchisees themselves
are in any event liable to affect trade between member states , even if they are entered into
between undertakings established in the same member state , in so far as they prevent
franchisees from establishing themselves in another member state .
5 . in view of the particular characteristics of such agreements , in comparison with
exclusive dealing agreements , regulation no 67/67 is not applicable to franchise
agreements for the distribution of goods .

OPERATIVE PART
On those grounds, the court in answer to the questions submitted to it by the
bundesgerichtsh of by order of 15 may 1984 , hereby rules :
(1 ) ( a ) the compatibility of franchise agreements for the distribution of goods with article
85 ( 1 ) depends on the provisions contained therein and on their economic contex.
(b) Provisions which are strictly necessary in order to ensure that the know-how and
assistance provided by the franchisor do not benefit competitors do not constitute
restrictions of competition for the purposes of article 85 (1).
(c)provisions which establish the control strictly necessary for maintaining the identity and
reputation of the network identified by the common name or symbol do not constitute
restrictions of competition for the purposes of article 85 (1).
(d)provisions which share markets between the franchisor and the franchisees or between
franchisees constitute restrictions of competition for the purposes of article 85 (1).
 (e) the fact that the franchisor makes price recommendations to the franchisee does not
constitute a restriction of competition , so long as there is no concerted practice between
the franchisor and the franchisees or between the franchisees themselves for the actual
application of such prices.
(f)franchise agreements for the distribution of goods which contain provisions sharing
markets between the franchisor and the franchisees or between franchisees are capable of
affecting trade between member states.
(2)regulation no 67/67/eec is not applicable to franchise agreements for the distribution of
goods such as those considered in these proceedings.

BOOKMAKERS’ AFTERNOON GREYHOUND SERVICES LTD V AMALGAMATED

RACING LTD

MANU/UKWA/0084/2009

England and Wales Court of Appeal (Civil Division)

No. A3 2008/2874

Decided On: 28.07.2009

Appellants: BOOKMAKERS' AFTERNOON GREYHOUND SERVICES LTD, LADBROKES

BETTING AND GAMING LTD and WILLIAM HILL ORGANIZATION LTD

Vs.

Respondent: AMALGAMATED RACING LTD, RACING UK LTD and ALPHAMERIC PLC

Hon'ble Judges:

Mummery, Lloyd and Moore-Bick, JJ.

JUDGMENT

Lord Justice Lloyd:

Introduction

1. Horseracing is a substantial business in the UK. Racecourses and bookmakers are among the
several essential elements in that business. They are interdependent: bookmakers draw in funds
from punters but they need races and therefore racecourses, without which this aspect of their
turnover would not exist and punters provide the most important source of outside income for
racing. Betting on horseracing provides a substantial proportion of the turnover of British
bookmakers.
2. The present litigation is between the interests of several major bookmakers, as Claimants and
those of about half of the racecourses in Great Britain, as Defendants. Not for the first time,
recourse has been had to competition law in an attempt to affect the distribution of economic
resources within the business of horseracing.

3. One element in the economic pattern, though not relevant to the present dispute, is that the
betting industry pays substantial sums, which are passed to British racecourses, by way of the
Betting Levy, administered by the Horserace Betting Levy Board. In 2000 the Government
announced its desire to abolish the levy and opened a consultation as to the implications of that.
In 2002 the proposal to abolish the levy was withdrawn and the levy has been renewed year by
year since then.

4. Betting takes place either at racecourses (on-course) or elsewhere (off-course), the latter
largely at licensed betting offices (LBOs) of which there are some 8,700 in Great Britain, though
nowadays it may also take place over the internet. Betting at LBOs is not limited to horseracing:
greyhound racing, other sports, numbers games and other events or contingencies provide
suitable and popular subjects for betting, but the bulk of LBO turnover is on horseracing.

5. Until 1986 it was illegal to show live televised pictures of racing in an LBO. The law changed
in that year. In 1987 such a service began to be provided for LBOs by Satellite Information
Services Ltd (SIS). (At first it was supplied by its parent company, but nothing turns on the
distinction for present purposes.) The parent company, Satellite Information Services (Holdings)
Ltd (SISH) was founded by the then four leading bookmaking firms, in anticipation of the
change in the law. At the time relevant to the present dispute it was owned as to about 49% by
Ladbrokes PLC, William Hill Organization Ltd and the Horserace Totalisator Board and as to
about 7.5% by Mr Fred Done. Directly or indirectly it acquired licences to broadcast to LBOs
live coverage of horse races at courses in Britain and also in Ireland. (I will refer to the relevant
rights as LBO media rights.) With that and other material it put together a live television service
broadcast by satellite (called SIS FACTS) to which LBOs could subscribe. Until 2007 it had no
competitor. It was therefore the sole buyer for the media rights which racecourses could offer
and the sole seller to LBOs of a broadcast service of this kind. Some races were and are
broadcast live by terrestrial channels, including the BBC and LBOs can show those races using
the terrestrial service, but the SIS FACTS coverage was much more comprehensive.

6. In 2007 a rival service to SIS FACTS came into play, providing a similar broadcast service,
known as Turf TV. This is provided by the First Defendant, Amalgamated Racing Ltd
(AMRAC), which is a joint venture between the Fourth Defendant, Alphameric Gaming Ltd and
the Fifth Defendant, Racecourse Media Services Ltd (RMS), which itself is owned by 19
undertakings which run 31 out of the 59 racecourses in Britain. Thus, SIS FACTS is provided by
interests aligned with major bookmakers, whereas Turf TV is provided by interests which
include those representing a significant number of racecourses. Both of those services are
regarded as essential to an LBO: they are "must-haves".
7. By the present proceedings, the principal bookmakers seek to undermine the Turf TV service,
by showing it to be the product of a cartel illegal under the competition law of the European
Union and of the UK. The racecourses object strongly, contending that it is absurd to try to use
competition law in order to strike down a successful attempt to create competition in a situation
where for 20 years there was none.

8. The proceedings came to trial before Mr Justice Morgan over some 6 weeks in 2008. He gave
judgment in favour of the Defendants on the issues relevant to this appeal on 8 August 2008 and
dismissed the claim: [2008] EWHC (Ch) 1978. He gave a later judgment on issues on a
counterclaim ([2008] EWHC 2688 (Ch)); having done so he granted permission to appeal. I
would like to pay tribute to the clarity of his long judgment, in the course of which, quite apart
from having to consider the facts in more detail than we have had to and to decide issues on the
evidence, mainly concerned with that given by expert witnesses, he had to address several
additional issues besides those which have been live on the appeal. Moreover, during the trial he
had also to deal with a number of interlocutory points (including points as to the formulation of
the Claimants' claim, on which he gave a preliminary judgment, [2008] EWHC 2503 (Ch)) and
also with points on the counterclaim, as well as hearing argument on one point, under article
81(3) of the EU Treaty, on which it was not necessary for him, in the end, to deliver a judgment.

9. In grappling with the issues on the appeal, we have been assisted by clear and concentrated
written and oral submissions from Counsel (who, in the case of the Appellants, were a new team
who had not appeared before the judge), enabling us to conclude the hearing of the appeal in
three rather full days.

118. The Métropole case was considered by the ECJ in a later case, Wouters, Case C-309/99,
[2002] ECR I-1577. Both of them and other relevant cases, were considered in turn by the CAT
in RCA. The Tribunal said this at paragraph 167:

We confess to some difficulty in reconciling the approach of the ECJ in Gøttrup-Klim and
Wouters with that of the CFI in Métropole, but find it unnecessary to dwell on the explanation in
Métropole as to the rationale that the CFI perceived as underlying cases such as Gøttrup-Klim
and Wouters (the latter of course being decided after Métropole). We consider that these two
decisions of the ECJ show that the assessment of whether or not a particular arrangement
constitutes an infringement of Article 85(1) (now Article 81(1)), or therefore of the Chapter I
prohibition, is a rather more flexible exercise than the CFI was perhaps willing to appreciate. It is
not enough that the arrangement is apparently anti-competitive, as in Gøttrup-Klim and Wouters.
What those cases show is that ostensibly restrictive arrangements which are necessary to achieve
a proper commercial objective will not, or may not, constitute an anti-competitive infringement
at all. Whether or not they will do so requires an objective analysis of the particular arrangement
entered into by the parties, assessed by reference to their subjective "wants" and against the
evidence of the particular market in which they made their arrangement. The task then is to
consider whether the restrictive arrangement of which complaint is made is "necessary" to
achieve the objective. The RCA appellants also submitted that the concept of "necessity" in this
context is not an absolute one, but has an element of flexibility about it, for which they referred
us to paragraph 109 in the Métropole case in which the course observed that "If, without the
restriction, the main operation is difficult or even impossible to implement, the restriction may be
regarded as objectively necessary for its implementation." We also accept this last submission:
competition law is not an area of law in which there is much scope for absolute concepts or sharp
edges.

HOFFMANN-LA ROCHE V COMMISSION

UNITED BRANDS CO AND UNITED BRANDS CONTINENTAL BV V COMMISSION,

EXPLOSIVE MANUFACTURERS WELFARE ASSOCIATION V COAL INDIA LTD AND ITS

OFFICERS

IN THE COMPETITION COMMISSION OF INDIA

NEW DELHI

Case No. 04 of 2010

Decided On: 26.07.2011

Appellants: Explosive Manufacturers Welfare Association

Vs.

Respondent: Coal India Limited and its Officers

Hon'ble Judges/Coram:

Ashok Chawla (Chairman), R. Prasad, Geeta Gouri, Anurag Goel and M.L. Tayal, Members

ORDER

1. Background

The case under consideration relates to allegations of certain anti-competitive acts on the part of Coal India Limited.
It has been alleged that in violation of provisions of Section 3 and 4 of the Competition Act, 2002 (Act), Coal India
Limited has engaged itself in unfair and discriminatory practices, has denied market access and has entered into anti-
competitive agreement with supplier(s).

Profile of Parties in the Case

1.1 Before going into the details of allegations, proceedings before the office of the DG and Commission and
response of different parties, a brief profile of different parties involved in the case is discussed first.

A) The Informant

1.1.1 The informant in this case is Explosive Manufacturers Welfare Association. It is a society registered under the
West Bengal Societies Registration Act 1961 comprising of various manufacturers who are engaged in the business
of manufacture and sale of industrial explosives. The association is having registered office at Kolkata, West
Bengal.

B) Respondent
Coal India Limited

1.1.2 Coal India Limited, the Opposite Party (OP) is a Schedule 'A' Maharatna Public Sector Undertaking under
Ministry of Coal, Government of India. It has its headquarters in Kolkata, West Bengal. CIL produces coking and
non-coking coal of various grades for a number of applications. As of March 31, 2010, it operated 471 mines in 21
major coalfields across eight states in India, including 163 open cast mines, 273 underground mines and 35 mixed
mines (which include both open cast and underground mines). It also operated 17 coal beneficiation facilities with
an aggregate designed feedstock capacity of 39.40 million tons per annum. CIL has nine direct Subsidiaries and two
indirect Subsidiaries, namely, Bharat Coking Coal Limited, Central Coalfields Limited, Central Mine Planning and
Design Institute Limited, Eastern Coalfields Limited, Mahanadi Coalfields Limited, Northern Coalfields Limited,
South Eastern Coalfields Limited, Western Coalfields Limited, Coal India Africana Limitada, MJSJ Coal Limited
and MNH Shakti Limited.

2. Information

2.1. The facts and allegations in the matter, in brief, are as under;

2.1.1 The Information provider (IP) has alleged that the OP has acted in violation of the provisions of the Act
regarding anti-competitive agreements (Section 3 of the Act) and abuse of dominant position (Section 4 of the Act)
in the procurement of industrial explosives.

2.1.2 The Informant has submitted that OP, a dominant consumer of explosives consuming more than 60% of total
explosives, as part of its requirement for the purpose of its mining activities invites open tenders for procurement of
Industrial explosives on regular basis. The existence of members of IP, being small scale undertakings is largely
dependent upon OP, as they have no other prospective consumers other than the OP. However, for the past few
years, OP has been arbitrarily pressurizing the members of the Informant association into entering agreements and
contracts for procurement of the explosives, by incorporating unrealistic and unfair conditions in the tender
documents, making it mandatory and unconditional for acceptance by the participants.

2.1.3 According to the informant association, against NIT dated 04.07.2008 for the supply of Bulk Loading and
Cartridge explosives, its members participated in the tender for a period of three years, viz; 2008-09, 2009-10, 2010-
2011 and on the basis of vendor qualification (evaluated by OP), the qualified and eligible bidders entered into
Running Contracts with the OP for a period of three years. The agreements executed by OP in connection with these
contracts were unfair and discriminatory. As per the agreement, the first term of the Running Contract started from
Dec. 2008 to Nov. 2009. The second term was to initiate from Dec. 2009 to Nov. 2010 and third and the final term
from Dec 2010 to Nov 2011.

However, OP vide letter dated 28.11.2008, (sic) changed the duration of contract from three years to one year and
vide letter dated 28.10.2009, terminated all Running Contracts including Reserve Running Contracts pertaining to
Cartridge Explosives and Accessories and also Bulk Loading explosives with effect from 01.12.2009. OP further
directed members of IP to continue supplies beyond 01.12.2009 as per the provisions of the Running Contract till
30.4.2010 or till the finalization of new contracts, even when on termination of any contract, the terms and
conditions of the contract cease and are treated as null and void.

2.1.4 The IP has further submitted that OP vide letters dated 11.12.2009 intimated it to review the price payable for
extended contract (w.e.f. 01.12.2009) pertaining to Bulk Explosives and also for Cartridges Explosives and
Accessories. OP also pressurized its members to lower their pre-fixed prices for the extended contract. Since after
the execution of the contracts, various members of the IP had invested large capital on manufacturing and supply of
the explosives to the OP, abrupt and arbitrary termination of the contract resulted in huge debts which were leading
to closure of their numerous facilities and units.
2.1.5 It has further been alleged in the Information that OP has included clauses 23, 25 and 26, amongst others, in
the NIT conferring absolute powers on itself to alter or to terminate the contracts in full of part thereof without
assigning any reason(s).

2.1.6 The IP has also submitted that OP has also entered into a long term 05 (five) year private agreement with
IOCL-IBP (a large scale PSU functioning under Ministry of Petroleum) for supply of explosives, without inviting
any tender. IOCL-IBP combine has been given a quantity preference of 20% of the total yearly requirement and
10% price preference over the members of IP. In addition to the above, the IOCL-IBP has also been assured of
increased order quantities at the rate of 20% of the total tendered quantity for every subsequent year. IP has alleged
that the above action of OP eliminates the spirit of competition by enhancing the purchasing power of the preferred
contractor and virtually kills the competition.

2.1.7 It has further been alleged that the quantity variation clause in the NIT, mandates allocation of a minimum of
80% and maximum of 120% of the order at the same terms, conditions and price. However, the acceptance level by
the subsidiary companies of the OP from the members of the IP did not exceed 60% of the awarded quantity. The
said deviation in procurement by the subsidiaries of OP was not due to the fall in actual requirement, but because the
remaining quantity was procured by giving undue preference to IOCL-IBP.

2.1.8 IP has also stated that OP wrongly treated the Powder Factor as a yardstick to evaluate the performance of
explosives since 2005-2006, discriminatorily amended the Rate Contract after issuance of the tender and its final
negotiations and in one case, the OP even amended the Rate Contract even after issue of the Rate Contract Further,
OP also delays refund of security deposits and security deposits running into crore of rupees are retained by it even
after the expiry of the contracts.

2.1.9 The informant has further submitted that OP has also introduced the price bid reverse auction process as per
which the eligible bidders are made to contest the offered prices to the lowest extent in order to retain the market
position. These phenomena directly and substantially lead to the introduction of forced predatory prices. OP, in its
recent NIT dated 09.10.2009, has incorporated a clause on price ceiling, which unfairly makes the price ruling on
the day of reverse auction as a bench mark price.

2.1.10 The IP has alleged that due to its actions and conduct, OP has grossly misused its position as a dominant
buyer by adopting unfair practices which can be classified as an abuse of dominant position as per Section 4 of the
Act. IP has also alleged that the OP has entered into anticompetitive agreements and therefore violated Sections
3(1), 3(3)(a) & 3(3)(b) of the Act.

3. After examining the allegations raised by the informant and the available material on record, the Commission
having formed an opinion that there exists a prima facie case in the matter, vide order dated 11.03.2010 referred the
matter to the Director General (DG) under Section 26(1) for investigation into the alleged violations of the Act.

4. Pursuant to the order passed by the Commission, the DG conducted the investigations and submitted his
investigation report dated 07.03.2011 to the Commission.

8.3.6 The Commission in this regard observes that the constituent members perhaps would be happy to get 100% of
supplies to the OP, denying the supplies to those who are not its members. However, this could then become the
reason for others to agitate their grievance. The selection or choice of supplier by a consumer, unless it falls foul of
laws of competition, is not an issue which ought to be brought before a competition agency. By sourcing 20% of the
supplies from IOCL-IBP, the OP is not affecting the relevant market in its favour since supplies of a major portion
are being sourced from other manufacturers therefore, it cannot be said that there is any violation of Section 4 (2) (b)
(i) and Section 4 (2) (c) of the Act since the arrangement does not limit or restrict production of goods or provision
of services or market. There is no denial of market access either.
DAVID MECA-MEDINA AND IGOR MAJCEN V COMMISSION OF THE EUROPEAN COMMUNITIES

DEUTSCHE TELEKOM AG V COMMISSION

ABERDEEN JOURNALS LTD. V DIRECTOR GENERAL OF FAIR TRADING

SUNIL BANSAL V JAIPRAKASH ASSOCIATES LTD

MANU/CO/0093/2015

IN THE COMPETITION COMMISSION OF INDIA

NEW DELHI

Case Nos. 72 of 2011, 16, 34, 53 of 2012 and 45 of 2013

Decided On: 26.10.2015

Appellants: Sunil Bansal and Ors.

Vs.

Respondent: Jaiprakash Associates Ltd. and Ors.

Hon'ble Judges/Coram:

Ashok Chawla, Chairperson, S.L. Bunker, Sudhir Mital, Augustine Peter and U.C. Nahta,
Members

ORDER

This common order shall dispose of the informations filed in C. Nos. 72 of 2011, 16 of 2012, 34
of 2012, 53 of 2012 and 45 of 2013 as similar issues are involved in these cases.

Facts

1. Facts of the cases may be briefly noted.

Case No. 72 of 2011

1.1. The information in Case No. 72 of 2011 has been filed under section 19(1)(a) of the
Competition Act, 2002 ('the Act') by Shri Sunil Bansal, Mrs. Manjula Bansal, Shri Anil Bansal,
Mrs. Saroj Bansal, Shri Pawan Bansal and Mrs. Meena Bansal against M/s. Jaiprakash
Associates Ltd. and M/s. Deutsche Postbank Home Finance Ltd. alleging inter alia contravention
of the provisions of section 4 of the Act.

Case No. 16 of 2012

1.2. The information in Case No. 16 of 2012 has been filed under section 19(1)(a) of Act by Shri
Deepak Kapoor against M/s. Jaiprakash Associates Ltd., M/s. Jaypee Infratech Ltd. and New
Okhla Industrial Development Authority alleging inter alia contravention of the provisions of
section 4 of the Act.

Case No. 34 of 2012

1.3. The information in Case No. 34 of 2012 has been filed under section 19(1)(a) of the Act by
Shri Tarsem Chand and Mrs. Kanta Devi Mittal against M/s. Jaiprakash Associates Ltd. alleging
inter alia contravention of the provisions of section 4 of the Act.

Case No. 53 of 2012

1.4. The information in Case No. 53 of 2012 has been filed under section 19(1)(a) of the Act by
Shri Sanjay Bhargava and Mrs. Anjali Bhargava against M/s. Jaiprakash Associates Ltd. and
M/s. Jaypee Infratech Ltd. alleging inter alia contravention of the provisions of sections 4 of the
Act.

Case No. 45 of 2013

1.5. The information in Case No. 45 of 2013 has been filed under section 19(1)(a) of the Act by
Shri Raghuvinder Singh against M/s. Jaiprakash Associates Ltd. alleging inter alia contravention
of the provisions of section 4 of the Act.

2. The Informants in all the above cases will be collectively referred to as the 'Informants' and
M/s. Jaiprakash Associates Ltd. as JAL, M/s. Jaypee Infratech Ltd. as JIL and New Okhla
Industrial Development Authority as NOIDA. JAL and JIL would be referred to as Jaypee Group
hereinafter in this order.

3. In Case Nos. 16 of 2012 and 45 of 2013, the Informants are allottees of residential units in
JAL's project named 'Jaypee Aman' at Noida. In Case Nos. 34, 72 and 53 of 2012, the Informants
are allottees of residential units in 'Jaypee Sun Court and Jaypee Sea Court Apartments' at
Greater Noida.

4. JAL and JIL are engaged in real estate business. M/s. Deutsche Postbank Home Finance Ltd.
is a financial services provider to Indian corporate, institutional and individual clients and
NOIDA was constituted under the U.P. Industrial Area Development Act, 1976 with a view to
develop an integrated industrial township for the industrial growth of the area.

5. The Informants in all the above mentioned cases alleged that JAL along with its group
company i.e. JIL abused its dominant position by imposing highly arbitrary, unfair and
unreasonable conditions in the agreements for allotment of residential apartments which
blatantly violated the principles of free and fair competition and thereby contravened sections
4(2)(a) and 4(2)(e) of the Act.
6. The following terms and conditions of the Provisional Allotment of an Apartment were
alleged to have violated section 4 of the Act: the application form did not mention the name of
the project; columns relating to consideration (basic sale price, car parking, preferential location
charges etc.) were left blank; the undertaking along with the application form was onerous and
one sided; introduction of clauses relating to maintenance deposit/maintenance charges/club
membership fees were not told at the time of booking; making obligatory for applicant/allottee to
sign a separate maintenance agreement for maintenance of common areas and facilities; clause
stating that applicant/allottee would have no right, title or interest on the premises either during
its construction or after its completion till the execution of Indenture of Conveyance; it was
stated that the Indenture of Conveyance shall not absolve applicant/allottee of obligations under
the standard terms and conditions; unilateral changes in the original plan and instead of 24 floors,
the plan was modified to build 28 floors; delay in delivery of possession and since the agreement
was highly one sided and arbitrary, no compensation was provided for this long delay in
delivery; the terms and conditions provided an absolute right to JAL to reject/not to allot the
apartment to the applicant without assigning any reason while the applicant had to give an
undertaking that the application for allotment was irrevocable, unless JAL desired so; there was
no liability on the opposite party builder in case of delay and breach of contract while there was a
stringent condition put on consumers for breach of contracts; it was provided that it was at the
discretion of JAL in case of a breach of contract by the applicant, to cancel the allotment and to
forfeit the earnest money of the allottee, and this could be, even before final installment was
made; JAL had unfettered rights to any variations, deletions, alternations of the plans, super
areas, specifications, dimensions, designs etc. and the Informants had no right to question or
dispute such changes; JAL failed to construct the apartment as per the specifications assured by
it in its advertisements and representations and that the Informants were provided with shoddily
constructed, poor quality flats which by no means could be considered of a 'premium' category as
advertised; it was also stated that the agreement provided a force majeure clause giving the right
to JAL to indefinitely delay the project without any obligations or for reasons of non-availability
of building material, water supply, electricity, strike etc. which are not the reasons generally
under any law of force majeure.

110. In relation to the dependence of consumers on JAL/JIL, it has been clearly mentioned above
that there are several established real estate players (who have been operational in the relevant
geographic market for decades) offering world class amenities. Accordingly, a large number of
options are available to the consumers who can actually choose from a wide range of projects
launched/developed by several builders and developers in the geographic region. Further, rapid
growth of real estate sector together with the presence of several big, small and medium sized
companies in the market is demonstrative of the absence of entry barriers/foreclosure of
competition.

SH. DHANRAJ PILLAY & OTHERS V M/S HOCKEY INDIA

 2013 SCC OnLine CCI 36 : [2013] CCI 35 J  6

Competition Commission of India

(BEFORE MR. ASHOK CHAWLA, CHAIRPERSON, MR. H C GUPTA, MEMBER, MR. R PRASAD, MEMBER, DR. GEETA GOURI, MEMBER, MR.
ANURAG GOEL, MEMBER AND MR. (RETD.) S N DHINGRA, MEMBER, JJ.)

In the Matter of:

Sh. Dhanraj Pillay and Others … Informants;

And

M/s Hockey India … Opposite Party.

Case No. 73 of 2011

Decided on May 31, 2013

Present: _____________for the informants

_____________for the Opposite Party

MAJORITY ORDER

 SHRI ASHOK CHAWLA, SHRI H.C. GUPTA, DR. GEETA GOURI, SHRI ANURAG GOEL AND S.N. DHINGRA (RETD.):
— The case was initiated on the basis of information filed by Sh. Dhanraj Pillay, aformer Olympian and Captain
of Indian Hockey Team against Hockey India (hereinafter “HI”) to the Competition Commission
of India (hereinafter “Commission”) under Section 19(1)(a) of The Competition Act, 2002 (hereinafter “Act”) on
November 15, 2011.

 2. The case centered on the events leading to the organization of World Series Hockey League (hereinafter
“WSH”) by Indian Hockey Federation in collaboration with Nimbus Sport. The case pertains to the alleged
imposition of restrictive conditions by HI, on players for participation in un-sanctioned prospective private
professional leagues resulting in undue restrictions on mobility of players and on prospective private
professional leagues leading to denial of entry to competing leagues.

 3. Parties to the Case and related parties

 3.1 The Informants in this case are a group of former Olympians and professional Indian  Hockey players
namely Sh. Dhanraj Pillay, Sh. Gundeep Kumar, Sh. Gurbax Singh Grewal, Sh. Balbir Singh Grewal, Sh.
Alloysius Edwards and Sh. V Baskaran.

 3.2 The Opposite Party, Hockey India, is the National Sports Federation of India for the sport
of Hockey affiliated to the Indian Olympic Association (IOA), Asian Hockey Federation (AHF) and
International Hockey Federation (FIH).

 3.3. A related party to HI is FIH. FIH is the international governing body for the sport of Hockey recognized
by the International Olympic Committee (IOC). FIH is responsible for integrity of the sport at the international
level and to ensure the development of sport throughout the world.

 3.4 Indian Hockey Federation (IHF) is the National Sports Federation for the sport of Hockey affiliated to
Indian Olympic Association, but it is not affiliated to FIH or AHF. IHF is the co-organizer of World
Series Hockey (WSH) League along with Nimbus Sport (Nimbus).
  3.5 Nimbus Sport, a subsidiary of Nimbus Communications Ltd., is a leading full sports rights management
and marketing company.

 4. Information

4.1 In December 2010, IHF and Nimbus announced the WSH league, designed and conducted on a
franchisee model. The League was to feature 8 city based teams and players from India and overseas. The
first tournament was scheduled to be organized from November 2011 to February 2012.

 4.2 After the announcement of the WSH League, the organizers started entering into negotiations with
players and signing them for the league. When the process of negotiations was on, the FIH notified regulations
relating to sanctioned and unsanctioned events and communicated the same to all National Associations vide
their letter dated 11th March 2011. These sanctions were to be applied prospectively w.e.f. 31 st March 2011. The
informants have stated that FIH and HI also started making statements prohibiting players from participating in
WSH, on account of it being an unsanctioned event.

 4.3 HI adopted the regulations relating to unsanctioned events and accordingly modified its Code of
Conduct (CoC) Agreement with players to include the clauses related to disciplinary action such as
disqualification from Indian National Team for any participation in unsanctioned events. In this backdrop, HI
along with FIH also announced that they intended to introduce their own league in India in 2013.

 4.4 A month before the scheduled start of the inaugural WSH League, the informants, based on the above
sequence of events made a filing to the Commission for inquiring into alleged anti-competitive activities of HI.

 4.5 Allegations

4.5.1 The specific allegations leveled by the informants are as under:

(i) HI is misusing its regulatory powers and promoting its own Hockey League at the exclusion of WSH and
is engaging in practices resulting in denial of market access to rivals, in contravention of Section 4(2)
(c) of the Act.

(ii) HI is using its dominance in conducting international events in India to enter into the market of
conducting a domestic event in India, in contravention of Section 4(2)(e) of the Act.

(iii) The CoC Agreement entered by HI with the players is an exclusive supply agreement and the
restrictive conditions included thereunder, constitute a violation of Section 3(4) of the Act.

The informants made the following submissions in support of their allegations against HI

 4.6 Jurisdiction issue

4.6.1 The informants submitted that HI, which is a society registered under Societies Registration Act 1860
qualifies to be a person as defined under Section 2(1)(v) of the Act. Also, the informant submitted that HI is
engaged in activities related to conducting and governing of international hockey tournaments in India,
facilitating sponsorship for the team, obtaining training facilities etc. According to the informants, these activities
are commercial and HI is an enterprise under section 2(h) of the Act.

 4.7 Abuse of dominance

4.7.1 Relevant Market
 The informants defined the relevant market as, “the market for conducting and governing
international hockey activities for both men and women in India”. The definition given by informants
covered in their view, both demand and supply side substitutability.

 4.7.1.1 Demand Side substitutability

The informants submittedthat the hockey players are the consumers of services rendered by HI and the
players do not consider the services of conducting and governing international hockey activities for men
and women interchangeable with any other service. Consequently, hockey players are not in a position to
shift to a body conducting any other sport in response to a change in the supply side of the market, which
comprises of HI, as it is the only body conducting and governing international hockey events in India.

The informants also stated that there is no substitutability between the conducting and governing of
international activities and domestic activities.

 4.7.1.2 Reference was made to the ECJ decisions on the Billiards Case (Henry v. The World Professional
Billiards & Snooker Association Ltd (WPBSA) [2001 EWCA Civ 1127]) to support their delineation of the
relevant market. In this case it was held:

“The first criterion in deciding whether particular suggested market is a relevant one for competition law
purposes is as to demand substitutability: is there another product which is a close substitute in the eyes or
purchasers for that which is the subject of the suggested market? As between snooker players and
tournament promoters, there is clearly no substitute, as far as the players are concerned, for the services
of promoters. From the point of view of the players, whether one considers him as seller (of his services) or
as buyer (of the services of a tournament organisers), he is dependent on tournament organisers, since
without tournaments he will have no opportunity to exercise his skills for profit.”

 4.7.1.3 Supply Side substitutability

As regards supply side substitutability, the informants submitted that the conduct and governance of
activities for a certain sport is a specialized area of service which involves important responsibilities and
crucial functions by the service provider. Services in relation to conduct and governance of sport can only
be provided by persons with special expertise and huge sport related resources in their command.
Therefore the supply of services related to conducting and governing international hockey activities cannot
be considered substitutable with any other service. The informants also clarified that supply substitutability
does not exist between international and domestic hockey events as provision of services related to
international events require recognition by international Federations and service providers for domestic
events cannot shift to international events in the absence of such recognition.

 4.7.1.4 On the issue of geographic marketthe informants submitted that uniformity in the conditions of CoC
agreements with players implies the market is pan India. On the possibility of extending the the market beyond
the boundaries of India, the informants averred that that development of the game, requirement of players and
factors relevant for team selection vary from country to country restricting the relevant market to India.