Before The Hon’ble Vormirian Company Law

Appellate Tribunal

In the case of

Trimato, Ziggy, NomRhino and others

(Appellants)
v.
1. Competition Commission of Vormir
2. Vormir Association of Restaurants
(Respondents)

Appeal against Final order of CCV in case no. 1 of 2020 and

order under case no. 2 of 2020 for violation of section 3 and 4
and other relevant sections of Competition Act, 2002 by
respondents.

Memorandum on behalf of Appellants.

 Table of Contents

List of Abbreviations ................................................................................................................. 3

Index of authorities .................................................................................................................... 4
Statement of Jurisdiction............................................................................................................ 6
Statement of Facts ...................................................................................................................... 7
Issues for Consideration........................................................................................................... 10
Summary of Arguments ........................................................................................................... 11
Statement of Arguments .......................................................................................................... 12
Prayer ....................................................................................................................................... 27
 List of Abbreviations

Sr. no. Abbreviation Full form

1. AAEC Appreciable adverse effect on competition
2. APPA Across Platform Parity Agreement
3. CCI Competition commission of India
4. CCV Competition commission of Vormir
5. Co Company
6. DG Director General
7. DFI Department of Food Inspection
8. EC European Commission
9. EU European Union
10. FSA Food Service Aggregators
11. MRTP Monopolies and Restrictive Trade Practices
12. OP Opposite Party
13. VAR Vormirian Association of Restaurants
14. VCLAT Vormir Company Law Appellate Tribunal
15. US United States
 Index of authorities

STATUTES REFERRED:

1. Competition act, 2002.

2. The Monopolies & Restictive Trade Practices Act, 1969.

CASES REFERRED:
1. FICCI – Multiplex Association of India v United Producers/Distributors Forum, Case
No 1/2009, decided on 25 May 2011, 2011 Comp LR 79 (CCI).
2. MP Mehrotra v Jet Airways (India) Ltd and Kingfisher Airlines Ltd, Case No Misc
1/2010 (4/2009).
3. Establishments Consten SA & Grunding – Verkaufs – GmbH v Commission, (1966)
ECR/ 1966 CMLR 418 .
4. Standard Oil Co v US, 337 US 293 (1949).
5. Ghanshyam Dass Vij v Bajaj Corp Ltd, Case No 68 of 2013 (CCI), decided on 12
October 2015.
6. Volk v Vervaecke, Case 5/69, [1969] ECR 295 .
7. Theater Enterprises Inc. v. Paramount Film Distributing Corporation, 346 US 537.
8. Union of India v. Hindustan Development Corporation, (1993) 3 SCC 499.
9. The Competition Act, 2002, Explanation (e) given under section 3(4).
10. Guidelines on Vertical Restraints, OJ (2000) C 291/1.
11. D.P. Mittal, Competition Law and Practice, 2nd Ed. 2008.
12. Mr. Samir Agarwal v. ANI Technologies and others, 2018 CompLR 9 (CCI).
13. Copperwel Corpn. v. Independence Tube Corporation, 467 US 752.
14. National Society of Professional Engineers v. Unites States, 435 US 679.
15. Shamsher Kataria Informant v Honda Siel Cars India Ltd, 2014 Comp LR 1 (CCI).
16. Mausegatt v Haute autorite, C-13/60.
17. Copperweld Corp v Independence Tube Corp, 467 US 752 (1984).
18. Exclusive Motors Pvt Ltd v Automobili Lamborghini SPA, [2014] 121 CLA
230 (CAT) : 2014 Comp LR 110 (CompAT).
19. Viho v Commission, 1995 ECR.
 20. Exclusive Motors Pvt Ltd v Automobili Lamborghini SPA, [2014] 121 CLA
230 (CAT): 2014 Comp LR 110 (CompAT).
21. Shamsher Kataria v Honda Siel, Case No 03/2011, order dated 25 August 2014, 2014
Comp LR 1 (CCI).
22. M/s. Fast Way Transmission Pvt. Ltd. And others v. Kansan News Pvt. Ltd. And
others [2014] 126 SCL 285 (CAT).
23. Explosive Manufacturers Welfare Association v. Coal India Limited and its
Officers, 2012 CompLR 525 (CCI).
24. Mr. Ramakant Kini v. Dr. L.H. Hiranandani Hospital, Powai, Mumbai, Case no. 39
of 2012.
25. United States v. General Motors, 384 US 127.
26. Argos Limited & Littlewoods Limited v. Office of Fair Trading [20041 CAT
24, [20051 CAT 132
27. Interstate Circuit, Inc. v. United States, 306 U.S. 208 (more) 859 S. Ct. 467; 83 L. Ed.
610

BOOKS REFERRED:
1. S M DUGAR, GUIDE TO COMPETITION LAW, VOLUME 1, 6 TH EDITION
(2016)
2. Prof. Dr. V.K. AGARWAL, COMPETITION ACT, 2002, SECOND
EDITION(2019)
3. ABIR ROY, JAYANT KUMAR, COMPETITION LAW IN INDIA, SECOND
EDITION (2014)
 Statement of Jurisdiction

The Vormirian Company Law Appellate Tribunal has the jurisdiction to entertain Case no. 1
and Case no. 2 under section 53A1 of Competition Act, 2002.

1
53A. (1) The National Company Law Appellate Tribunal constituted under section 410 of the companies Act,
2013 shall, on and from the commencement of Part XIV of Chapter VI of the Finance Act, 2017, be the
Appellate Tribunal for the purpose of this Act and the said appellate Tribunal shall –
(a) to hear and dispose of appeals against any direction issued or decision made or order passed by the
Commission under sub-sections (2) and (6) of section 26, section 27, section 28, section 31, section 32, section
33, section 38, section 39, section 43, section 43A, section 44, section 45 or section 46 of the Act;
(b) to adjudicate on claim for compensation that may arise from the findings of the Commission or the orders of
the Appellate Tribunal in an appeal against any finding of the Commission or under section 42A or under sub-
section (2) of section 53Q of this Act, and pass orders for the recovery of compensation under section 53N of
this Act.
 Statement of Facts

Case No. 1 of 2020

The information filed by VAR pertains to the following:

Violation of Section 4

A. Out of approximately 35 million monthly orders made in Vormir through FSA

platforms, Trimato has constantly held a market share of 60% of all orders per
month for the past 11 months in Vormir. Thus, Trimato is alleged to be dominant in
the market for online food aggregation services in Vormir. Trimato charges
excessive commissions from its restaurant partners, while the cloud kitchens owned
by Trimato are not charged similar commissions. This conduct is averred to be
discriminatory and favours Trimato-owned cloud kitchens and has led to denial of
market access for other restauranteurs;
B. Trimato had recently acquired a controlling stake in a quick service restaurant
named OBO while Ziggy had acquired control of another quick service restaurant –
Fabfood. Overtime, with the help of resources from Trimato and Ziggy, both OBO
and Fabfood have opened up their own franchises all over Vormir;
C. The FSAs with their increased market power and enhanced portfolio (due to the
M&A deals), have purportedly imposed substantially high commissions upon the
regular restaurants registered on their platforms in comparison to the commissions
charged from the newly formed cloud kitchens and joints of OBO and Fabfood. The
Informant claims that such practices provided means to Trimato and Ziggy to
leverage their interests in the downstream market where their cloud kitchens
operate; as well as in the conventional market of the regular restaurants where OBO
and Fadfood operate, in contravention of Section 4(2)(e) of the Act;
D. Further, Trimato came up with an unique software on its online platform where
instead of offering all the food and meal deals of the restaurants registered on their
platform, they would offer recommendations to the customers to order their food
from certain specific restaurants, some of which were franchisees of OBO. VAR
suspects that hidden costs are being charged by Trimato from these specific
restaurants, due to which Trimato would intentionally float these restaurants with
attractive deals and additional discounts on their platforms, effectively manipulating
 the customers to order only from these specific places.
E. FSAs provide deep discounts to customers which has been claimed to harm
competitive pricing in the market. In this regard, the FSAs have engaged in
predatory pricing which is in contravention to Section 4(2)(a)(ii) of the Act,
individually by Trimato, as well as by FSAs collectively;
F. Additionally, VAR pointed out that IronBank, which is a tech-focused private equity
investor, along with its affiliates, has an investment of 15% in Trimato, 5% in Ziggy
and 8% in NomRhino, with a board seat in each.
Violation of Section 3

A. The FSAs have further entered into unique arrangements relating to ‘Across
Platform Parity Agreements’ (“APPAs”), whereby the FSAs prevent all restaurant
owners from offering better terms, prices and other favorable deals through their
individual websites or other sales channels, in comparison to the terms and prices
offered by the FSAs on their platforms; and
B. Through the APPAs with restaurant owners, such restaurant owners are compelled
to ensure that their products are priced similarly on all FSA platforms. This has
allowed individual FSAs to retain business on their platform without losing the
business to a competing FSA. However, it has become increasingly difficult for the
partner restaurants to maintain their prices on their individual websites and at their
brick-and-mortar outlets. In VAR’s view, this has led to a “hub and spoke” cartel
between the FSAs and the restaurants that use their platforms by fixing the prices
across platforms.

Case No. 2 of 2020

The FSAs filed an information against VAR and its member restaurants under Section
19(1)(a) before the CCV, alleging violations of Section 3(3) read with Section 3(1) of the Act
(Case No. 2 of 2020), on the following grounds:

A. The FSAs highlighted the increasing prices of the products offered by the VAR
member restaurants on their platforms, which was nearly doubled in 2019 compared
to 2018, despite minimal change in the cost of production, inputs, etc. such as the
prices of raw food inputs, labor costs and logistics; In the FSAs’ view, the almost
consistent increment of 200% in prices for each item in 2019, in comparison to
 2018, offered by the VAR members on the FSAs’ platforms amounted to price
parallelism which adversely impacted the businesses of the FSAs;
B. Further, VAR prepared regular reports with comparative studies on pricing, reach
and services offered by each of its members. These reports were circulated to each
member and discussed at VAR’s bi-annual meetings. FSAs averred that VAR
collected and disseminated confidential and competitively sensitive information of
its member restaurants, and thereby, facilitated cartelization by way of price fixing
amongst its members; and
C. It was also pointed out that much of the criticism aimed at FSAs was due to VAR
members’ collectively agreeing to anti-competitive practices, such as provision of
sub-standard quality of food and beverages, non-cooperation on part of their servers
with the FSAs’ delivery personnel, use of sub-standard infrastructure, etc., for
delivery orders from the FSAs’ platforms only.
 Issues for Consideration

1. Whether the FSAs violated the provisions of Section 3(3) read with Section 3(1) of the
Act?

2. Whether the FSAs violated the provisions of Section 3(4)(e) and Section 3(3) read with
Section 3(1) by way of their APPAs?

3. Whether the FSAs violated provisions of Section 4 of the Act, collectively and/or
individually (on part of Trimato and /or as part of a single economic entity)?

4. Whether VAR along with its member restaurants, violated provisions of Section 3(3) read
with Section 3(1) of the Act?
 Summary of Arguments

1. Whether the FSAs violated the provisions of Section 3(3) read with Section 3(1) of the
Act?

Section 3 of the Competition Act provides for prohibition from entering into anti-competitive
agreements. The effect on the Competition should be the result of the agreement, as defined.
The consequential effect may even be unintentional. For any agreement to be considered to
be anti-competitive it should have an “appreciable” adverse effect on competition (AAEC).

2. Whether the FSAs violated the provisions of Section 3(4)(e) and Section 3(3) read
with Section 3(1) by way of their APPAs?

The assessment of whether the agreement has as its object, the restriction of competition, is
based on a number of factors. These factors include the content of the agreement and the
objective aims pursued by it. It may also be necessary to consider the content in which it is
to be applied and the actual conduct and behavior of the parties in the market.

3. Whether the FSAs violated provisions of Section 4 of the Act, collectively and/or
individually (on part of Trimato and /or as part of a single economic entity)?

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 Competition Act, 2002. 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 [anti-competitive] agreement, the presumption is not irrebuttable.

4. Whether VAR along with its member restaurants, violated provisions of Section 3(3)
read with Section 3(1) of the Act?

If the agreement can have the potential to distort competition, it will be covered under this
provision. It is pertinent to note that the agreement need not have taken effect or have been
operationalising for the provisions of section 3 of the Act to apply. What is important is
whether the agreement is capable of constituting a threat, direct or indirect, actual or
potential, to the competition in the market.
 Statement of Arguments

1. Whether the FSAs violated the provisions of Section 3(3) read with Section 3(1) of the
Act?

The advent of digitalization in Vormirian economy has made the existence of service
providers possible and these aggregators are contributing largely to the economy as well as
further growth in digital

The advent of Food Services Aggregators (“FSAs”) Notable FSAs include Trimato, Ziggy,
and NomRhino is result of digitalization

These food services platforms are essentially “two-sided” markets, and cater to: (a) the
restaurants who list their food products on their platform; and (b) the customers who order
food products from their platform.

Section 3 of the Competition Act provides for prohibition from entering into anti-competitive
agreements. Any such agreement which causes or is likely to cause an appreciable adverse
effect on competition within Vormir shall be void.

Causes or is likely to cause appreciable adverse effect on competition: sub-section (1)

The expression used in the sub-section “which causes or is likely to cause an appreciable
adverse effect on competition within Vormir” can be broken into three components,

i. it should affect competition within India;

ii. affect should be appreciable, i.e., not minimal; and
iii. it should either actually effect or is expected to affect competition.

The effect on the Competition should be the result of the agreement, as defined. The
consequential effect may even be unintentional. What is material is potential damages
to competition by virtue of the agreement (which will include any understanding or
arrangement formal, i.e., enforceable in law or informal). It is not necessary to find a specific
intent. It is sufficient that the likely effect is the consequence of the persons’ conduct or
business arrangements. Because the essence of violation is the illegal agreement, the proper
analysis focuses on the potential harm that would ensure if the conspiracy is successful, and
not upon the actual consequence. The conduct or contract between two parties not resulting in

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the said consequences is not prohibited. It is all that is necessary to see is that it must be
possible to foresee with a sufficient degree of probability on the basis of a set of objective
factors of law or of fact that the agreement in question may have influence, direct or indirect,
actual or potential, on competition.

In FICCI – Multiplex Association of India v United Producers/Distributors Forum,2 the

Commission observed that as regards existence of Appreciable Adverse Effect
on Competition (AAEC), the scheme of the Competition Act, 2002 envisages two situations:

 where the agreement is of the most pernicious nature (such as price fixing or market-
sharing), including cartels, as mentioned under section 3(3), AAEC is presumed and

 In less pernicious agreements, such as those mentioned under section 3(4), AAEC has
to see with reference to factors given under section 19(3) of the Act.

Section 3 of Competition Act, 2002 covers agreements, as defined under the Act, which
cause or are likely to cause appreciable adverse effect on competition in India. The
probability and not merely possibility of its consequence as appreciably
affecting competition is the requirement. If the agreement can have the potential to
distort competition, it will be covered under this provision. It is pertinent to note that the
agreement need not have taken effect or have been operationalising for the provisions
of section 3 of the Act to apply.3 What is important is whether the agreement is capable of
constituting a threat, direct or indirect, actual or potential, to the competition in the market. 4

Appreciable adverse effect on competition—sub-section (1)/(3)/(4)

Agreements having an “appreciable adverse effect on competition” specified in sub-

sections (3) and (4) are considered to be in contravention of section 3 and shall be void. The
said term has not been defined in the Competition Act, 2002. The word “appreciable” has
been defined in Law Lexicon as follows:

capable of being estimated, weighed, judged of, or recognized by the mind, capable of being
perceived or recognized by the senses, perceptible but not a synonym of substantial (Black’s
Law Dictionary.)

2
FICCI – Multiplex Association of India v United Producers/Distributors Forum, Case No 1/2009, decided on
25 May 2011, 2011 Comp LR 79 (CCI).
3
MP Mehrotra v Jet Airways (India) Ltd and Kingfisher Airlines Ltd, Case No Misc 1/2010 (4/2009).
4
Establishments Consten SA & Grunding – Verkaufs – GmbH v Commission, (1966) ECR/ 1966 CMLR 418 .

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In terms of section 19(3), the Commission shall have due regard to the various factors
specified therein in clauses (a) to (f) while determining whether an agreement has an
appreciable adverse effect on competition under section 3. It is purely in the realm of
estimation and is subjective. Whether the adverse effect of competition is appreciable or not
will vary in the facts and circumstances of each case leaving the business enterprise and
parties to the agreement guessing and not being able to chalk out its business and market
policies.

Public interest does not necessarily mean interest only of industry. The restraint of trade
would be tolerable if it is limited to what is reasonably necessary; otherwise it becomes
appreciably adverse. The measurement in terms of rupee volume in itself is not of
significance, but other facts as specified are required to be considered.

In Standard Oil Co v US,5 the court held that “the requirement of article 3 of the
Clayton Act of showing the effect of the contract to substantially lessen competition is
satisfied by the proof that competition has been foreclosed in a substantial share of the line of
commerce affected”.

This is relevant for purposes of enquiry before the Commission relating to vertical
agreements falling under sub-section (4).

Test of Appreciability

For any agreement to be considered to be anti-competitive it should have an “appreciable”

adverse effect on competition (AAEC). Section 19(3) of the Act lays down the factors to be
considered while determining AAEC. However, there is no parameter provided for
appreciable factor under section 3. In other jurisdictions, insignificant market share of an
undertaking has been held to be a factor to determine appreciability.
The Competition Commission in India is likely to take the same approach. Any agreement in
question has to affect competition to an appreciable extent to fall within the prohibition
of section 3(1). Some of the factors that are likely to be taken in to account by the
Commission to check appreciable effect on competition are:

a) percentage of business controlled,

b) the strength of the remaining competition;

5
Standard Oil Co v US, 337 US 293 (1949).

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c) whether the action springs from business requirements or purpose to monopolise;

d) the probable development of the industry, consumer demands and other
characteristics of the market.

“ De Minimis ” Doctrine

The doctrine of de minimis deals with the concept wherein agreements of enterprises with
insignificant market shares have insignificant effect on the market i.e., it is unlikely to cause
appreciable adverse effect on competition in the market. It is possible mostly in cases where
the positions of the said enterprises are weak in the market.

In the case of Ghanshyam Dass Vij v Bajaj Corp Ltd,6 the Commission observed that that the
doctrine of de minimis can be used as a factor to militate against appreciable adverse effect
on competition. Accordingly, in light of the market structure of FMCG products and
particularly the hair oil segment in India, it was observed that Bajaj Corp did not have a
position of strength in the sector in comparison with other brands. Accordingly, the
arrangement with its distributors regarding territorial demarcations, in the presence of several
competitors and considering the dynamic nature of the sector was unlikely to affect the inter-
brand competition in the market. As such, the impact of restrictions imposed by Bajaj Corp
would be negligible. The Commission therefore, disagreed with the Director General’s
conclusion that the vertical restraints imposed by Bajaj on its distributors caused appreciable
adverse effect on competition in the market which contravenes section 3(4) of
the Competition Act, 2002.

“ De Minimis ” Doctrine in EU

The De Minimis doctrine was first formulated by the Court of Justice in Volk v Vervaecke,7
where it observed that an agreement falls outside the prohibition of Article 101(1) where it
has only an insignificant effect on market, taking in to account the weak position which the
persons concerned have on the market of the product in question. In the notice on agreements
of minor importance (de minimis), the Commission quantifies, with the help of market share

6
Ghanshyam Dass Vij v Bajaj Corp Ltd, Case No 68 of 2013 (CCI), decided on 12 October 2015.
7
Volk v Vervaecke, Case 5/69, [1969] ECR 295 .

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thresholds, what is not an appreciable restriction of competition under Article 101 of the
Treaty on the functioning of the EU (ex Article 81 TEC) [Commission notice].

Cartel and Cartelization:

Cartel functions secretly without any formal agreement. A cartel may be providing for price-
fixing; to limit production and supply, to allocate market share or sales quotas or to engage in
bid rigging or collusive bidding. Cartelization leads to higher price above competitive level,
poor quality of goods and services to the consumers.

Defense of Cartelization: Price parallelism is often used as an effective defense, posing a

challenge for competition authorities US and European Court has adopted a ‘parallelism plus’
approach which requires showing the existence of ‘plus factors’ beyond merely the firms
parallel behavior, in order to prove that an anti-trust violation has occurred There is an
inclination to consider parallel behavior as first clue pointing to the presence of collusion.
Even though parallelism does not suffice to prove unlawful conduct, it may contribute to
forming a suspicion of illegality8.

In the case of Theater enterprises Inc. v. Paramount Film Distributing Corporation9, the
Supreme Court of United States observed that:-

“In the absence of any direct evidence of cartel and the circumstantial evidence not going
beyond price parallelism, without there being even a shred of evidence in proof of any factor
to bolster the circumstances of price parallelism, we find it unsafe to conclude that the
respondents indulged in any cartel for raising the prices. The charge of cartel therefore
fails.”

In the case of Union of India v. Hindustan Development Corporation10, the Supreme Court
considered a question that whether quoting of identical price by big suppliers of cast steel
bogies to the Railway Board can lead to an inference that they had formed a cartel to prevent
competition in the market. After noticing dictionary meaning of the words “cartel” and
“predatory” and making a reference to American Jurisprudence 2d Vol.54 page 677 and 695
the following observation was made:-

8
Para 2.8, Study of Cartel Case Laws in Select Jurisdictions – Learning’s for the Competition Commission of
India, Final Report, CUTS International, 2007.
9
Theater Enterprises Inc. v. Paramount Film Distributing Corporation, 346 US 537.
10
Union of India v. Hindustan Development Corporation, (1993) 3 SCC 499.

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“A mere offer of a lower price by itself does not manifest the requisite intent to gain
monopoly and in the absence of a specific agreement by way of a concerted action suggesting
conspiracy, the formation of a cartel among the producers who offered such lower price
cannot readily be inferred..”

2. Whether the FSAs violated the provisions of Section 3(4)(e) and Section 3(3) read
with Section 3(1) by way of their APPAs?

The FSAs have further entered into unique arrangements relating to ‘Across Platform Parity
Agreements’ (“APPAs”), whereby the FSAs prevent all restaurant owners from offering
better terms, prices and other favorable deals through their individual websites or other sales
channels, in comparison to the terms and prices offered by the FSAs on their platforms; and
through the APPAs with restaurant owners, such restaurant owners are compelled to ensure
that their products are priced similarly on all FSA platforms.

The assessment of whether the agreement has as its object, the restriction of competition, is
based on a number of factors. These factors include the content of the agreement and the
objective aims pursued by it. It may also be necessary to consider the content in which it is
to be applied and the actual conduct and behavior of the parties in the market.

Resale Price Maintenance: includes any agreement to sell goods on condition that the prices
to be charged on the resale by the purchaser shall be the prices stipulated by the seller unless
it is clearly stated that prices lower than those prices may be charged.11

Resale Price Maintenance is a provision by which the final price charged to the consumers is
not set by the distributor but imposed by the producer. The restriction has several variants
including maximum retail price (price ceiling), minimum price, non-binding “recommended
retail price” or advertised price. Resale price maintenance or price floors suppose that price
cuts can be detected at a sufficiently low cost. These price cuts can take the form of non-
monetary such as free delivery. Under the RPM agreements, those agreements come into the
picture whose main element is that the buyer is obliged or induced to resell not below a
certain price, at a certain price or not above a certain price.12

11
The Competition Act, 2002, Explanation (e) given under section 3(4).
12
Guidelines on Vertical Restraints, OJ (2000) C 291/1.

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Determining AAEC in case of Resale Price Maintenance: Clause (e) of s. 3(4) has two main
ingredients, (i) sale of goods which is made by the manufacturers in the wholesale or retail
outlets, is preconditioned to the effect that resale, thereof should be on stipulated price, (ii)
agreements therefore should not have clearly provided that prices lower that the stipulated
price may be charged. In other words agreement to sell goods which are entered into on
principal basis contains provision about resale price by way of recommended price or
maximum ceiling price, there should be freedom to charge lower price and it should be stated
in unequivocal words.13

In the case of Mr. Samir Agarwal v. ANI Technologies and others14 it was held that Resale is
fundamental to the conduct of resale price maintenance. In the context of app-based taxi
services, the ANI Technologies do not sell any good/service to the drivers that the drivers
resell to the riders. While the drivers offer the physical service of transportation to the riders
and are legally independent entities, they are effectively extensions or agents of the ANI
Technologies when they operate through the ANI Technologies platforms. Resale price
maintenance, under the provisions of the Act, is essentially setting of a floor price on resale.
In case of app-based taxi services, the dynamic pricing can and does on many occasions drive
the prices to levels much lower than the fares that would have been charged by independent
taxi drivers.

Agreement are considered void only if they results in an appreciable adverse effect on
competition in India and the same is tested on “rule of reason” analysis. The informant and
the Commission, under the rule of reason analysis have to actually prove that challenged
practice harms competition in the relevant market.15

Under the 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.16

13
D.P. Mittal, Competition Law and Practice, 2nd Ed. 2008.
14
Mr. Samir Agarwal v. ANI Technologies and others, 2018 CompLR 9 (CCI).
15
Copperwel Corpn. v. Independence Tube Corporation, 467 US 752.
16
National Society of Professional Engineers v. Unites States, 435 US 679.

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3. Whether the FSAs violated provisions of Section 4 of the Act, collectively and/or
individually (on part of Trimato and /or as part of a single economic entity)?

Out of approximately 35 million monthly orders made in Vormir through FSA platforms,
Trimato has constantly held a market share of 60% of all orders per month for the past 11
months in Vormir. Thus, Trimato is alleged to be dominant in the market for online food
aggregation services in Vormir. There is no finding that confirms use of any anti-competitive
practices or misuse of its position to adversely affect competition.

Doctrine of Single Economic Entity

Two or more legal entities might be considered as a Single Economic Entity for the purpose
of applying competition law. For instance, Competition law does not in most cases perceive a
parent company and its wholly owned subsidiary as competitors, even if they are active in the
same market. The subsidiary is presumed not to act autonomously in the market but to follow
its parent’s directives. Agreements between the parent and wholly-owned subsidiary thus,
escape section 3 of the Competition Act, 2002.17 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
was not irrebuttable. It is a question which should be decided however on the facts and
circumstances of each case.18

The evolution of the concept of “single economic entity” in European Union can be traced
back the European Commission (EC), case of Mausegatt v Haute autorite,19 where it was
observed that “affiliation to the group deprives the subsidiary company of the ability
to act according to an economic scheme of its own. The “given conditions” of such a
subsidiary’s operations are prescribed not by the market but by the instructions of the
principal company”. In this case the relationship between the parent and the subsidiary was
used to demonstrate that a cartel could not be formed between the parent and subsidiary, as
they must be considered to be governed by the same leading group. The 2011 EC Guidelines
on the applicability of Article 101 of the Treaty on the Functioning of the European Union to

17
The position is similar to EU, where agreement between parent and subsidiary escapes the ambit of Article
101 of the Treaty on the Functioning of the European Union (TFEU).
18
Shamsher Kataria Informant v Honda Siel Cars India Ltd, 2014 Comp LR 1 (CCI).
19
Mausegatt v Haute autorite, C-13/60.

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horizontal co-operation agreements inducted the concept of “single economic entity” as

following:

11. Companies that form part of the same ‘undertaking’ within the meaning of Article 101(1)
are not considered to be competitors for the purpose of these guidelines. Article 101 only
apples to agreements between independent undertakings. When a company exercises decisive
influence over another company they form a single economic entity and, hence, are part of
the same undertaking. The same is true for sister companies, that is to say, companies over
which decisive influence is exercised by the same parent company. They are consequently not
considered to be competitors even if they are both active on the same relevant product and
geographic markets.

The practice of considering two or more legal entities as a single economic entity within
European Competition law was also laid out in the 1973 case of Continental Can v
Commission, where the Court observed:

the circumstances that this subsidiary company has its own legal personality does not suffice
to exclude the possibility that its conduct might be attributed to the parent company. This is
true in cases particularly where the subsidiary company does not determine its market
behavior autonomously but in essential follows directions of the parent company.

If two legal entities are part of the same economic unit then they cannot be said to collude
with each other. In considering whether two companies belong to same economic entity, the
following factors may be considered:

i. Ownership (where a company owns all or large part of another company);

ii. Economic Independence (a company which is entirely financially dependent on
another would most likely have to follow instructions from the other company);
iii. Degree of instructions given and the obedience to those instructions.

The US Supreme Court in the 1984 case of Copperweld Corp v Independence Tube
Corp20 similarly concluded that an internal agreement to implement a single, unitary firm’s
policies does not raise the antitrust dangers that section 1 of the Sherman Act, 1890 was
designed to police. It was further observed that a parent corporation and its wholly owned
subsidiary are incapable of conspiring with each other. Similarly, in the American Needle Inc

20
Copperweld Corp v Independence Tube Corp, 467 US 752 (1984).

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v National Football league et al, the US Supreme Court observed that a parent corporation
and its wholly owned subsidiary are incapable of conspiring with each other for purposes
of section 1 of Sherman Act, 1890. Although the parent corporation and its wholly owned
subsidiary are separate for the purposes of incorporation or formal title, they are controlled by
a single center of decision making and they control a single aggregation of economic power.
Joint conduct by two such entities does not deprive the market place of independent centers
of decision making and as a result an agreement between them does not constitute a contract,
combination or conspiracy.

Indian Cases applying Single Economic entity doctrine-

In the case of Exclusive Motors Pvt Ltd v Automobili Lamborghini SPA,21

the Competition Commission of India observed that for the application of section 3, there has
to be a proved agreement between two or more enterprises. It held that the agreement
between M/s Lamborghini, the opposite party and its Group Company Volkswagen India
could not be considered to be an agreement between the two enterprises as envisaged
under section 2(h) of the Competition Act, 2002. According to the Commission, the
agreements between entities constituting one enterprise could not be assessed under the Act.

The Commission relied on the internationally accepted doctrine of “single economic entity”.
The Commission referred to the European case of Viho v Commission,22 where the Court
went on to observe, firstly, the facts in the complaint by Viho, which complained that Parker
was prohibiting the export of its product by its distributors, dividing the common market into
national markets of the Member States, and maintaining artificially high prices for Parker
products on those national markets.

The Commission also referred to the judgment of the Court of the First Instance and also
relied upon the observation of Para 35 in Ahmed Saeed Flugereisen wherein it was held
that Article 85 does not apply where the concerted practice in question is between
undertakings belonging to a single group as parent company and subsidiary, if those

21
Exclusive Motors Pvt Ltd v Automobili Lamborghini SPA, [2014] 121 CLA 230 (CAT) : 2014 Comp LR 110
(CompAT).
22
Viho v Commission, 1995 ECR.

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undertakings form an economic unit within which the subsidiary had no real freedom to
determine its course of action on the market.23

The Competition Commission of India in the case of Shamsher Kataria24 observed 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 Competition Act, 2002. The
Commission noted that the exemption of single economic entity stems from the inseparability
of the economic interest of the parties to the agreement. It held thus: “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 [anti-competitive] agreement, the presumption
is not irrebuttable.”

In the case of M/s. Kansan News Pvt. Ltd., 25 the Commission held that by denying Kansan
News Ltd. To retransmit its news channel through their cable network the Group could not be
said to have limited or restricted the provision or market of cable service, because the Kansan
News Ltd. was not a participant in the relevant market and the service of market of cable TV
was not getting affected. The Commission thus found that the group had not contravened the
provisions of section 4(2)(b)(i) of the Act.

In the case of Explosive Manufacturers,26 the Commission held:

“The Commission feels that a consumer is free to select a supplier in its normal course of
business after due diligence and after following due procedure in accordance with the
relevant rules governing procurement, particularly when the consumer in a government
body. A consumer will not harm itself consciously and if some wrong doing is done, for
procedural flaws, relevant rules will take care of such anomalies. Once consumer choice has
been exercised and selection is done by a consumer for getting supplies, other competing
suppliers cannot claim that their supply or production is being restricted. The choice of
supplier made by consumer will not fall within the purview of Competition Act, unless the
choice is made in a manner which restricts competition in the market. In this case, since the
OP has left open about 80% of the market for other suppliers and also since the members of
23
Exclusive Motors Pvt Ltd v Automobili Lamborghini SPA, [2014] 121 CLA 230 (CAT) : 2014 Comp LR 110
(CompAT).
24
Shamsher Kataria v Honda Siel, Case No 03/2011, order dated 25 August 2014, 2014 Comp LR 1 (CCI).
25
M/s. Fast Way Transmission Pvt. Ltd. And others v. Kansan News Pvt. Ltd. And others [2014] 126 SCL 285
(CAT).
26
Explosive Manufacturers Welfare Association v. Coal India Limited and its Officers, 2012 CompLR 525
(CCI).

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constituent members are not barred from supplying to the OP, there appears to be no harm to
overall competition in the market.”

4. Whether VAR along with its member restaurants, violated provisions of Section 3(3)
read with Section 3(1) of the Act?

In Mr. Ramakant Kini v. Dr. L.H. Hiranandani Hospital, Powai27, Mumbai the Commission
pointed out that s. 3to cause(1) prohibits any agreement in respect of provision of services
which causes or likely to cause an appreciable adverse effect on competition within India and
therefore the ambit of s. 3 is extremely wide and covers all kinds of commercial agreements
(even if they do not fall in the category of s. 3(3) and 3(4) ) and the CCI has to check whether
such commercial agreement will cause AAE based on the principles laid down in s. 19(3).

Section 3 of Competition Act, 2002 covers agreements, as defined under the Act, which
cause or are likely to cause appreciable adverse effect on competition in India. The
probability and not merely possibility of its consequence as appreciably
affecting competition is the requirement. If the agreement can have the potential to
distort competition, it will be covered under this provision. It is pertinent to note that the
agreement need not have taken effect or have been operationalising for the provisions
of section 3 of the Act to apply. What is important is whether the agreement is capable of
constituting a threat, direct or indirect, actual or potential, to the competition in the market.

The scope of agreement has been specifically dealt with s. 2(b) of the Act which defines the
word “agreement” as –

“Agreement” includes any arrangement or understanding or action in concert-

i. whether or not, such arrangement, understanding or action is formal or in writing; or

ii. whether or not, such arrangement, understanding or action is intended to be
enforceable by legal proceedings.

The definition is designed in such a way as to produce a vast and sweeping coverage for joint
and concerted anti-competitive actions. There is no need for an explicit agreement in cases of

27
Mr. Ramakant Kini v. Dr. L.H. Hiranandani Hospital, Powai, Mumbai, Case no. 39 of 2012.

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conspiracy where joint and collaborative action is pervasive in the initiation, execution, and
fulfillment of the plan.28

Hub-and-spoke arrangements can be characterized as any number of vertical exchanges or

agreements between economic actors at one level of the supply chain (the spokes), and a
common trading partner on another level of the chain (the hub), leading to an indirect
exchange of information and some form of collusion between the spokes. In the extreme, this
indirect exchange can achieve the same negative market outcomes as a hardcore price fixing
cartel, without the horizontal competitors ever having exchanged information directly.

Hub-and-spoke arrangements are cartels that are not co-ordinated through direct exchanges
between the horizontal competitors, but through indirect exchanges via a vertically related
supplier or retailer.

In United Kingdom – the Toys case 1 in 2003, the Office of Fair Trading (OFT) 29, fined
Hasbro, Argos and Littlewoods for entering into a price-fixing agreement concerning certain
Hasbro toys and games. The decision was challenged before the UK Competition Appeal
Tribunal (CAT), and the Court of Appeal, which both upheld the OFT infringement decision.
Hasbro was one of the largest toys and games manufacturers in the UK, while Argos and
Littlewoods were the two largest catalogue retailers, directly competing with each other.
After receiving complaints from Argos and Littlewoods about their low margins on these
products, Hasbro decided to launch a “pricing initiative”. This consisted in persuading
retailers to charge a recommended retail price (RRP) in order to increase their margins.
However, both Argos and Littlewoods, as the main. The then two UK competition enforcers,
the OFT and the Competition Commission, were merged into the Competition & Markets
Authority (CMA) in 2014. price makers on the market, feared that, if one of them charged the
RRP, the other would undercut it in order to gain market shares. This is where Hasbro played
a key role in acting as a hub for the purposes of the anti-competitive agreement. Hasbro held
separate discussions with Argos and Littlewoods in order to identify common products in
their catalogues, and to check whether the retailers had objections to matching the RRP for
those common products. Hasbro communicated to each of the retailers that the other had
agreed to charge the RRP on the products in question. Hasbro also played a major role in
continuously monitoring the retailers’ conduct, both directly and through information

28
United States v. General Motors, 384 US 127.
29
1 Argos Limited & Littlewoods Limited v. Office of Fair Trading [20041 CAT 24, [20051 CAT 132

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received from the retailers: “Argos monitored other retailers’ prices. If they found out that a
retailer was not at the Hasbro RRP, they contacted me [Mr. Wilson, Hasbro’s Account
Manager for Argos] to find out why there was a difference. The understanding was that if
Hasbro could give Argos an assurance that the other retailer would put the price back up to
the RRP, Argos would also remain at the RRP.” The three companies were fined a total of
GBP 22.65 million, with Hasbro receiving full leniency for co-operating with the OFT.

In Interstate Circuit, Inc. v. United States30, Interstate Circuit was one of the largest US
exhibitors of motion picture movies and operated both first-run theatres, which showed newly
released movies, and second-run theatres, which showed movies sometime after release for a
lower price. Due to the stiff competition from second-run theatres that showed movies for
less than 25 cents (as opposed to 40 cents for first-run theatres), Interstate Circuit lost sales in
its first run theatres. For this reason, it agreed with distributors that they should require
second-run theatres to charge no less than 25 cents for showing their movies. In case of non-
compliance with the agreement, Interstate Circuit threatened not to show the distributors’
movies in its theatres. The plan could only work if most distributors adhered, as, otherwise,

a) an adhering distributor would lose sales to its non-adhering competitors, and

b) Interstate Circuit’s threat would not be credible,

as retaliation against too many distributors would be costly and thus unrealistic. In order to
bring as many distributors as possible on board, the manager of Interstate Circuit sent an
identical letter to all distributors explaining the plan. The letter named “on its face as
addressees the eight local representatives of the distributors, so from the beginning each of
the distributors knew that the proposals were under consideration by the others”, and
explained that without unanimous cooperation the plan would result in significant business
losses. Interstate Circuit, by acting as a hub, managed to bring the upstream distributors to
agree with the plan to raise the prices of the competing second-run theatres, thus limiting
competition from them, without any direct communication actually having occurred among
the distributors. The Supreme Court concluded that “acceptance by competitors [i.e., the
upstream distributors],without previous agreement, of an invitation to participate in a plan the
necessary consequence of which, if carried out, is restraint of interstate commerce is
sufficient to establish an unlawful conspiracy.

30
Interstate Circuit, Inc. v. United States, 306 U.S. 208 (more) 859 S. Ct. 467; 83 L. Ed. 610

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Prayer

Wherefore in the light of the issues raised, arguments advanced and authorities cited it is
most humbly prayed that this Honorable Tribunal may be pleased to adjudge and declare that:

1. Trimato, Ziggy, NomRhino & others have not violated the provisions of Section 3(3) read
with Section 3(1) of the Act.

2. Trimato, Ziggy, NomRhino others have not violated the provisions of Section 3(4) (e) and
Section 3(3) read with Section 3(1) by way of their APPAs.

3. Trimato, Ziggy, NomRhino & others have not violated the provisions of Section 4 of the
Act, collectively and/ or individually (on part of Trimato and/ or as part of a single economic
entity).

4. VAR along with its member restaurants have violated provisions of Section 3(3) read with
Section 3(1) of the Act.

And pass any other order that this Hon’ble Tribunal may deem fit in the interests of justice,
equity and good conscience.

ALL OF WHICH RESPECTFULLY SUBMITTED BY THE APPELLANTS.

(COUNSEL FOR THE RESPONDENTS)

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