50R

1ST SAM&Co. – JGLS ANTITRUST LAW MOOT COURT COMPETITION, 2019

BEFORE THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL

Competition Appeal (AT) No.___/2019

Amar Napwell Pvt. Ltd., Appellant No. 1

Akbar Napwell Pvt. Ltd., Appellant No. 2

Antony Napwell Pvt. Ltd., and Appellant No. 3

Slumber Pvt. Ltd. Appellant No. 4

V.

Competition Commission of Bohemia, Respondent No. 1

Twirl-On Pvt. Ltd., Respondent No. 2

CMM, Railway Coach Factory, Bohemia, Respondent No. 3

Mrs. Bhutani Respondent No. 4

ON BEHALF OF THE RESPONDENTS

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 TABLE OF CONTENTS

S. No. Particulars Page No.

1 List of Abbreviations 3

2 List of Sources/Authorities 5

3 Statement of Facts 9

4 Statement of Jurisdiction 19

5 Questions Presented 20

6 Summary of Arguments 21

7 Arguments Advanced 23

8 Prayer Sought 46

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 LIST OF ABBREVIATIONS

Abbreviated use Expansion

AAEC Appreciable Adverse Effect on Competition
Art Article
CCB Competition Commission of Bohemia
CCI Competition Commission of India
CIAB Consumer Interest Association of Bohemia
Co Company
COMPAT Competition Appellate Tribunal
DG Director General
EC European Commission
ECJ European Court of Justice
ECR European Court Report
Edn Edition
EU European Union
Ltd Limited
MRTPC Monopolies and Restrictive Trade Practices Commission
OECD Organization for Economic Co-operation and Development
OJ Official Journal
Ors Others
Pvt Private
r/w read with
S Section
SC Supreme Court of India
TFEU Treaty on the Functioning of the European Union
USSC Supreme Court of the United States
& And
¶ Paragraph

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 LIST OF SOURCES/AUTHORITIES

STATUTES

The Constitution of India

Competition Act of India, 2002

Competition Commission of India (Lesser Penalty Regulations), 2009

BOOKS

Richard Whish & David Bailey, Competition Law (8th Edition, 2015)

Dr. V.K. Agarwal, Competition Act, 2002, 2011

Phillip E. Areeda &Herbert J. Hovenkamp, “Antitrust Law: An Analysis of Antitrust Principles

and Their Application” para.1434(D)(2) (2d Ed. 2000)

CASES

Activision Blizzard Germany GmbH v. Commission [2011] ECR I-419.

All India Tyre Dealers Federation V. Tyre Manufacturers 2013 COMP LR 0092 (CCI)

American Tobacco Co.v United States,  328 US 781, 785-788 (1946).

Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U. S. 1, 19, n. 33 (1979).

Broadcasting service providers case Suo Motu Case No. 02 of 2013

Builders Association of India v Cement Manufacturers Association and Ors, CCI Case No

29/2010

Calcutta Discount Company Limited v. Income Tax Officer [1961] 41 ITR 191 (SC)

City of Tuscaloosa v. Harcros Chem., Inc, (11th Cir. 1998) 158 F.3d 548, 565

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Competition Commission of India v Steel Authority of India and Another (2010) 10 SCC 744 

Competition Commission of India Vs. Co-ordination Committee of Artists and Ors.

Contact Data v. Commission [2009] ECRII-1021,

Delhi Jal Board v. Grasim Industries 2017 SCC OnLine CCI 48

Dole Food and Dole Fresh Fruit Europe v Commission, C-286/13 P, ECLI:EU:C:2015:184,

paragraph 114-115.

Escorts Limited and Ors. Vs. Competition Commission of India and Ors. COMPAT Appeal

no.13 of 2014.

Excel Crop Care Limited v Competition Commission of India and Another

Groupement des Cartes Bancaires v Commission, C-67/13 P, ECLI:EU:C:2014:2204, paragraph

50-51;

In Re :Aluminium Phosphide Tablets Manufacturers (2012) Case No 02 of 2011 (CCI); Royal

Agency and Ors v Chemists and Druggists Association and Ors Case No 63 of 2015 (CCI).

In Re-Alleged cartelization in flashlight market in India Suo Motu Case No. 01 of 2017

In re Plywood Antitrust Litig., 655 F.2d 627, 634, 637 (5th Cir. 1981)

In Re: Alleged Cartelization by Cement Manufacturers RTPE 52 of 2006.

In Re: Anticompetitive conduct in the dry-cell batteries market in India Suo Motu Case No. 01 of

2018

Inc. v. RWM Enters., 939 F.2d 547, 554 (8th Cir. 1991),

India Glycols Ltd vs Indian Sugar Mills Association,CCI Case No. 94 of 2014

ITC Limited vs. MRTPNS (1996) 46 Comp. Case. 619

JFE Engineering v Commission [2004] ECR II-2501

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M/s International Cylinder (P) Ltd. and Others v. Competition Commission of India and Others,

2014 Comp. L.R. 184 (CompAT)

Mr. Ramakant Kini v. Dr. L.H. Hiranandani Hospital, CCI Case No. 39/2012.

National Insurance Company Ltd. and Ors. v. Competition Commission of India−MANU

/TA/0060/2016

Nexans France SAS and Nexans SA v European Commission [2014] C-37/13 P

Northern Pacific R. Co. v. United States, 356 U. S. 1, 5 (1958),

Rajasthan Cylinders and Containers Limited Vs. Union of India and Ors. 2018 SCCOnLine SC

1718

Schwegmann Bros. v. Calvert Corp., 341 U. S. 384

Southern PipelineContractors Conrite Walls (Pty) Ltd. v. The CompetitionCommission

Suiker Unie v. Commission Cases 40/73[1975] ECR 1663.

Technip SA v. SMS Holding (P) Ltd. & Ors.(2005) 5 SCC 465, Guinness PLC and Distillers

Company PLC

United States v. Paramount Pictures, Inc.,334 U.S. 131 (1948)

WEBSITES REFERRED

www.cyrilamarchandblogs.com

www.justice.gov

www.manupatrafast.com

www.oecd.org

www.scconline.com

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ARTICLES, REPORTS AND RESEARCH PAPERS:

Potential Pro-Competitive and Anti-Competitive Aspects of Trade/Business Associations,

OECD Policy Roundtables: Trade Associations, DAF/COMP (2007)45, 4 November 2008

Prosecuting Cartels without Direct Evidence, OECD Policy Roundtables, 11-Sep-2006,

DAF/COMP/GF (2006)

Craig W. Conrath (2003) “Practical Handbook of Antimonopoly Law Enforcement for

Economies in Transition or Development”, Department of Justice (DOJ)

Price Fixing, Bid Rigging, and Market Allocation Schemes: What They Are and What to Look

For, Antitrust Division, U.S. Dept. of Justice (Feb. 18, 2019, 10:10 PM)

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 STATEMENT OF FACTS

1. Bohemia is a republic in South Asia, whose laws are pari materia with the laws of India.

Bohemia enacted its Competition Law, the Bohemian Competition Act (“Competition Act”), in

2002.

2. The Competition Commission of Bohemia (“CCB”), which is established under the aegis of the

Competition Act and is governed by associated regulations, notifications, and amendments

published in the Gazette of Bohemia from time to time such as the Competition Commission of

Bohemia (Lesser Penalty) Regulations, 2009 (“Lesser Penalty Regulations”), treats decisions of

the Competition Commission of India as well as other authorities as having high persuasive

value. The CCB also regards the competition regulators of the European Union and the United

States of America highly, and relies on established precedent from these jurisdictions as well.

3. Napwell Mattress Pvt. Ltd. (“Napwell”) was previously the largest and most successful mattress

manufacturer in Bohemia enjoying a share of 60% as of 2010 in the market for manufacture and

sale of foam mattresses to retail customers in Bohemia. The other market players included Twirl-

On Foams Pvt. Ltd. (“Twirl-On”) with a share of 25% and Slumber Beds Pvt. Ltd. (“Slumber”)

with a share of 5%. The remainder of the market was fragmented among the unorganized sector

mattress suppliers in Bohemia.

4. In 2011, CCB passed an order under Section 27 of the Competition Act, finding Napwell to be

abusing its dominant position within the terms of Section 4 of the Competition Act, and also

ordered for a division of Napwell under Section 28. Following the order, Mr. Raichand divided

every department of Napwell into three parts and each venture capital fund appointed his three

sons, Amar, Akbar, and Antony, as their respective managing directors. These new companies

were registered as Amar Napwell Pvt. Ltd. (“Amar Napwell”), Akbar Napwell Pvt. Ltd. (“Akbar

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 Napwell”), and Antony Napwell Pvt. Ltd. (“Antony Napwell”), all of which were also qualified

to participate in tenders floated by the Chief Material Manager, Rail Coach Factory with respect

to berths in railway coaches.

5. Since 2013, the market shares which would have been attributed to Napwell are now evenly

divided among the three brothers. There has been little change in the market presence of Twirl-

On and Slumber in Bohemia.

6. On June 2, 2017, the CCB received an information from the Chief Material Manager, Rail Coach

Factory alleging that Amar Napwell, Akbar Napwell, Antony Napwell, and Twirl-On, were

bidding collusively by quoting similar prices on the same dates with a deviation of 10% or less

as well as submit their documentation in the same language and format as each other in response

to the NITs issued by the Rail Coach Factory for foam berths in railway coaches in Bohemia.

Being the only manufacturers in Bohemia who fulfilled all the quality and quantity criteria of the

Rail Coach Factory, since 2013, each of the four enterprises had taken turns in quoting the lowest

bid value to ensure that they won the bid, although such bid value would inevitably shoot back

up the following year. It was the Informant’s chief allegation that these prices fell well outside

the budget of the Bohemian Railways, hence, the Bohemian Railways was no longer a profit-

making enterprise.

7. On June 5, 2017, the CCB received information from Mrs. Bhutani, a retail customer, alleging

that each of the suppliers, namely Amar Napwell, Akbar Napwell, Antony Napwell, Twirl-On,

and Slumber, priced similar categories of mattresses similarly. For example, the prices of ‘king-

sized coir based foam mattresses’ of each of the companies only marginally deviated from each

other, and were exorbitantly priced. Hence, the companies were pricing their respective foam

mattresses which were sold for household and hotel use in a collusive manner.

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8. Subsequently, on June 7, 2017, the CCB members met and agreed that the information received

by the informants provided sufficient indication that “the mattress industry in Bohemia appears

to be rampant with collusive activity and bid rigging, as a result of which both small retail

customers as well as large institutional consumers are harmed, and that such practices would

also prevent the entry of a new player into the market”. The CCB members proceeded to instruct

the Director, Legal Affairs of the CCB to prepare the prima facie order for their signature and

after placing his signature on the order in the morning of June 8, 2017, a copy of the order was

dispatched to the office of the Director General, CCB (“DG”) with a note on top stating “For

immediate action”.

9. On the morning of June 9, 2017, the DG conducted a dawn raid at the registered office of

Slumber, and seized documents, records, and computers. The DG had obtained all the necessary

permissions for conducting the dawn raid, such as obtaining a warrant from the Chief

Metropolitan Magistrate. Knowing this, Antony considered that while Slumber barely had a say

in the business decisions made by the others and its database and records may likely have had

evidence of the meetings they conducted on the sidelines of the India Mattress Expo that all the

companies attended annually. He also considered that while Slumber did not have any

information regarding the bid rigging for the Indian Railways’ NITs, Twirl-On, being the next

smallest player, may have had apprehensions about being penalized by the CCB and was likely

to file a leniency petition before the CCB.

10. Over the weekend of June 10-11, 2017, Antony, Amar and Akbar explored the idea of filing a

leniency petition themselves. On June 13, 14, 15, 2017, Antony Napwell, Akbar Napwell, and

Amar Napwell respectively filed for leniency with the CCB along with corresponding

documents. Subsequently, on June 25, 2017, Twirl-On also filed for leniency with the CCB with

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 all the corresponding documents previously submitted by Antony Napwell, Akbar Napwell, and

Amar Napwell.

11. Pursuant to which DG began the investigation, during the course of taking depositions of

representatives of the various parties involved, Twirl-On’s representative stated that “the best

place to go fishing would be in the inbox”. Thereafter, the DG issued requests for information to

all the parties directing them to submit the e-mail dumps of all senior personnel of each of the

companies for the last five years. Antony Napwell, Akbar Napwell, and Amar Napwell

challenged the request of DG before the Bohemian High Court stating that the DG did not have

the authority to do so. The Bohemian High Court agreed with the brothers but held that DG still

had the authority to call for thee-mails of the managing directors, i.e., Amar, Akbar, and Antony.

12. .While going through the emails received by the DG, the DG found various emails in the

‘Deleted Items’ of Akbar’s inbox which were sent by the family lawyer and suggested that ,in

order to ensure that each of the three brothers’ companies gets some relief from the CCB, they

must each provide information/documents which are different from each other’s records and

which would be seen to independently add value to the CCB’s investigation. The DG observed

that the brothers had submitted the relevant documents in the following manner:

a. Details of the various meetings held by representative of each of the five mattress

companies from 2013 to 2017, including the date, venue, time, and participants of such

meetings –submitted by Antony Napwell;

b. Minutes of the above meetings, including details of the final price range within which the

companies agreed to sell mattresses of different categories –submitted by Akbar Napwell;

and

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 c. Details of the common terms and conditions (including price considerations) to be

submitted in response to the respective NITs of the Chief Material Manager, Rail Coach

Factory –submitted by Amar Napwell.

Thereafter, the DG submitted its investigation report (“DG Report”) to the CCB on October

1, 2018 finding Amar Napwell, Akbar Napwell, Antony Napwell, Twirl-On, and Slumber in

contravention of Section 3 of the Competition Act due to price fixing and separately, Amar

Napwell, Akbar Napwell, Antony Napwell, and Twirl-On in contravention of Section 3 of

the Competition Act due to bid rotation in the market for manufacture and supply of foam

berths in railway coaches in Bohemia.

13. The CCB invited the five mattress companies to provide their responses to the DG Report.

While Amar Napwell, Akbar Napwell, and Antony Napwell did not have any objections in their

responses, Twirl-On filed detailed objections to the DG Report, and contended that most of the

decisions were taken unilaterally by Amar Napwell, Akbar Napwell, and Antony Napwell which

together, for all intents and purposes, still remained a single economic entity despite the division

of the original Napwell by the CCB. To this end, Twirl-On submitted that, by virtue of always

being in the majority, Amar, Akbar, and Antony always voted in favor of a particular strategy as

a single block. Twirl-On also contended that the strategy of the brothers was adopted with the

aim of ensuring that they continued to enjoy approx. 20% market share each. 15.Amar Napwell,

in its objections, made the contention that the DG’s investigation was violative of the principles

of natural justice as it had not allowed Amar Napwell’s request for cross examination of the

representatives of Twirl-On and Slumber. Amar Napwell further contended that, without such

cross examination, it had been deprived of the opportunity to fully present its case.

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14. Slumber, in its objections to the DG Report, submitted that there had been a gross violation of

the principles of natural justice by the CCB as it was practically impossible for the DG to have

conducted the dawn raid on the day immediately after the CCB’s prima facie order, on account

of the logistical and preparatory work required to conduct a dawn raid. It further contended that

it had been unfairly targeted and penalized as it was the smallest of the mattress manufacturers

and had very little control over the way the meetings used to proceed, and that the dawn raid

amounted to little more than a ‘fishing expedition’. When this argument was reiterated in the oral

submissions before the CCB, the CCB Chairman himself passed a comment that “Slumber was

the unfortunate bait which had been used to catch the bigger fish”.

15. Last, Slumber submitted that the DG had ignored its submissions against the Informant, the

Chief Material Manager of the Rail Coach Factory, which had abused its dominant position as

the sole government undertaking in charge of procurement of components for railway coaches.

Slumber premised this argument on the fact that it used to be one of the bidders for the NITs

issued by the Chief Material Manager in the 2000s –however, the Chief Material Manager raised

the minimum annual turnover requirement in its NITs for prospective bidders, which

automatically excluded smaller enterprises such as Slumber from bidding. In his concluding

statement, the representative of Slumber said that the alleged bid rigging situation alleged by the

Chief Material Manager is “a product of its own past mistakes”.

16. On April 30, 2019, the CCB passed an order –

a. Invoking the proviso to Section 27(b) of the Competition Act to impose a penalty of 3% of

the average turnover of the concerned parties for FY 2013-14 to FY 2016-17;

b. Granting 30% leniency to Twirl-On on the grounds that although it did not provide any vital

disclosure, it did fully cooperate with the DG’s investigation;

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 c. Granting 30% leniency to Amar Napwell, Akbar Napwell, and Antony Napwell,

respectively, on the ground that although all of them provided vital disclosures, they, did not

fully cooperate with the DG’s investigation;

d. Dismissing all other objections raised by Twirl-On and Slumber regarding the objection

with respect to cross examination, the CCB observed that providing a right to submit a

response to the DG Report and submit its arguments in a hearing before the CCB satisfied

the due process requirements of a regulator such as the CCB. Regarding the allegations of

dominance by Twirl-On against Amar Napwell, Akbar Napwell, and Antony Napwell, as

well as by Slumber against the Chief Material Manager were the subject matter of a separate

case, and should be addressed by way of filing a fresh information before the CCB.

17. Amar Napwell, Akbar Napwell, Antony Napwell, and Slumber have separately filed appeals in

challenge of the CCB’s order before the NCLAT.

18. The NCLAT has admitted the appeals and has decided to hear them together, and will now hear

all arguments, including the issues and contentions raised before the DG and the CCB, and the

recommendations and findings of the DG and CCB respectively.

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 APPENDIX – I

Market shares based on the sales of the market participants in each of these categories, for the

year 2013-2017:

Based on the information provided by the leniency applicants, Amar Napwell, Akbar Napwell,

Antony Napwell, Twirl-On and Slumber the price range from 2013 to 2017 of various categories

of mattress is provided at Table A below – the same has been prepared in conjunction with

market studies and reports. These prices are w.r.t ‘King-sized’ mattresses which forms the upper

bracket of the market – all smaller mattresses are proportionately lesser in price. Further, the

dates on which the Opposite Parties revised their respective prices (provided in the respective

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cells in Table A below) were on or shortly after the dates of the India Mattress Expo meetings.

Details of such meetings are provided below:

a. 2014 meeting: February 4, 2014 @ 1:00 PM

b. 2015 meeting: January 27, 2015 @ 10:00 AM

c. 2016 meeting: February 18, 2016 @ 8:00 PM

d. 2017 meeting: February 24, 2017 @ 8:30 PM

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 APPENDIX – II

Details of meetings attended by Amar Napwell, Akbar Napwell, Antony Napwell and Twirl-On

with respect to collusive bidding:

a. 2014 meeting: May 24, 2014 @ 9:00 AM

b. 2015 meeting: May 27, 2015 @ 8:00 AM

c. 2016 meeting: May 28, 2016 @ 9:00 AM

d. 2017 meeting: May 24, 2017 @ 8:30 AM

Below are the bidding quotations:

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 STATEMENT OF JURISDICTION

THE APPELLANTS ARE BEFORE THE HON’BLE NATIONAL COMPANY LAW

APPELLATE TRIBUNAL IN APPEAL TO THE ORDER PROVIDED BY THE

COMPETITION COMISSION OF BOHEMIA UNDER SECTION 53B OF THE

COMPETITION ACT OF BOHEMIA, 2002, PURSUANT TO THE REPORT SUBMITTED

BY THE LD. DIRECTOR GENERAL (DG) UNDER SECTION 26(3) OF THE ACT

AGAINST THE APELLANTS, UNDER SECTION 19(1)(a) WHEREIN THE APPELLANTS

WERE FOUND TO BE IN CONTRAVENTION OF VARIOUS PROVISIONS OF THE ACT.

Section 53B.- Appeal to Appellate Tribunal

(1) The Central Government or the State Government or a local authority

or enterprise or any person, aggrieved by any direction, decision or order

referred to in clause (a) of section 53A may prefer an appeal to the Appellate

Tribunal

BEFORE THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL

THE APPELLANTS HUMBLY AND RESPECTFULLY

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 QUESTIONS PRESENTED

THE RESPONDENTS HAVE PLACED BEFORE THIS HON’BLE TRIBUNAL, THE

FOLLOWING ISSUES FOR ITS CONSIDERATION:

ON BEHALF OF CCB AND INFORMANTS

ISSUE 1: WHETHER OR NOT, THE CONCERNED PARTIES HAVE ACTED IN

CONTRAVENTION OF SECTION 3 OF THE COMPETITION ACT AND THEREAFTER IS

THE PENALTY IMPOSED AND LENIENCY GRANTED BY CCB APPROPRIATE GIVEN

THE GRAVITY AND EFFECT OF CONTRAVENTION?

ISSUE 2: WHETHER OR NOT, THE OBSERVATIONS OF CCB WITH RESPECT TO

CONTENTIONS RAISED BY APPELLANTS AND RESPONDENT NO. 2 AMOUNT TO

VIOLATION OF PRINCIPLES OF NATURAL JUSTICE?

ON BEHALF OF TWIRL-ON

ISSUE 3: WHETHER OR NOT, TWIRL-ON HAS BEEN WRONGFULLY PENALIZED BY

THE CCB?

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 SUMMARY OF ARGUMENTS

ON BEHALF OF CCB AND INFORMANTS

Issue-1: That the concerned parties have acted in contravention of Section 3 of the

Competition Act and the penalty imposed thereafter is justified.

It is most respectfully submitted that the concerned parties have acted in contravention of section

3 of the Act by entering into an anti-competitive agreement and indulging in price fixing. That

the essentials of the offense are met well and since, the ambit of an anti-competitive agreement is

wide enough to include tacit agreements too, there is sufficient material available to conclude

that the concerned parties were in active coordinating pricing. The standard of proof applied here

in preponderance of probabilities considering the parallelism plus factors, that is, the meetings

held at the sidelines of Mattress Expo. That the parties have also indulged in Bid-rigging by

taking turns in quoting lowest prices every year and the such pattern in which prices had been

quoted verifies the culpability. Hence, the penalty levied by the CCB is appropriate considering

the adverse effect to the competition that had been caused by the parties.

Issue-2: That the observations of the CCB with respect to contentions raised by Appellants

and Respondent No. 2 do not amount to violation of principles of natural justice

It is submitted that the due procedure had been followed by CCB and the actions taken by DG

thereon were well within the scope of his duties. That considering the intricacy of the case, the

dawn raid had to be conducted without prior notice and with immediate action as per the

instructions of CCB. That such order was given after the CCB formed a prime facie opinion and

therefore had valid reasons supporting the order. That by inviting submissions from individual

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parties, the CCB gave due consideration to the contentions of all parties and the parties were at

same platform. The CCB, hence, did not violate the principles of natural justice.

ON BEHALF OF TWIRL-ON

Issue-3: That Twirl-on had been wrongly penalized by the CCB

It is submitted that though Twirl-On did not approach the CCB first, but it did give due

assistance in the investigation process. That the material and documents provided did amount to

vital disclosure, just that the same had already been submitted by Appellant No. 1,2 & 3. That

such action on part of said Appellants was a well thought plan and Twirl-On was never a player

in any of the anti-competitive practices. That it was just engaged in active price parallelism and

quoted similar price to win the bid by keeping a constant check. That the fact that Twirl-On did

not even win the bid in any year proves that there was not an agreement in existence for one

would not act to its own detriment.

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 ARGUMENTS ADVANCED

ARGUMENTS ON BEHALF OF CCB AND INFORMANTS:

ISSUE 1: THAT THE CONCERNED PARTIES HAVE ACTED IN CONTRAVENTION

OF SECTION 3 OF THE COMPETITION ACT AND THAT THE PENALTY IMPOSED

AND LENIENCY GRANTED BY CCB IS APPROPRIATE GIVEN THE GRAVITY AND

EFFECT OF CONTRAVENTION?

A. BID ROTATION

It is submitted to the Hon’ble Tribunal that Amar Napwell, Akbar Napwell, Antony Napwell and

Twirl-On acted in contravention of Sec. 3(1) and Sec. 3(3) by entering into a horizontal

agreement to collusively bid against the NITs issued by the CMM, Railway Coach Factory,

Bohemia and such averment is well-founded upon considering the fact that – Firstly, the Parties

agreed to submit identical bids as they were quoting similar prices on the same dates, as well as

submitting documentation in same language and format. Secondly, the Parties were in agreement

as to who would submit the lowest bid in each successive year evidenced by the fact that the

quoted bid price used to shoot up the following year. Thirdly, such agreement between the

Parties caused an adverse effect on government’s purchase and spending provided the fact that

the Parties were the only manufacturers qualifying the quantity and quality criteria of Railway

Coach Factory, Bohemia.

It is submitted that by and large the whole purpose of the Act which is to prevent practices

having adverse effect on competition, to promote and sustain competition in markets, to protect

the interests of consumers stands defeated by the act of the Parties.

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 B. PRICE FIXING

It is submitted to the Hon’ble Tribunal that Amar Napwell, Akbar Napwell, Antony Napwell,

Twirl-On and Slumber have entered into an anticompetitive agreement as per Section 3(1) and

section 3(3) of the Competition Act, 2002 (hereinafter the Act). Firstly, as the prerequisites of

horizontal anticompetitive agreement are fulfilled i.e. the agreement is between enterprises and

an association of enterprises with respect to identical goods and services. Secondly, the term

agreement has been given a wide ambit to include tacit agreements. Thirdly, such agreements

can be inferred by conduct of the parties and other circumstantial evidence as the standard of

proof to be applied is preponderance of probabilities. Fourthly, in the given set of facts, multiple

such evidences are gathered by way of parallel pricing and plus factors.

C. PREREQUISITES OF S. 3(1) READ WITH S.3(3) ARE FULFILLED:

1. It is humbly submitted to the Hon’ble Tribunal that the requirements of Section 3(1) read

with section 3(3) falls into three: an agreement, as shall be further elaborated upon, that is

between enterprises or persons or associations of enterprises or persons that shall be engaged

in “identical or similar trade of goods or provision of services”.

2. It is submitted that Amar Napwell, Akbar Napwell, Antony Napwell, Twirl-On and Slumber

are enterprises1 as under Section 3(1) of the Act as they are engaged in the supply of foam

mattresses.

3. It is also a prerequisite that the enterprises be engaged in direct competition with other, i.e. be

horizontally located to create such horizontal anti-competitive agreement 2 which Section 3(1)

and 3(2) declare as void. It is therefore submitted that as the Appellants and Respondent No.

2 are leading manufacturers of foam mattresses3 and supplying the same to Railway Coach
1
The Competition Act, 2002, Section 2(h).
2
 Schwegmann Bros. v. Calvert Corp., 341 U. S. 384.
3
¶ 3, Moot Proposition.

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 Factory (Appellant No. 1, 2, 3 and Respondent No. 2) and also for hotel and household

purposes (Appellants and Respondent No.2), is established that they are engaged in “identical

or similar trade of goods or provision of services”4.

4. It is further submitted that in deciding upon a contravention of section 3(3) the commission is

required to establish only such agreement which creates AAEC as mentioned under section

3(3) (a), (b), (c) or (d). The onus therefore is to show that there is an agreement and such

agreements hold the potential of affecting markets5.

D. WIDE AMBIT OF AN ANTI-COMPETITIVE AGREEMENT AS PER SECTION 3-

1. It is humbly submitted to the Hon’ble tribunal that term agreement has been succinctly

defined in the Act6 with emphasis on its wide nature so as to prevent a restriction of its

applicability to only written agreements7. Formal or written arrangements are therefore not

required8 to be proved by the Commission to show adverse effects of even informal or tacit

arrangements9.

2. The definition, being inclusive and not exhaustive, is a wide one. An understanding may be

tacit and the definition under Section 2(b) of the Act covers even those situations where

parties act on the basis of a nod or a wink10. Furthermore, Section 3(3) apprehends both

agreements as well as practices of a concerted nature, and decisions which may be anti-

competitive in their effect.

3. Under Article 101 of Treaty on the Functioning of European Union, a provision

corresponding to S. 3(1), agreements are similarly broadly interpreted and does not

4
The Competition Act, Section 3(3).
5
Mr. Ramakant Kini v. Dr. L.H. Hiranandani Hospital, CCI Case No. 39/2012.
6
Section 2(b), Competition Act, 2002.
7
American Tobacco Co .v United States, 328 US 781, 785-788 (1946).
8
United States v. Paramount Pictures, Inc.,334 U.S. 131 (1948)
9
Builders Association of India v Cement Manufacturers Association and Ors, CCI Case No 29/2010 , In Re: Alleged
Cartelization by Cement Manufacturers RTPE 52 of 2006.
10
Technip SA v. SMS Holding (P) Ltd. & Ors.(2005) 5 SCC 465, Guinness PLC and Distillers Company PLC

24 | P a g e
 necessitate a formal agreement to have been reached on all matters. They also specifically

include exchange of correspondence11. Therefore, any direct or indirect contact between

such enterprises whereby the effect of such contact is to influence the conduct of the market

constitutes concerted practice12.

E. CIRCUMSTANTIAL EVIDENCE AND PREPONDERANCE OF PROBABILITIES

SUFFICIENT TO PROVE ANTICOMPETITIVE AGREEMENT:

1. It is submitted for consideration to the Hon’ble Tribunal that in light of the definition of the

term ‘agreement’, evidence must be assessed on the basis of benchmark of preponderance

of probabilities13. It especially is a requirement for cartelization whereby the clandestine

nature of the activity will dictate that there will not be any express agreement. 14An

agreement therefore, can be presumed on the basis of circumstances of a case15.

2. Evidences in cases of collusive agreements are categorized into direct and indirect

evidence. Circumstantial evidence consists of communication evidence and economic

evidence, which include firm conduct, market structure, and evidence of facilitating

practices16. It must also be noted that circumstantial evidence holds potent value in such

cloak and dagger cases wherein conduct of the parties holds the likelihood of collusive

agreements17.

3. Further, given that anticompetitive offences are civil offences18, the test of 'balance of

probabilities' is distinguished from 'beyond reasonable doubt' as envisaged under criminal

11
Nintendo OJ [2003] L 255/33, Contact Data v. Commission [2009] ECRII-1021, ActivisionBlizzard Germany
GmbH v. Commission [2011] ECR I-419.
12
Suiker Unie v. Commission Cases 40/73[1975] ECR 1663.
13
 Escorts Limited and Ors. Vs. Competition Commission of India and Ors. COMPAT Appeal no.13 of 2014.
14
Hay, George A., "Anti-competitive Agreements: The Meaning of “Agreement”" (2013). Cornell Law Faculty
Working Papers.Paper 105.
15
All India Tyre Dealers Federation V. Tyre Manufacturers 2013 COMP LR 0092 (CCI)
16
Prosecuting Cartels without Direct Evidence, OECD Policy Roundtables, 11-Sep-2006, DAF/COMP/GF (2006)
17
Inc. v. RWM Enters., 939 F.2d 547, 554 (8th Cir. 1991), In re Plywood Antitrust Litig., 655 F.2d 627, 634, 637 (5th
Cir. 1981)
18
JFE Engineering v Commission [2004] ECR II-2501

25 | P a g e
 law19. ‘Balance of probabilities’ becomes the accepted standard, especially so in a case of

tacit collusion whereby hardly any concrete evidence of such activity will exist 20. The

reliance therefore is rightly placed upon circumstantial evidence to create plausibility 21, and

it has been an accepted practice to rely upon economic or indirect evidences to establish the

same.22

F. THE APPELLANT NO. 1, APPELLANT NO. 2, APPELLANT NO. 3 AND

RESPONDENT NO. 2 HAVE ALLOCATED THE TENDERS AMONGST

THEMSELVES IN AN ANTICOMPETITIVE MANNER:

1. It is submitted that the abovementioned parties have been involved in sharing of markets by

duration as per their arrangement of market sharing. The data analysis shows archetypes of

market sharing in 2013-14 to 2016-1723. This has also been coupled with tenders being

obtained in turns by the Parties.

2. In this regard, the Hon’ble tribunal must note the inclusive nature of Section 3(3) (c). The

statutory scheme has not been kept exhaustive as to the manner of market sharing and will

recognize other manners of market sharing apart from the ones explicitly mentioned.

Therefore, the conduct of the parties as to the receipt of tenders will be well within

durational manipulation.

G. THE APPELLANT NO.1, APPELLANT NO. 2, APPELLANT NO. 3 AND

RESPONDENT NO. 2 ARE GUILTY OF BID-RIGGING:

19
M/s International Cylinder (P) Ltd. and Others v. Competition Commission of India and Others, 2014 Comp. L.R.
184 (CompAT)
20
In Re :Aluminium Phosphide Tablets Manufacturers (2012) Case No 02 of 2011 (CCI); Royal Agency and Ors v
Chemists and Druggists Association and Ors Case No 63 of 2015 (CCI).
21
Craig W. Conrath (2003) “Practical Handbook of Antimonopoly Law Enforcement for Economies in Transition or
Development”, Department of Justice (DOJ).
22
In In re Text Messaging Antitrust Litigation, (7th Cir.2010) 630 F.3d 622
23
Table B, Appendix II, Moot Proposition.

26 | P a g e
 1. It is submitted according to Section 3(3)(d) of the Act, bid-rigging or collusive bidding has

statutorily determined to be anticompetitive. The act also defines the practice in the

following terms,

"bid rigging" means any agreement, between enterprises or persons referred to in

sub-section (3) engaged in identical or similar production or trading of goods or

provision of services, which has the effect of eliminating or reducing competition for

bids or adversely affecting or manipulating the process for bidding."24

2. The necessary ingredient of bid rigging, apart from an agreement and horizontal

relationship between the parties, is that the agreement has the effect of eliminating or

reducing competition of bids or adversely affect or manipulating the process for bidding 25.

Richard Whish and David Bailey in their book 26 have categorized the various forms of

collusive bidding/bid rigging include:

(a) Level tendering/bidding (i.e. bidding at same price)

(b) Cover bidding/courtesy bidding.

(c) Bid rotation.

(d) Bid Allocation.

3. It is submitted that the Parties have been manipulating the tendering process of Bohemian

Railway Coach Factory by level tendering, allocating as per duration and rotating between

themselves, the said tenders. Level tendering has occurred over the span of many years

with most prominent identical submissions being made from 2013-14 to 2016-17

Furthermore, the Parties enterprises have rotated the tenders by attempting to split them by

effectively fixing the number of parties and rates of negotiation.

24
Competition Act, 2002, Section 3(3)(d), Explanation.
25
Rajasthan Cylinders and Containers Limited Vs. Union of India and Ors. 2018 SCCOnLine SC 1718
26
Richard Whish and David Bailey, Competition Law, 8th edn, OUP 2015.

27 | P a g e
 H. PARALLEL PRICING AND PLUS FACTORS:

1. It is submitted to the Hon’ble Tribunal that in a market where the competition may be

close-knit the commission is required to be more vigilant to ensure the preservation of

existing levels of competition27.

2. In this regard, identical pricing becomes suspect in the absence of alternative explanation

especially so when it not a case of mere price parallelism. In the given instance, the data

for the bidding process not only shows price parallelism but also substantial and

simultaneous increase in bid prices28. This in effect has set the facts at hand beyond the

threshold of mere parallelism that was set by The Hon’ble Supreme Court to show cartel

conduct29.

3. There also exist plus factors as all the Parties have a common platform viz the meetings

mentioned in the Appendix I and II that were held at the sidelines of India Mattress Expo

Meetings.

4. Another plus factor are the commercial dealings between the enterprises. As parallel

pricing is further compounded by the report given in Appendix I pertaining to all 5

companies, whereby there is clear evidence of commercial dealings with each other30.

5. It is submitted that such contact alleviates the possibilities and extent of collusion

between the Appellants and Respondent No. 2, especially as it would specifically allow

for discussion of pricing policies.

6. Co-ordinated Price Increase: It must be noted that maintenance of the price increase in
31
tandem with each other year and the prices went up right after the meetings . It is

27
British Sugar OJ [1999] L 76/1
28
Table A, Appendix I, Moot Proposition.
29
Rajasthan Cylinders and Containers Limited Vs. Union of India and Ors. 2018 SCCOnLine SC 1718
30
Table A, Appendix I, Moot Proposition.
31
City of Tuscaloosa v. Harcros Chem., Inc, (11th Cir. 1998) 158 F.3d 548, 565.

28 | P a g e
 therefore an extension of parallel pricing which is commonly featured in conspiracy

findings32. Price increase when it is not justified by alternative factors shows a higher

degree of coordination as opposed to a mere market feature. Especially when it occurs in

as precise a fashion as that in the years 2013-14 to 2016-17 in the given instance 33. This

increase in prices is patently a counter movement to the normal scheme of demand and

supply whereby upon the fall of demand the prices are expected to fall.

I. APPRECIABLE ADVERSE EFFECTS ON COMPETITION EXIST AS PER

SECTION 19 FACTORS:

It is submitted to the Hon’ble Tribunal that the Commission has established the case of

contravention of Section 3(3), and is therefore not required, as per the scheme of the Act

to establish simultaneously or in addition that AAEC is being caused as per Section 19(3)

of the Act. The commission would therefore present the alternative submissions in the

exigency of rebuttal of the presumption of Section 3(3). The Commission submits that the

Appellants and Respondent No. 2 have not only created hindrances in the entrance

survival in the market as they have created an artificial increase in prices, but they have

also significantly caused losses instead of accrual of benefits to consumers.

Presumption of Appreciable Adverse Effect under section 3(3):

1. Sub-section (3), stipulates four kinds of agreements which are presumed to have

appreciable adverse effect on competition. Therefore, if a particular agreement comes in

any of the said categories, it is per se treated as adversely affecting the competition to an

appreciable extent34 and comes within the mischief of sub-section (1). The per se rule

holds that certain agreements have such predictable and pernicious anticompetitive effect,
32
Phillip E.Areeda &Herbert J.Hovenkamp, “Antitrust Law: An Analysis Of Antitrust Principles And Their
Application” para.1434(D)(2)(2d Ed. 2000)
33
Table A, Appendix I, Moot Proposition
34
Competition Commission of India Vs. Co-ordination Committee of Artists and Ors.

29 | P a g e
 and such limited potential for procompetitive benefit, that they are deemed unlawful per

se35.There is no further need to have actual proof as to whether it has caused appreciable

effect on competition36.

2. Therefore, the scheme of section 3(3) differs from the necessity that is imposed by Section

3(4) whereby the commission is bound to make the effects-based analysis according to the

six factors of Section 19(3), in reaching such conclusion of AAEC.

3. It is submitted that the same principle if followed by the European Commission and arises

from the fact that certain types of coordination between undertakings can be regarded, by

their very nature, as being harmful to the proper functioning of normal competition.37

4. The COMPAT has also previously held 38 thatthe presumption under Section 3(3) of the

Act takes away the applicability of rule of reason. Presumption in a substantive law

isirrefutable and conclusive. Once a conclusion of violation of Section 3(3) is reached,

contravention of Section 3(1) of the Act is also established.

Section 19(3) factors stand not rebutted:

1. Significantly, it must be noted that as per the case of Rajasthan Cylinders and Containers

Limited Vs. Union of India and Ors. 39, the Commission is not required to further a case of

contravention under Section 19(3) when the ingredients of Section 3(3) have been

adequately satisfied. Therefore, it is humbly submitted to the Hon’ble Tribunal that in the

alternative of section 3(3) contravention, the Appellants and Respondent No. 2 have led

to the adverse effect of competition as per the scheme of Section 19(3) of the Act.

35
Northern Pacific R. Co. v. United States, 356 U. S. 1, 5 (1958), Broadcast Music, Inc. v. Columbia Broadcasting
System, Inc., 441 U. S. 1 , 19, n. 33 (1979).
36
Richard Whish and David Bailey, Competition Law, 8th edn, OUP 2015. .
37
Groupement des Cartes Bancaires v Commission, C-67/13 P, ECLI:EU:C:2014:2204, paragraph 50-51; Dole Food
and Dole Fresh Fruit Europe v Commission, C-286/13 P, ECLI:EU:C:2015:184, paragraph 114-115.
38
National Insurance Company Ltd. and Ors. v. Competition Commission of India−MANU /TA/0060/2016
39
Supra, note 25.

30 | P a g e
 2. Section 19(3) postulates both negative factors, from sub-section (a) to (c), followed by

positive factors as provided by sub-sections (d) to (f). With respect to Section 19(3)(c),

that the cartel that exists between all the enterprises is creating hindrances to an easy

entry and survival in the market.

3. Further, one of the factors is 'accrual of benefits to the consumers' 40. It is humbly

submitted that that instead of leading to any such effect, the enterprises have had a

severely negative impact on it. Accrual of benefit to consumer cannot be viewed only

from the perspective of continuous supply of the tendered product or supply at negotiated

price. The procurement should be at a competitive price, more so when the procurer is a

public authority. When the bids are quoted pursuant to a collusive action by the bidders,

even post bid negotiations cannot guarantee lowest rates because the procurer cannot

ascertain the most competitive price prevalent in the market. This causes loss to the

public exchequer and, in turn, harms the public at large41.

J. LENIENCY PETITIONS FILED BY AMAR NAPWELL, AKBAR NAPWELL,

ANTONY NAPWELL AND TWIRL-ON:

It is humbly submitted before the Hon’ble Tribunal that the abovementioned parties

themselves filed the leniency petitions before the Commission and disclosed relevant

details. It is pertinent to note that the definition of ‘applicant’ under the Lesser Penalty

Regulations, 2009 reads as -

“applicant” means an enterprise, as defined in clause (h) of section 2 of the Act, who is

or was a member of a cartel and includes an individual who has been involved in the

40
Section 19(3)(d), Competition Act.
41
Delhi Jal Board v. Grasim Industries 2017 SCC OnLine CCI 48

31 | P a g e
 cartel on behalf of an enterprise, andsubmits an application for lesser penalty to the

Commission.42

As the abovementioned parties have themselves filed the leniency petition and they’re an

applicant in this case. Hence, by the virtue of the above quoted definition, it leads us to

conclusive conclusion that these parties admit their wrong doing and hence have violated

the law.

K. PENALTIES IMPOSED AND LENIENCY GRANTED ARE APPROPRIATE

ACCORDING TO THE GRAVITY AND EFFECT OF THE CONTRAVENTION:

1. It is submitted that the Commission holds the discretion to impose penalties 43 as it may

deem fit provided that it is within the 10% cap as imposed by Section 27(b). After the

amendment44, the word “shall” was substituted by the word “may” in order to give effect

to such discretion. The penalty provided under Section 27(b) covers “not more than ten

percent of the average of the turnover for the last three preceding financial years”.

However, in case any agreement referred to in section 3 has been entered into by a cartel,

the Commission may impose upon each producer, seller, distributor, trader or service

provider included in that cartel, a penalty of up to three times of its profit for each year of

the continuance of such agreement or ten percent of its turnover for each year of the

continuance of such agreement, whichever is higher. Thus, after establishing a

contravention of Section 3 of the Act, the CCB imposed a penalty of 3% of the turnover

arising out of sale of tables.

2. It may be noted that the twin objectives behind imposition of penalties are:

(a) to reflect the seriousness of the infringement; and

42
Section 2(b), The Competition Commission of India (Lesser Penalty) Regulations, 2009
43
Central Act 39 of 2007
44
Central Act 39 of 2007

32 | P a g e
 (b) to ensure that the threat of penalties will deter the infringing undertakings.

Therefore, the quantum of penalties imposed must correspond with the gravity of the

offence and the same must be determined after having due regard to the mitigating and

aggravating circumstances of the case45.

Commission has followed the two-step process as set by Excel Crop:

1. In line with the decision of Excel Crop Care Limited v Competition Commission of India

and Another46, the commission has taken into account the ‘relevant turnover’ of the

products affected by the infringement. Since, all the Parties were multi-product

companies; adopting the criteria of relevant turnover of the company arising out of sale of

mattresses does not include within its sweep the other products manufactured by the

company, unconnected with the infringement. It, therefore, held that penalty of 3% would

be limited to the product/service in question – in this case, the mattresses – which was the

relevant product for the enquiry. CCB had imposed the penalty the basis of their turnover

of this product.

2. In light of the above discussion a two-step calculation has to be followed while imposing

the penalty under Section 27 of the Act.

Step 1: Determination of Relevant Turnover: -

Firstly, sales of mattresses highlight the turnover as pertaining to products and services

that have been affected by such contravention.

Secondly, due regard to the entity’s audited financial statements or reliable records

reflecting the entity’s relevant turnover or estimate the relevant turnover based on DG’s

investigation is placed.

45
India Glycols Ltd vs Indian Sugar Mills Association,CCI Case No. 94 of 2014.
46
(2017) 8 SCC 47.

33 | P a g e
 Step 2: Determination of Appropriate Percentage of Penalty Based on Aggravating and

Mitigating Circumstances: -

Following the EU categorization of aggravating and mitigating circumstances 47, the CCB

has noted that mitigating circumstances are not present as-

-the mere fact that an undertaking participated in an infringement for a shorter duration

than others will not be regarded as a mitigating;

-the anti-competitive conduct of the undertaking has not been authorized or encouraged

by public authorities or by legislation.

- the quantum and nature of the penalty imposed pays particular attention to the need to

ensure that fines have a sufficiently deterrent effect;

Profits form contravention are linked to heavy damage to Nation’s economy:

1. Competition Appeal Court of South Africa in the case of Southern PipelineContractors

Conrite Walls (Pty) Ltd. v. The CompetitionCommission48 “there is a legislative link

between the damage caused and the profits which accrue from the cartel activity. The

inquiry appears to envisage that consideration be given to the benefits which accrue from

the contravention: that is to amount to affected turnover. By using the baseline of affected

turnover’ the implications of the doctrine of proportionality that is between the nature of

the offence and benefit derived therefrom, the interests of the consumer community and

the legitimate interests of the offender can be taken more carefully into account and

appropriately calibrated.”

2. It is submitted that in the cases of public procurement, savings to public treasuries are

interlinked with competitive procurement regimes. With respect to this, big-rigging by

47
Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of RegulationNo 1/2003, (2006/C
210/02).
48
Case No. 105/CAC/Dec/10.

34 | P a g e
 cartels in public tenders leads to increased coasts not only to the procuring agency but to

the larger public. It is also noted that Government and its agencies have often limited

leverage due to the various administrative, procedural and accountability formalities that

they have to follow as compared to private sector. Thus, efficiency and cost saving are

necessary ingredients of the whole procurement process 49 which are being undermined by

the price fixing and bid-rigging of the concerned Parties.

3. It is highlighted for the consideration of the Hon’ble Tribunal that the gravity of the

offence relates to the average annual procurement of foam mattresses for Railway Coach

Factory and for hotel and household purposes, which is around BR 1200 crores. Any

anticompetitive agreement adversely affecting such a large procurement figures, that too,

over the course of 4-5 years is bound to be taken as a most egregious contravention. Such

conduct deprives not only the consumers but the economy also from exploiting the

optimal capacity utilization and thereby reducing prices.

Leniency Granted has been appropriate:

It is humbly submitted before the Hon’ble Tribunal that the leniency granted to Amar

Napwell, Akbar Napwell, Antony Napwell and Twirl-On is appropriate as the three

brothers made vital disclosure pertaining to price fixing and bid rigging but they became

hostile while the investigation was going on. Per Contra, Twirl-On did not make any

vital disclosure as all the details had already been disclosed by the three brothers but it

did assist while the investigation was going on. Also, all of the parties came forward after

the first dawn raid was conducted at Slumber’s office and all of them had apprehensions

that they’re going to be the next targets. Hence, they did not have any bonafide intentions

rather they wanted to save themselves from being penalized. It can be inferred very
49
Cartel Enforcement and Competition, ICN Special Report, 2018.

35 | P a g e
 clearly that the Appellant No. 1, Appellant No. 2, Appellant No. 3 and Respondent No. 2

did not come forward with clean hands.

The commission also perused the emails received from the brothers’ lawyer in which the

lawyer assisted them saying they should the divide the relevant matter accordingly so that

all of them are granted some leniency.

In the light of above arguments, the penalty imposed and leniency granted is appropriate

given the gravity and effect of contravention.

ISSUE 2: THAT THE OBSERVATIONS OF CCB WITH RESPECT TO CONTENTIONS

RAISED BY APPELLANTS AND RESPONDENT NO. 2 DOES NOT AMOUNT TO

VIOLATION OF PRINCIPLES OF NATURAL JUSTICE:

1. It is submitted that due procedure was followed during the investigation conducted by

DG. That upon receiving the complaint from informants, that is, Mrs. Bhutani and the

CMM of Railway Coach Factory, Bohemia, the CCB had sufficient suspicion about the

collusive activity and bid rigging amongst the Appellants and Respondent No. 2,

therefore the CCB passed a prima facie order and the same was sent to the DG for

immediate action. 

2. The contention of the Appellant No. 4 about the logistical and preparatory work required

to conduct a dawn raid doesn’t hold any ground since the order had to be immediately

acted upon as per the instructions given under CCB’s prima facie order and so was done

by the DG along with complying with all the procedural requirements including the

permission from the Chief Judicial Magistrate. 

Therefore, the DG fulfilled his duty and acted in accordance with the provisions of

section 41 of the Act. 

36 | P a g e
 3. That the CCB is obligated to have reasonable belief  before passing any order and as

observed by the Hon’ble Supreme Court in Calcutta Discount Company Limited v.

Income Tax Officer50 that “The expression 'has reason to believe'...does not mean a

purely subjective satisfaction of the Income-tax Officer but predicates the existence of

reasons on which such belief has to be founded. That belief, therefore, cannot be founded

on mere suspicion and must be based on evidence and any question as to the adequacy of

such evidence is wholly immaterial at that stage”

4. It is submitted that labelling the dawn raid as a fishing expedition incorrect as the CCB

had sufficient reason to arrive at a prima facie opinion. A reference from the European

commission in the case of Nexans France SAS and Nexans SA v European

Commission51can be taken where The ECJ held that the reasons given for an inspection

decision "need not necessarily delimit precisely the relevant market", but the European

Commission is required to state in the decision "the essential characteristics of the

suspected infringement, indicating inter alia the market thought to be affected". The

European Commission must "identify the sectors covered by the alleged infringement

with which the investigation is concerned with a degree of precision sufficient to enable

the undertaking in question to limit its cooperation to its activities in the sectors in

respect of which the Commission has reasonable grounds for suspecting an infringement

of the competition rules, justifying interference in the undertaking's sphere of private

activity, and to make it possible for the Court of the European Union to determine, if

necessary, whether or not those grounds are sufficiently reasonable for those purposes."

50
[1961] 41 ITR 191 (SC)
51
[2014] C-37/13 P

37 | P a g e
 5. The CCB is also duty bound as per section 18 to ‘protect the interest of consumers’. The

parties, herein, have come to an agreement to control the price of mattresses in market

which is also exorbitant as per market standards and the consumers have no option but to

pay such price due to such agreement between parties, hence, the action of CCB to

conduct dawn raid is justified.

6. It is also submitted that while coming to such prima facie opinion, the CCB considered

relevant factors such as the market share of the parties and dependence of consumers on

the enterprise as provided by section 19(4) of the act. 

7. It is also to be noted that as the Hon’ble Supreme Court of India observed in the case of

Competition Commission of India v Steel Authority of India and Another 52 that “the

prima facie order of investigation from the Commission to the DG was nothing more than

a departmental enquiry and is inquisitorial in nature.” In order to handle complaints of

abuse of dominance in an expeditious manner, the Supreme Court suggested that there is

no requirement of notice and following such step would not be violating the principle of

natural justice. The direction of investigation under 26(1) is merely a ‘preparatory step’

and not a decision-making process.

8. It is also pertinent to mention that the CCB did invite due submissions from the parties

individually and the contention that no right of cross-examination was not given to the

parties is not sound as inviting submissions justifies the requirement of parties to defend

their case and thereby raise any argument against any of the parties. Hence, no principle

of natural justice has been violated. The Hon’ble SC of India also observed in the case of

Competition Commission of India v. Steel Authority of India and Another 53 when the CCI

52
(2010) 10 SCC 744 
53
(2010) 10 SCC 744

38 | P a g e
 had invited submissions from the parties, the CCI had met the ends of natural justice by

stating that “it is evident that the overarching requirements of natural justice has been

followed by the Commission i.e. notification and a chance to the opposite party to present

its response—Audi alteram partem.” However, in the present case, the parties could not

have been notified about the dawn raid given the intricacies and the act also does not

necessitate the requirement of a prior notification. 

9. It is also submitted that the DG did not ignore any submissions against the informants

and due consideration was given to all the facts and circumstances of the case at hand.

The slumber’s contention that the CMM had abused his dominant position by raising the

minimum annual turnover requirement and thereby preventing Slumber to become one of

the bidders. It does not hold ground cause firstly, the CMM represents the interests of the

Railway department and act as per the requirements of the passengers, secondly, it has

been exclusively mentioned in the fact sheet54 that Appellant No. 1, Appellant No. 2,

Appellant No. 3 and Respondent No. 2 were the only firms fulfilling the quality and

quantity criteria of Rail Coach Factory Bohemia, therefore, suggesting that the Slumber

could not fit into the requirements of the Rail Coach Factory. Raising the turnover

requirement cannot be categorized as an abuse of dominant position as such action could

also have been attributable to the justified requirements of Rail Coach Factory.   

Therefore, it is submitted that no principles of natural justice have been abrogated by the CCB

and all the actions were taken by their officials within the ambit of the Act.

ARGUMENTS ON BEHALF OF RESPONDENT NO. 2:

ISSUE 3: THAT CCB HAS ERRED IN PENALISING TWIRL-ON-

54
Para 6, Moot Proposition

39 | P a g e
1. Without any prejudice to the above arguments, it is humbly submitted that the penalty

imposed and leniency granted by CCB to Respondent No. 2 is not justified as it has made

‘significant value addition’ in the case by providing a full, true and vital disclosure about the

said agreement between the parties pertaining to the mattress industry, although the said

documents had already been submitted by the Appellant No. 1, Appellant No. 2 & Appellant

No. 3 but that solely cannot become a factor for completely disregarding the submission

made by Respondent No. 2 as the said Appellants strategized in advance as to how could

they shift the liability which was evident from the facts. It is pertinent to note here that the

way in which the leniency petitions had been filed show that it was a well thought plan of the

said Appellants  to prevent Respondent No. 2 from uncovering the reality as it is a stated fact

that the petition was filed in anticipation of Respondent No. 2 approaching the Commission.

The said Appellants knew that the Respondent No. 2 could provide ‘material disclosure’ to

CCB, hence, they took the lead and themselves provided self-incriminating evidence to seek

leniency, it is also corroborated by the emails that had been exchanged between the brothers

and their lawyer. Furthermore, it is submitted that Respondent No. 2 and its individuals have

fully cooperated in the investigation and accordingly, the Commission should have granted

them 100% leniency from penalty.

2. In the case of ITC Limited vs. MRTPNS 55 which states: “The Commission may, if it is

satisfied that any producer, seller, distributor, trader or service provider included in any

cartel, which is alleged to have violated section 3, has made a full and true disclosure in

respect of the alleged violations and such disclosure is vital, impose upon such producer,

seller, distributor, trader or service provider a lesser penalty as it may deem fit, than

leviable under this Act or the rules or the regulations:

55
(1996) 46 Comp. Case. 619

40 | P a g e
 There are a set of conditions to be satisfied for getting benefits under the leniency

programme, the procedure for grant of lesser penalty, and the quantum of penalties that are

waived when lenient treatment is meted out to the cartel member who cooperates with the

Commission by submitting information on the cartel.

3. It is submitted that the Respondent No. 2 had not indulged in price fixing as Appellant No. 1,

Appellant No. 2, and Appellant No. 3 by virtue of holding the majority share in totality, always

voted in favor of a particular strategy as a single block the strategy of the brothers was adopted

with the aim of ensuring that they continued to enjoy approximately 20% market share each, that

is, collectively 60%. Therefore, in order to meet the competition and expand its market share, the

Respondent No. 2 had been engaged in active price parallelism throughout the years to as

observed in Appendix I. 

4. It is also submitted that price parallelism on the face of it does not equate to price fixing.The

same was held in the case of ITC Limited vs. MRTP Commission &Ors. 56 that “in the absence of

any direct evidence of cartel behavior and the circumstantial evidence not going beyond price

parallelism, without there being even a shred of evidence in the proof of any plus 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”. 

5. It is humbly submitted by the counsel that Respondent No. 2 was merely a bait in the

rampant act of collusive bidding as the prices were quoted to avail the bid. However,

considering the fact that the Respondent No. 2 never won the bid as evident from the Table B

of Appendix II, it is apparent that the Respondent No. 2 was never a player in the forbidden

act of the said Appellants.

56
Supra 55

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6. It is further submitted that Respondent No. 2 filed a leniency petition not because of collusive

bidding but only because it wanted to unfold the reality and show that it was not the

Respondent No. 2 who was in-charge and therefore, provided all vital disclosures necessary

documents and also cooperated in the DG’s investigation.

In Re-Alleged cartelization in flashlight market in India57, the Commission concluded that in

the absence of cogent evidence, it cannot be concluded that the parties formed a cartel.

However, the order does give a flavor that there was an exchange of commercially sensitive

information. However, the alleged exchange did not establish that there was any agreement

upon the terms of increasing or determining prices.

7. That there is a need to examine the definition of “bid-rigging” as provided under Section 3 of

the Act. Explanation to Section 3 of the Act provides the following:

“Section 3:

Explanation.—For the purposes of this subsection, "bid rigging" means any agreement,

between enterprises or persons referred to in sub-section (3) engaged in identical or similar

production or trading of goods or provision of services, which has the effect of eliminating

or reducing competition for bids or adversely affecting or manipulating the process for

bidding.”

Thus, for “bid-rigging” to take place, there needs to be-

a. elimination or reduction of competition for bids,

b. an adverse effect on or manipulation of the bidding process- neither of these conditions

are fulfilled.

57
Suo Motu Case No. 01 of 2017

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 In Re: Anticompetitive conduct in the dry-cell batteries market in India58, the Commission

initiated an investigation pursuant to Panasonic's leniency application wherein there existed a

bi-lateral ancillary cartel between Panasonic's controlled entity in India with another battery

manufacturer in relation to institutional sales. The Commission concluded that there was a

cartel and gave a 100% reduction in penalty to Panasonic while penalizing Godrej and Boyce

Manufacturing.

8. In the case of broadcasting service providers case59:

Keeping in view the stage at which the lesser penalty application was filed, co-operation

extended in conjunction with the value addition provided by the evidences furnished by the

lesser penalty applicants in establishing the existence of cartel, CCI granted Globecast and its

individuals 100 percent reduction in the penalty and 30 percent reduction in penalty to ESCL

and its individuals.

9. The first order passed by the CCI was in early 2017, in Cartelization in respect of tenders

floated by Indian Railways for supply of Brushless DC Fans and other electrical items 60,

wherein the CCI penalized three companies i.e., M/s Pyramid Electronics (Pyramid), M/s R.

Kanwar Electricals (Kanwar) and M/s Western Electric Trading Company (Western)

including its office bearers for bid rigging. The CCI granted Pyramid (and its office bearers) a

seventy five percent reduction in the total leviable penalty for breaking ranks and turning into

an approver. 

10. It is submitted that the Respondent No. 2 also turned towards the DG and filed for leniency

petition by disclosing all the relevant information and material disclosure, it helped DG in the

58
Suo Motu Case No. 01 of 2018
59
Suo Motu Case No. 02 of 2013
60
Suo Moto Case No. 03 of 2014

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 proceedings and turned an approver though it was a bait in collusive bidding as it neither got

any tender in its favor so it should get some more leniency in the process and lesser penalty. 

In re: Cartelization in respect of zinc carbon dry cell batteries market in India 61, all the three

cartelists approached the CCI requesting for lenient treatment to the exclusion of the

association. The CCI passed on the benefit of leniency to a certain extent to Eveready

Industries Ltd. and Indo National Ltd. including their office bearers while granting complete

immunity to Panasonic Energy India Co. Ltd. This was the first time that the CCI granted

complete immunity to the first leniency applicant including its office bearers, as the

investigation was initiated at the behest of Panasonic's disclosure to the CCI.

61
Suo Motu Case No. 02 of 2016

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 PRAYER OF RELIEF

It is humbly submitted before the Hon’ble National Company Law Appellate Tribunal, Bohemia

that in the light of the facts stated, issues raised, arguments advanced and authorities cited, the

counsel of the respondent namely CCB and informants most humbly and respectfully prays that

this Hon’ble Tribunal may graciously be pleased to adjudge and declare that:

- It upholds the order passed the Competition Commission of Bohemia.

Counsel of Twirl-On most humbly and respectfully prays that this Hon’ble Tribunal may

graciously be pleased to adjudge and declare that:

- The leniency granted to Twirl-On shall be 100%.

Or pass any other order and make directions as the Hon’ble Tribunal may deem fit to meet the

interest of justice, equity and good conscience in the instant case.

And this for this act of kindness, appellants shall duty bound forever pray.

Respectfully submitted by: COUNSEL ON BEHALF OF THE RESPONDENTS

Place: Bohemia

Date: 12 August, 2019

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