COMPETITION APPELLATE TRIBUNAL

NEW DELHI

APPEAL No. 51 of 2015

[Under Section 53-B of the Competition Act, 2002 against order dated
29.10.2014 passed by the Competition Commission of India in Case No. 50 of
2014].

CORAM

Hon’ble Shri Justice G.S. Singhvi

Chairman

Hon’ble Shri Rajeev Kher

Member

In the matter of :

Prem Prakash,
Proprietor of Venus Testing and
Research Laboratory,
Industrial Area, Khurai Road,
BINA, Dist. : Sagar,
Madhya Pradesh – 470113. … Appellant

Versus

1. The Principal Secretary,

Madhya Pradesh Public Works Department
Government of Madhya Pradesh,
Vallabh Bhawan,
Mantralaya, Bhopal
Madhya Pradesh – 482 004.

2. The Director General,

Central Public Works Department,
Nirman Bhawan,
New Delhi – 110001.

3. Competition Commission of India

Hindustan Times House,
18-20, Kasturba Gandhi Marg,
New Delhi – 110001. … Respondents

Appearances : Shri Prem Prakash, Appellant in person.

Shri Sanjib K. Mohanty, Advocate for Respondents

Nos. 1 and 2.
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ORDER

Whether the activities of Respondents Nos. 1 and 2 fall within the

definition of ‘enterprise’ contained in Section 2(h) of the Competition Act,

2002 (for short ‘the Act’) is the question which arises for consideration in this

appeal filed against order dated 29.10.2014 passed by the Competition

Commission of India (for short, ‘the Commission’), which declined to entertain

the information filed by the appellant with the allegations of abuse of

dominant position by Respondents Nos. 1 and 2 and closed the case under

Section 26(2) of the Act.

2. The appellant is the proprietor of Venus Testing and Research

Laboratory which deals in chemical material testing etc. The appellant claims

that his laboratory has been assessed by the Accreditation Commission for

Conformity Assessment Bodies and approved that it meets the requirements

of International Standard ISO/IEC 17025:2005.

3. On 12.07.2014, the appellant filed an information under Section

19(1)(a) against Respondent Nos. 1 and 2 alleging that they have refused to

consider his laboratory for testing material on the ground that it has not been

accredited by the National Accreditation Board for Testing & Calibration

(NABL) and this amounts to violation of Sections 3 and 4 of the Act. In

support of his assertion, the appellant relied upon Circulars dated

03.09.2011 and 16.09.2013 issued by the Public Works Department,

Government of Madhya Pradesh. For the sake of reference, the English

translation of the circulars (as filed by the appellant) is reproduced below :

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“Government of Madhya Pradesh

Public Works Department, Mantralya Bhopal

No.F/585/2012/10 WO 5095 Bhopal, Dated: 03/09/12

1. Principal Engineer, Public Works Department,

Bhopal;

2. Chief Engineer, Public Works Department, Capital

Zone, Bhopal;

3. Chief Engineer, Public Works Department, Sagar

Zone, Sagar.

Subject:- In order to ensure the quality of works of the

Public Works Department.

Ref.:- Your T.No.401/Sa/Misc/155/2012/1803

Dated 07/07/2012

That keeping in view the recommendations made by

you, the State Government is hereby decided to insert the

following Additional Special Condition in the N.I.T. to get the

10% of the prescribed testings of the materials to be used in

construction works according to the standard conducted

from Accredited Material Testing Laboratory Accredited by

the National Accreditation Board for Testing & Calibration

of Laboratories.

For the road bridge works, the 10% Test Accredited

Material Testing Laboratory shall be conducted by the

Contractor within the prescribed Frequency, as per the

agreement on the expenses of the Contractor.

The aforesaid additional special condition shall be

tentatively included in the works for Sagar and Bhopal zones

only.
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Enclosure:- Nil

In the name & By the order of the

Governor of M.P.
(R.K. Mehra)
Additional Secretary
M.P. Government,

Public Works Department, Bhopal, Dated 3/7/12

Copy to:- The Personal Secretary to Hon’ble Public Works

Department, Bhopal forwarded for information.

Enclosure-Nil (R.K. Mehra)

Additional Secretary
M.P. Government

-----------------------------------------------------------------------
“Government of Madhya Pradesh

Public Works Department, Mantralya Ballabh

Bhawan, Bhopal

No.F/585/2012/10 WO 5098 Bhopal, Dated: 16th September, 13

1. Principal Engineer, Public Works Department,

Bhopal;

2. Chief Engineer, Public Works Department, Capital

Zone, Bhopal;

3. Chief Engineer, Public Works Department, Sagar

Zone, Sagar.

Subject:- In order to ensure the quality of works of the

Public Works Department.

Ref.:- Government’s Memo No.F 58/5 /2012 /19

Yo/5098 Dated 3.9.2012

That in order to ensure the quality of works of the

Public Works Department, the State Government vide above

referred order dated 03.09.2012 had inserted an Additional

Special Condition in N.I.T. to get conducted at least 10% of

the prescribed testing of the materials to be used in

construction works according to the standard, from the

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Accredited Material Testing Laboratory certified by the

National Accreditation Board for Testing & Calibration

Laboratories (NABL) on the expenses of the Contractor

tentatively for the Bhopal zone and Sagar Zone only, the

Stage Government is hereby issuing directions by making

amendment in the above referred Government Order dated

03/09/2012 that in future in all Zones comes under the

Public Works Department (including the P.I.U.), all the

Construction Works and Strengthening and Renewal works

costing more than 50 lakhs, at least 20% of the prescribed

number of testing of the materials according to the

standards, shall be got conducted by the Accredited Material

Testing Laboratory certified by the NABL on the expenses of

the Contractor and Government wants that these directions

shall be included in all the N.I.T. by way of Special

Condition.

In the name and By the order

of the Governor of M.P.

(R.K. Mehra)
Additional Secretary
M.P. Government, Public Works Department, Bhopal,
Dated : __ September, 2013

F.58/5/2012/19/Ya

Copy to:-

1. All the Superintending Engineer, Public Works

Department, Madhya Pradesh;
2. All the Executive Engineers, Public Works
Department, Madhya Pradesh for Information and
necessary action.
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Additional Secretary
M.P. Government, Public Works Department, Bhopal,
Dated : __ September, 2013”

4. The appellant also referred to Office Memorandum No. DG/MAN/308

issued by Respondent No. 2 modifying Clause 53.20 of CPWD Works Manual,

2014, the relevant portions of which are extracted below :

“Existing Provision :

53:20 : Outside/ Independent Testing Facilities

Extensive testing of the materials used for construction is a

prerequisite for attaining high quality of the work. This

shall also require specialized tests, physical, chemical,

ultrasonic, x-ray and various other types of tests which

cannot possibly be carried out in a site laboratory. These

tests also require specialized personal who regularly deal in

such testing. Therefore the need arise for carrying out the

tests in outside laboratories. These laboratories may be in

the Government sector, Semi Government or Private sector.

The outside private laboratories shall be short listed before

hand by EE and approval obtained from SE. In case of

laboratories in the private sector, the past record and

reputation of the laboratory must invariably be given due

consideration. The infrastructure in these laboratories can

also be inspected before they are short listed.

Modified Provision :

53.20 : Outside/Independent Testing Facilities

Extensive testing of the materials for construction is a pre-

requisite for attaining high quality of the work. This shall

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also require specialized tests, physical, chemical,

ultrasonic, X-ray and various other types of tests which

cannot possibly be carried out in a site laboratory. These

tests also require specialized personnel who regularly deal

in such testing. Therefore the need arise for carrying out

the tests in outside laboratories. These laboratories may

being the Government sector, Semi Governments or Private

Sector. All govt. Institutions, Indian Institutes of

Technology, National Institutes of Technology, Central and

State research Centers, Centrally and State funded

laboratories stands approved. No approval is required for

testing in these laboratories/ institutes. However, the

outside private laboratories shall be approved in the

following manner:-

1. The ADG will approve the private lab on the

recommendation of Chief Engineer if no approved

labs as above is available within 200 km of the work

site. A particular private lab will be approved for

specified tests and work/project. Approving

authority will specify the tests while approving the

laboratory.

2. A lab will have to submit details of space available

equipments, staff (Technical and non-Technical),

Accreditation and approved from various

department/ institutes. Lab must be NABL approved.

3. Initial approval of lab should be for one year and can

be revalidated for further one year and so on.

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4. Every lab will be audited for maintenance and

calibration of equipments and employment of staff

prior to approval/ revalidation.”

5. The appellant alleged that by incorporating the conditions of testing

materials used for construction by laboratories accredited only by the

National Accreditation Board for Testing and Calibration Laboratories (NABL),

the respondents have imposed arbitrary and unreasonable conditions of

eligibility adversely affecting competition in the relevant market.

6. The Commission identified geographic area of India as the relevant

geographic market for the purpose of services of accreditation of laboratories.

It then referred to the functions of NABL and refused to entertain the

grievance made by the appellant on the ground that the Opposite Parties do

not come under the definition of ‘enterprise’ in terms of Section 2(h) of the Act

because they are not directly engaged in any economic or commercial

activities. The relevant portions of the impugned order are extracted below :

“4. Facts of the case reveal that the grievance of the

Informant is primarily against the Principal

Secretary, PWD and the Director General, CPWD for

imposing the alleged abusive condition in their

abovesaid orders in contravention of the provisions of

section 4 of the Act. The said condition alleged to

have promoted a single accreditation body

consequently affecting the business of those

laboratories which are not accredited with NABL.

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5. For examination of the alleged abusive conduct of the

Opposite Parties, it is required first to delineate the

relevant market where the Opposite Parties are

operating and then to assess its position of

dominance in the relevant market so delineated and

finally, examination of conduct in case it is found to

be in a dominant position in the relevant market.

6. The relevant product market may be defined as the

“services of accreditation of laboratories” in the

instant case. In case of a small but significant

increase in the price of accreditation, there is no

broader market to which a laboratory can shift to. It

will have to avail of accreditation services by the

authorized agency within the parameters of services

of accreditation of laboratories. The laboratories

throughout India can avail of accreditation services

through the accreditation body authorized for the

same in the territory of India. Thus, the geographic

area of “India” appears to be the relevant geographic

market in the instant case.

7. Accordingly, “services of accreditation of laboratories

in India” is considered as the relevant market in the

instant case.

8. For the applicability of the provisions of Section 4, the

Opposite Parties must be an enterprise in terms of

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section 2(h) of the Act. In the instant case, the

allegation of the Informant is primarily against the

Principal Secretary, PWD in the Government of

Madhya Pradesh and the Director General, CPWD in

New Delhi. CPWD, as an attached office of the

Ministry of Urban Development, has been entrusted

with the execution of Public Works of all Central

Government Organizations (except Defence and

Railways). It is also charged with the responsibility of

maintaining the building assets of the Central

Government. PWD is the premier agency engaged in

planning, designing, construction and maintenance

of Government assets in the field of built environment

and infrastructure development. Assets in built

environment include Hospitals, Schools, Colleges,

Technical Institutes, Police Buildings, Prisons,

Courts etc. and assets in infrastructure development

include Roads, Bridges, Flyovers, Footpaths,

Subways etc.

9. NABL is an autonomous body under the aegis of

Department of Science & Technology, Government of

India, and is registered under the Societies

Registration Act, 1860. NABL has been established

with the objective to provide Government, Industry

Associations and Industry in general with a scheme

for third-party assessment of the quality and

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technical competence of testing and calibration

laboratories. Government of India has authorised

NABL as the accreditation body for Testing and

Calibration Laboratories. Government of India has

authorized NABL as the sole accreditation body for

Testing and Calibration laboratories.

10. NABL provides laboratory accreditation services to

laboratories that are performing tests / calibrations

in accordance with NABL criteria based on

internationally accepted standard for laboratory

accreditation ISO/IEC 17025.

11. According to the information on NBAL’s website,

these services are offered in a non-discriminatory

manner and are accessible to all testing and

calibration laboratories in India and abroad,

regardless of their ownership, legal status, size and

degree of independence. It has established its

Accreditation System in accordance with ISO/IEC

17011:2004, which is followed internationally. NABL

also compiles to the requirement of APLAC MR001 for

the fulfilment of APLAC MRA and ILAC Arrangements.

12. NABL is the sole accreditation body authorised by the

Government of India for Testing and Calibration

laboratories.
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13. The activities being performed by the Opposite Parties

do not come under the definition of ‘enterprise’ in

terms of Section 2(h) of the Act as they are not directly

engaged in any economic and commercial activities.

The Opposite Parties have no existence in the relevant

market, except for laying down norms as to the

authorization of accreditation bodies for specific

purposes. Their role is limited to planning, designing,

construction and maintenance of Government assets,

as such provisions of section 4 of the Act are not

attracted against them. The Opposite Parties have

issued circulars only and they are not operating in

the relevant market. Therefore, the conduct of the

Opposite Parties does not give rise to any competition

concern.”

[Underlining is ours]

7. In Rajat Verma Vs. Haryana Public Works (B&R) Department and

others [Appeal No. 45 of 2015] decided on 16.02.2016, this Tribunal

considered the question whether Haryana Public Works Department falls

within the definition of the term ‘enterprise’ under Section 2(h) of the Act and

answered the same in affirmative by recording a detailed order and set aside

a somewhat similar order passed by the Commission refusing to order an

investigation into the allegations of abuse of dominance made by the

appellant in that case.

8. By relying upon the order passed in Rajat Verma’s case, which shall be

read as part of this order, we hold that the view taken by the Commission on
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the maintainability of the information filed by the appellant is legally

unsustainable and the impugned order is liable to set aside.

9. In the result, the appeal is allowed. The impugned order is set aside

and the matter is remitted to the Commission for considering whether the

allegations contained in the information filed by the appellant makes out a

prima facie case requiring investigation under Section 26(1).

10. However, it is made clear that the observations made in this order shall

not, in any manner, influence the decision to be taken by the Commission

under Section 26(1) of the Act.

[G.S. Singhvi]
Chairman

[Rajeev Kher]
Member

17th February, 2016