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10th NLUJ Antitrust Moot, 2019


Winner Team Memorial - Appellant

BEFORE THE KING'S COMPETITION APPELLATE TRIBUNAL, REPUBLIA


UNDER SECTION 53-B OF THE COMPETITION ACT, 2002
APPEAL NO. 1 OF 2019
REFERENCE CASE NO. 1 OF 2014
G-One Pharmaceuticals & Ors. . . Appellants;
Versus
Competition Commission of Republia . . Respondent.
ALONG WITH
G-One Pharmaceuticals . . Applicant;
Versus
Competition Commission of Republia . . Respondent.
MEMORIAL FOR THE APPELLANTS
TABLE OF CONTENTS
TABLE OF CONTENTS ii
LIST OF ABBREVIATIONS vi
INDEX OF AUTHORITIES ix
STATEMENT OF JURISDICTION xii
STATEMENT OF FACTS xiii
ISSUES FOR CONSIDERATION xvi
SUMMARY OF ARGUMENTS xvii
WRITTEN ARGUMENTS 1
I. G-ONE'S APPLICATION SHOULD BE UPHELD BY THE KCAT. 1
A. The Application for a Summary Hearing is maintainable. 1
i. The KCAT has power to regulate its own procedure. 1
ii. There are no complicated questions of fact or law in the present 2
case.
iii. Alternatively, the KCAT can adjudicate upon complicated questions 2
of facts or law
iv. There is no requirement of recording detailed evidence by the KCAT. 3
B. Alternatively, the Appeal by G-One can be disposed off 4
summarily.
C. Price fixation of an essential commodity cannot be challenged 4
presently.
i. Price Fixation is a policy decision of the Republian Government. 5
ii. Price Fixation is a legislative activity with limited examination. 6
iii. Alternatively, the CCR could have preferred a review of the ceiling 7
prices.
D. The Republian Government has the jurisdiction to examine the 7
price ceiling or production of any essential commodity and not
the CCR.
i. The Prices were not determined by market forces but fixed by the 8
Government.
ii. The RECA, 1965 and the DOPE Order, 2010 would regulate the 8
essential commodities and not the Competition Act, 2002.
iii. The Republian Government could have chosen to direct the 9
manufacturers to increase production during the harsh Republian
Winter.
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iv. Similarly, the Government could have fixed the ceiling price as it 9
deemed fit.
v. Primacy should be given to respective regulators under the two acts. 10
vi. The Manufacturers including G-One strictly adhered to the ceiling 11
prices.
E. The DG contravened the principles of natural justice during the 11
search and seizure.
i. The DG failed to provide right to legal representation. 11
II. G-ONE HAS NOT VIOLATED SECTION 4 OF THE 2002 ACT . 14
A. The relevant market presently is the market for 14
dextromethorphan to cure dry cough.
B. G-One is not placed in a dominant position. 15
i. G-One is not capable of operating independently of competitive 16
forces prevailing in the relevant market.
ii. G-One is not capable of affecting rivals in the relevant market. 17
iii. G-One's alleged market share of 42% is of no consequence 17
presently.
iv. G-One does not have economic power and does not have any 18
commercial advantage over Competitors.
C. Alternatively, G-One Pharmaceuticals has not abused its 18
dominance.
i. G-One Pharmaceuticals has not indulged in unfair pricing. 19
ii. Secondly, the DOPE Ceiling Price only pertained to retailers and 20
retailers could sell the syrup at a price higher than the ceiling.
iii. G-One Pharmaceuticals has not limited production and therefore not 20
contravened Section 4(2)(b)(i) of the 2002 Act.
iv. G-One could not have increased prices by limiting production since 21
it was already selling the cough syrup at the DOPE Ceiling Price.
III. THE DG AND THE CCR CANNOT PROCEED AGAINST THE DOPE DEPARTMENT. 23
A. The DOPE Department is not an enterprise for the purposes of 23
Section 2(h).
B. The DOPE Department merely performs statutory functions. 24
C. The DOPE Department has not indulged in any commercial or 25
economic activity
D. The DOPE Department in not in control of goods. 26
E. No prima facie case was made out against the DOPE 26
Department.
F. There was no appreciable adverse effect on competition due to 27
the DOPE Department.
IV. THE MANUFACTURERS AND THE DOPE DEPARTMENT HAVE NOT VIOLATED 29
SECTION 3(3) OF THE ACT .
A. There was no agreement between the manufacturers. 29
i. The Pharmaceutical industry reflects oligopolistic characteristics. 29
ii. Conscious price parallelism alone may not prove an agreement. 30
iii. Conscious Parallelism in and of itself cannot be considered as 31
collusion.
iv. Price parallelism cannot be regarded to be an evidence of cartel 31
agreement.
v. Similar pricing was a result of profit maximisation objective. 31
B. There was no agreement between the manufacturers and the 32
DOPE Department
i. The DOPE Department is not an enterprise under Section 2(h) of the 32
Act.
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ii. The findings of the DG showed no evidence to suggest an agreement 33


between the parties.
C. Alternatively, there was no appreciable adverse effect on 33
Competition.
i. The entry barriers were not due to the Manufacturers but due to the 34
Drugs and Cosmetics Act, 1940.
ii. There is accrual of benefits to the customers. 34
iii. The manufacturers conformed to the DOPE Ceiling Prices. 35
iv. The Manufacturers were not involved in Black Marketing. 35
v. The Republian government could have directed the manufacturers to 35
increase production and supply.
PRAYER A
LIST OF ABBREVIATIONS
% Percentage
& And
§ Section
¶ Paragraph
AIR All India Reporter
Bom Bombay
CCI Competition Commission of India
CCR Competition Commission of Republia
Ch. Chapter
CIT Commissioner of Income Tax
CompLJ Company Law Journal
CPJ Consumer Protection Judgements
Crim. Criminal
CTR Current Tax Reporter
DE Delhi
Del Delhi
DG Director General
DLT Delhi Law Times
DOPE Drugs Overpricing Evaluation Order
DPCO Drugs Price Control Order
DRJ Delhi Reported Journal
ECJ European Court of Justice
ECLI European Case Law Identifier
ECR European Court Reports
ed. Edition
Fr. France
i.e. That is
IPO Initial Public Offering
KCAT King's Competition Appellate Tribunal
Ker Kerala
Ltd. Limited
MANU Manupatra
Mar March
MCX Multi Commodity Exchange
No. / NO. Number
Nov. November
NSE National Stock Exchange
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Ors. Others
p. Page
QB Queen's Bench
R&D Research and Development
Re Reference
RECA Republian Essential Commodities Act
RPD Republian Dollars
SC Supreme Court
SCC Supreme Court Cases
SCL SEBI and Corporate Laws
SCR Supreme Court Reports
Sd/— Signed
UP Uttar Pradesh
US United States
v. Versus
WHO World Health Organisation
INDEX OF AUTHORITIES
A. ARTICLES
1. AK DASGUPTA, “The Theory of Black Market Prices” (1950) available at 20
https : //www.epw.in/system/files/pdf/1950_2/3/the_theory_of_black_market_prices.pdf
B. BOOKS
1. SM DUGAR, GUIDE TO COMPETITION LAW (6th ed. 2016) 1, 9, 14, 16,
18, 19, 20,
34
2. ABIR ROY & JAYANT KUMAR, COMPETITION LAW IN INDIA (2nd ed. 2018) 14, 16, 18,
19
3. RICHARD WHISH & DAVID BAILEY, OXFORD'S COMPETITION LAW (7th ed. 2012) 30
C. FOREIGN CASES
1. Cour de Cassation [Société Europcar France] [Supreme Court for judicial 12
matters] crim., Nov. 27, 2013, Bull. crim., No. 102 (Fr.)
2. Dow Chemical Ibérica v. Commission, 1989 ECLI 380 12
3. Fenin v. Commission, 2006 ECLI 453 26
4. Hoffmann-La Roche v. Commission, [1979] ECR 461 16
5. Michelin v. Commission of the European Communities, [1983] ECR 3451 18
6. Pett v. Greyhound Racing Association, (1970) 1 QB 46 12
7. Re : Pergamon Press Ltd. (1971) 1 Ch. 388 13
8. United Brands v. Commission, [1978] ECR 207 16, 19
9. Walker Process v. Food Machinery, 382 US 172 (1965) 14
D. INDIAN CASES
1. All India Tyre Dealers' Federation v. Tyre Manufacturers, 2012 SCC OnLine 30
CCI 65
2. Atos Wordline v. Verifone India Sales, 2015 CompLR 327 15
3. Biocon v. Hoffman La Roche 20
4. Builders Association v. Cement Manufacturers Association, 2017 SCC OnLine 31
CCI 21
5. CCI Chambers v. Development Credit Bank, (2003) 7 SCC 233 : AIR 2004 3
SC 184
6. CCI v. Bharti Airtel, (2019) 1 CompLJ 1 (SC) 4, 10, 11,
33
7. CCI v. JCB India, (2014) 146 DRJ 531 7
8. CCI v. Oriental Rubber, 251 (2018) DLT 137 12
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9. Debapriyo Bhattacharya v. State of Andhra Pradesh, 2012 CompLR 172 25, 26


10. Department of Agriculture v. Mahyco Monsanto, 2016 SCC OnLine CCI 93 7, 8
11. Dhakeshwari Cotton Mills v. CIT, AIR 1955 SC 65 2
12. Dilip Modwil v. IRDAI 24
13. Grasim Industries v. CCI, 2014 CompLR 109 (Delhi) 27
14. Gupta Sugar Works v. State of UP, 1987 Supp SCC 476 : AIR 1987 SC 5, 6
2351
15. In Re : Glass Manufacturers of India, 2012 SCC OnLine CCI 7 31
16. India Sugar Mills Association v. Indian Jute Mills Association, 2014 CompLR 23
225 (CCI)
17. James v. Federal Bank, III (2005) CPJ 360 (Ker) 3
18. JJ Merchant v. Srinath Chaturvedi, (2002) 6 SCC 635 : AIR 2002 SC 2931 3, 4
19. Jyoti Swaroop Arora v. Tulip Infratech, 2015 SCC OnLine CCI 26 35
20. Manju Tharad v. Eastern India Motion Picture Association, 2012 CompLR 23
1178 (CCI)
21. MCX v. NSE India, 2011 CompLR 129 (CCI) 17, 32
22. Mineral Enterprises v. Ministry of Railways, [2013] 118 SCL 55 (CCI) 6, 24
23. Om Datt Sharma v. CCI, 2015 CompLR 529 14
24. Prag Ice and Oil Mills v. Union of India, (1978) 3 SCC 459 : AIR 1978 SC 6
1296
25. Rajasthan Cylinders v. Union of India, 2018 (13) SCALE 493 32
26. Rajat Verma v. Public Works (B&R) Department, [2015] 130 SCL 1 (CCI) 25
27. Reckitt Benkiser v. Union of India, 2015 (151) DRJ 381 6, 8
28. Sandhya Drug Agency v. Assam Drug Dealers, 2014 CompLR 61 (CCI) 20
29. Santosh Kumar v. Bhai Mool, AIR 1958 SC 321 2
30. Shamsher Kataria v. Honda Siel Cars, 2014 CompLR 1 (CCI) 16
31. Siemens India v. K. Subramaniam, (1983) 34 CTR (Bom) 23 2
32. Sitaram Sugar v. Union of India, (1990) 3 SCC 223 5
33. Sodhi Transport v. State of UP, AIR 1986 SCR (1) 939 34
34. Telefonaktiebolaget LM Ericson v. CCI, (2016) 4 CompLJ 122 (Del) 9
35. Union of India v. Cynamide India, (1987) 2 SCC 720 : AIR 1987 SC 1802 6
36. Union of India v. R. Gandhi, (2010) 11 SCC 1 5
37. Versatile Commotrade v. Balraj 4
E. NOTIFICATIONS
1. Resolution No. 33/7/97-PI.I dated 29th August 1997 19
F. ONLINE SOURCES
1. ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, GLOSSARY OF 31
I NDUSTRIAL ORGANISATION ECONOMICS AND COMPETITION LAW 26 (1993) available at
http://www.oecd.org/regreform/sectors/2376087.pdf
2. ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, POLICY ROUND 29
TABLES 1 (1999) available at
https : //www.oecd.org/daf/competition/1920526.pdf
3. PATRICK REY ON THE USE OF ECONOMIC ANALYSIS CARTEL DETECTION, available at 29
http://www.eui.eu/RSCAS/Research/Competition/2006(pdf)/200610-COMPed-
Rey.pdf
G. STATUTES AND RULES
1. Competition Act, 2002, No. 12, Acts of Parliament, 2002 (India) 1, 2, 3, 14,
16, 19
2. Drugs Price Control Order, 2013 7, 9, 10
3. The Advocates Act, 2002, No. 25, Acts of Parliament, 1961 (India) 12
STATEMENT OF JURISDICTION
The Appellants have preferred the present appeal under Section 53-B of the Competition
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Act, 2002 against the order of the CCR dated 10th January, 2019. Further, G-One
Pharmaceuticals has filed an application under Section 53-O of the Competition Act, 2002.
STATEMENT OF FACTS
I. THE KINGDOM OF REPUBLIA AND ITS COMPETITION LAW
The Kingdom of Republia (“Republia”) is a vast nation with a large population. In 2002, the
Republian Parliament enacted the Competition Act, 2002 (“2002 Act”). The Act established the
Competition Commission of Republia (“CCR”) to promote competition and prohibit anti
competitive practices by orders imposing suitable penalties. The CCR directs its investigative
arm, the Director General (“DG”) to open investigations against perceived anti-competitive
conduct upon finding that a prima facie case is made out. The orders of the CCR are appealable
before the Kings Competition Appellate Tribunal (“KCAT”).
II. THE ANTEGRIAN AGGRESSION AND THE SUBSEQUENT ENACTMENT OF THE ESSENTIAL
COMMODITIES ACT , 1965.
In 1962, Republia was attacked by its neighbour, Antegria and the attack was regarded as
the Antegrian Aggression. During the aggression, many large Republian traders hoarded
essential commodities such as medicines and sold them at shockingly high prices. To counter
the hoarding, Republia enacted the Republian Essential Commodities Act, 1965 (“RECA”). The
RECA allowed the government to regulate the production, supply and distribution of
commodities considered ‘essential’. Further, the government could also impose price ceilings or
other forms of market control.
III. THE DOPE ORDER
In 1972, the Republian Government realised that drug prices in Republia were significantly
higher than those in neighbouring countries. In an effort to combat continued hoarding, the
government notified the Drugs Over Pricing Evaluation Order, 1972 (“DOPE Order”) under the
RECA. The DOPE Order provided for cost based ceiling prices on 447 drugs listed in its
schedule. Further, the DOPE department was created to enforce the DOPE order. The
manufacturers who sold the drugs at prices above the ceiling were subject to strict penalties
under the RECA, including cancellation of licenses, fines and imprisonment.
IV. MARKET BASED PRICE CONTROLS FOR ESSENTIAL DRUGS
In 2008, Margaret Nykwil, the Republian Minister for Chemicals and Fertilisers announced
that the government was considering a major overhaul to the DOPE Order. She said that cost-
based price controls provided insufficient incentives for the manufacturers to chase efficiencies.
Further, her party wanted to provide cheaper healthcare by imposing market based price
controls. The scope of price control was limited to ‘essential’ drugs and finally on 01st April,
2010, the government notified substantial amendments to the DOPE Order to impose market
based price controls.
V. THE REPUBLIAN WINTER OF 2013
In the winter of 2013, there was a sudden dip in temperature in Republia and large parts
witnessed snowfall for the first time in recorded history. The unprecedented weather led to a flu
epidemic of epic proportions. Children were the worst hit by this scourge. Dry Cough was the
main symptom of the flu and doctors prescribed dextromethorphan based cough syrup to
alleviate the irritation. This crisis finally abated in March 2014 alongside the onset of spring and
the airlift of hundreds of tons of humanitarian aid, including WHO supplied essential medicine
kits.
VI. THE KETCHUM COMMISSION REPORT
Due to the flu epidemic and the ensuing public disaster, a total of 7,000 Republians died.
Thereafter, the government constituted an inquiry commission headed by Banner Ketchum, a
member of the Republian Parliament. The report of the Ketchum Commission [“KCo Report”]
was tabled in the Republian Parliament and it contained two major findings, first that all brands
of cough syrup were priced identically at the price permitted by the DOPE Order and second
that Cough Syrup manufacturers did not increase production despite the onset of the epidemic.
VII. REFERENCE TO CCR AND THE SUBSEQUENT INVESTIGATION
On 03rd December, 2014, the Government referred the present matter to the CCR under
Section 19(1)(b) of the Competition Act, 2002. Later, without holding a preliminary conference,
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the CCR found that a prima facie case existed and directed the DG to conduct an investigation.
On 15th July 2015, the DG raided the offices of all manufacturers with a market share of 1% or
more. A wide variety of documents were seized, despite the protests of the manufacturers that
principles of natural justice were violated as their lawyers were not present. Thereafter, the DG
submitted its report to the CCR.
VIII. CCR'S FINDINGS AND THE PRESENT APPEALS
The CCR imposed a penalty on the manufacturers amounting to 2% of their average
turnover of their cough syrup businesses in the period investigated, in addition to a nominal
penalty of 100,000 Republian Dollars against the DOPE Department. Aggrieved, the
Manufacturers preferred appeals against the order of the CCR before the KCAT. Further, G-One
Pharmaceuticals separately filed an application and requested the KCAT to dismiss and set
aside the findings of the CCR, and as a gesture of goodwill, stated that they would lower their
prices to 30% if the application was allowed. The KCAT listed the matter for arguments on 15th
March, 2019.
ISSUES FOR CONSIDERATION
I. WHETHER G-ONE'S APPLICATION BE UPHELD BY THE KCAT?
II. WHETHER G-ONE HAS VIOLATED SECTION 4 OF THE ACT ?
III. WHETHER THE DG AND THE CCR CAN PROCEED AGAINST THE DOPE DEPARTMENT?
IV. WHETHER THE MANUFACTURERS AND THE DOPE DEPARTMENT HAVE VIOLATED SECTION 3
(3) OF THE ACT ?
SUMMARY OF ARGUMENTS
I. G-ONE'S APPLICATION SHOULD BE UPHELD BY THE KCAT.
G-One's application to set aside the findings of the CCR by way of a summary hearing is
maintainable. This KCAT has the power to regulate its own procedure and is governed by the
principles of natural justice as has been provided under Section 53-O of the 2002 Act.
Presently, this application has been filed in conformity with the principles of natural justice. G-
One submits that it has at all times complied with the DOPE Ceiling Price.
Secondly, G-One submits that the CCR did not have jurisdiction to examine any anti-
competitive practices but the Republian Government had the jurisdiction to either direct G-One
to increase production or decrease the prices under the DOPE Order, 2010. However, the
Government never chose to give any such direction and therefore, that itself indicates that G-
One did not violate the provisions of the Competition Act, 2010. G-One submits that the
Government is the sectoral regulator to regulate prices and production of essential commodities
and presently, the Government had the necessary jurisdiction and not the CCR as alleged by
the CCR.
Thirdly, the Appellants submit that the Director General infracted the principles of natural
justice by denying the right to legal representation during the search and seizure. It is trite law
that whenever any person's reputation is at stake, he ought to be provided the right to legal
representation. Such omission to provide legal representation is in itself a ground to invalidate
the order of the CCR.
II. G-ONE DID NOT VIOLATE SECTION 4 OF THE 2002 ACT .
G-One did not violate Section 4 of the 2002 Act. Presently, the delineation of the relevant
market by the DG and the CCR was incorrect. They did not consider the substitutable or
interchangeable products with regard to intended use. If the imported bottles of cough syrup
and the dextromethorphan manufactured at home were also included within the relevant
market, G-One would not even be the largest player in the market. Therefore, with regard to
the relevant product market, the relevant market is the market for ‘dextromethorphan to cure
dry cough’. Secondly, G-One submits that it is not capable of operating independently of the
prevailing market forces in Republia. G-One cannot increase its prices beyond the ceiling price
and further, its production is also governed by the DOPE Order, 2010. Accordingly, G-One is not
in a dominant position.
Thirdly, G-One did not abuse its dominance and did not indulge in excessive pricing. The
pricing was in view of providing adequate margins to the retailers and distributors since the
retail market for pharmaceuticals was populated by intermediaries such as stockists. Further, G
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-One could not have limited its production as it was not economically efficient to increase
production due to the temporary increase in demand.
III. THE DG AND THE CCR CANNOT PROCEED AGAINST THE DOPE DEPARTMENT.
The Appellants state that the DOPE Department is not an enterprise within the meaning of
Section 2(h). The DOPE Department does not carry out any commercial functions but merely
carries out statutory functions. Further, even the CCR has found that DOPE Department's
turnover was effectively zero. The DOPE Department is also not in control of articles or goods
within the meaning of Section 2(h). Merely enforcing the DOPE Order cannot itself mean that
the DOPE Department within the definition of an enterprise. If so, all statutory authorities
would be enterprises. Further, the DOPE Department had no discretion to determine prices and
the price was fixed by the Republian Government pursuant to the formula. Therefore, the DG
and the CCR could not have proceeded against the DOPE Department.
IV. THE MANUFACTURERS AND THE DOPE DEPARTMENT DID NOT VIOLATE SECTION 3 OF THE 2002
ACT .
In order to invoke Section 3 of the 2002 Act, it is essential that there exists an agreement
within Section 2(b). However, presently there was no agreement between the manufacturers
and secondly, there was no agreement also between the manufacturers and the DOPE
Department. Further, the DG also did not find evidence of any communication to have taken
place between the parties. The similarity in prices was only the result of the oligopolistic nature
of the market and not because of any cartel. In case of price parallelism, the CCR must show
some other evidence to establish the existence of an agreement. However, the CCR has been
unable to show the existence of any further evidence.
Secondly, even if an agreement is established, there was no appreciable adverse effect on
Competition. The entry barriers were not the result of any agreement but due to the Republian
Drugs and Cosmetics Act, 1940. Further, sale at similar prices would have led to increase in
non-price competition and the Manufacturers would have an incentive provide quality products
to outdo their respective competitors. Accordingly, it is the Manufacturers and the DOPE
Department have not violated Section 3 of the Act.
WRITTEN ARGUMENTS
I. G-ONE'S APPLICATION SHOULD BE UPHELD BY THE KCAT.
1. G-One Pharmaceuticals (hereinafter “G-One”) will establish that its application to dismiss
and set aside the findings of the CCR be upheld.
A. The Application for a Summary Hearing is maintainable.
2. Presently, G-One has filed an application to set aside the findings of the CCR vis-a-vis G-
One by way of a summary hearing.1 This application was preferred since G-One has proposed to
undertake an Initial Public Offering (“IPO”) in July, 2019 and the findings of the CCR have
jeopardised its success.2 If the aforesaid application is allowed without any finding with respect
to any violation3 , G-One will voluntarily lower their prices by 30%. Accordingly, G-One submits
that the application for a summary hearing is maintainable for the following reasons.
i. The KCAT has power to regulate its own procedure.
3. Section 53-O of the Competition Act, 2002 (hereinafter “2002 Act”) provides that the
Appellate Tribunal shall not be bound by the Code of Civil Procedure, 1908 but shall be guided
by the principles of natural justice.4 Further, the Appellate Tribunal has the power to regulate
its own procedure.5
4. Since the Appellate Tribunal can regulate its own procedure, the present application by G-
One should be allowed. Moreover, the present application is in conformity with the principles of
natural justice since the CCR has been given an opportunity of being heard and oppose the
present application.6
5. G-One's application should also be seen in view of the fact that commercial operations will
be seriously impeded if disputes between the parties are not adjudicated upon immediately.7
Therefore, G-One submits that its application is maintainable.
ii. There are no complicated questions of fact or law in the present case.
6. The CCR may contend that KCAT cannot decide the present application summarily since
summary procedure is not intended for complicated questions of either fact or law.8 However, G
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-One submits that there are no complicated questions of either fact or law involved in the
present case and therefore, the KCAT can adjudicate the present application summarily.
7. To buttress this submission, G-One contends that comprehensive hearings have already
taken place before the CCR9 Further, detailed evidence has been recorded by the DG and hence
there is no complicated question of fact or law involved presently.
iii. Alternatively, the KCAT can adjudicate upon complicated questions of facts or law.
8. The KCAT is required to be headed by a Chairperson who is, or has been a judge of the
Supreme Court or the Chief Justice of a High Court.10 Further, the member of the KCAT is
required to be a person of ability, integrity and standing having special knowledge of, and
professional experience of not less than twenty-five years in Competition matters.11 Hence, it is
alternatively submitted that the KCAT is competent to decide complicated questions of law or
facts.12
9. Further, it would also be a totally wrong assumption that merely because summary
hearing is requested, justice cannot be done when some questions of facts are required to be
dealt with or decided.13 The KCAT is entitled to regulate its own procedure so as to do away
with the need of a detailed and complicated trial and by arriving at a just decision of the case
by resorting to the principles of natural justice and by following the procedure consistent with
the principles of natural justice.14
iv. There is no requirement of recording detailed evidence by the KCAT.
10. The CCR may contend that there is a requirement of recording lengthy evidence and that
the same is not permissible within the scope of a summary enquiry.15 Regardless, G-One
submits that comprehensive hearings have taken place before the CCR and that the DG has
recorded detailed evidence16 Therefore, there is no need of recording lengthy evidence
presently by the KCAT. For the aforesaid reasons, G-One submits that the present application
can be disposed off summarily and that the KCAT has the requisite power to do so.
B. Alternatively, the Appeal by G-One can be disposed off summarily.
11. Assuming but not conceding that the application by G-One is not maintainable, the
KCAT can still dispose off the appeal of G-One Pharma summarily. In addition to the
application, G-One has also preferred an appeal against the order of the CCR with the KCAT.17
Hence, the present appeal can also be disposed off summarily and in an expeditious manner.18
12. The object of summary procedure is to ensure that expeditious disposal of commercial
causes is not defeated.19 Presently, if the matter is not disposed of summarily, the IPO by G-
One will be jeopardised and irreparable loss will be caused to it. This should also be seen in
view of the fact that the object of the 2002 Act is to promote and sustain competition and to
protect the interests of the consumers.20
13. Further, if the present application or appeal is allowed, G-One will voluntarily reduce its
prices by 30% and that will not only promote competition but also will protect the interests of
consumers by reducing the prices of dextromethorphan based cough syrups.
C. Price fixation of an essential commodity cannot be challenged presently.
14. G-One submits that the investigation and the penalty by the CCR has no merit given
that all Manufacturers including G-One strictly adhered to the DOPE ceiling prices imposed by
the government itself.21 G-One contends that it has at all times complied with the DOPE Price
Ceiling. It is for that reason that the order of the CCR deserves to be set aside. Further, G-One
will establish that price fixation of an essential commodity cannot be questioned presently. This
submission is based on the following grounds.
i. Price Fixation is a policy decision of the Republian Government.
15. Judicial Review is not concerned with matters of economic policy. The Court cannot
substitute its judgment for that of the legislature or its agents as to matters within the
province of either.22 This proposition shall apply to Tribunals including the KCAT since all Courts
are Tribunals.23 Further, with respect to price fixation of an essential commodity under the
RECA, 1965, the Courts neither act like a chartered accountant nor act like an income tax
officer.24 The Court only must see whether the price determined was with due regard to
considerations provided by the statute.25
16. Further, distribution and supply of essential commodities at fair prices in the best
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interest of the general public is a matter for decision exclusively within the province of the
Central Government and such matters do not ordinarily attract the power of judicial review.26
17. Therefore, G-One submits that the policy decision of the Republian Government to
control the price of dextromethorphan based cough syrup which is admittedly an essential
commodity keeping in view various social, economic and commercial factors is not amenable
for judicial review either by the CCR or the KCAT.27
ii. Price Fixation is a legislative activity with limited examination.
18. Viewed from whatever angle, price fixation of any essential commodity is a legislative
activity.28 A legislative measure does not concern itself with the facts of an individual case. It is
meant to lay down a general rule applicable to all persons or objects of transactions of a
particular kind or class.29 Presently, the DOPE Order applied to all manufacturers of
dextromethorphan based syrup in Republia.30
19. As far as judicial review of any legislative activity is concerned, interference is only
possible if the fixation is discriminatory or violates Part III of the Constitution.31 Further,
examination is confined to whether the price determined was with due regard to considerations
provided by the Statute and whether extraneous matters have been excluded from
determination.32
20. Presently, the CCR could have preferred a Writ Petition if it felt that the price fixation
under the DOPE Order was discriminatory or violative of Part III.33 G-One further submits that
apart from a Writ Petition, the CCR could not have regarded the prices set to be anti-
competitive and could not have questioned the prices under the 2002 Act.34
iii. Alternatively, the CCR could have preferred a review of the ceiling prices.
21. It is quite clear that the DOPE Order, 2010 is pari materia to the Drugs Price Control
Order, 2013 (hereinafter “DPCO”).35 Under paragraph 31 of the DPCO, 2013, any person
aggrieved by any notification or order issued under paragraphs 4, 5 and 6 can apply to the
government for a review or notification or order within a period of 30 days of the date of the
publication or notification.36
22. Presently, the CCR could have approached the Republian government to review the price
ceiling if it considered the same to be anti-competitive. The CCR is an artificial legal person and
Section 7(2) of the 2002 Act states that the CCR shall be a body corporate having perpetual
succession and a common seal with a power to acquire, hold and dispose of property both
movable and immovable and shall by the said name sue or be sued.37
23. For the aforesaid reasons, G-One submits that the price fixation of the essential
commodity i.e. dextromethorphan cannot be challenged presently and since G-One has at all
times complied with the price ceiling, its application should be allowed.
D. The Republian Government has the jurisdiction to examine the price ceiling or
production of any essential commodity and not the CCR.
24. G-One submits that with respect to any essential commodity under the RECA, the
Republian Government has the power to regulate the price ceiling or production and not the
CCR.38 Since the domain of regulating the production, supply and distribution solely vests with
the Republian Government, the CCR's jurisdiction would be ousted and would be barred from
conducting any examination under the Competition Act, 2002.
25. G-One will establish that the CCR did not have jurisdiction presently based on the
following grounds.
i. The Prices were not determined by market forces but fixed by the Government.
26. G-One submits that the price ceiling under the RECA, 1965 was fixed by the
Government based on a pre-decided formula and the same was not decided as per market
forces of demand and supply.39 Since the Republian Government had decided the prices of the
cough syrup and not by market forces, the Central Government would have the jurisdiction to
examine the same under the DOPE Order, 2010 and not the CCR under the 2002 Act.40
ii. The RECA, 1965 and the DOPE Order, 2010 would regulate the essential commodities and
not the Competition Act, 2002.
27. Since the price ceiling was fixed, an action would only lie if the ceiling was contravened.
Further, the manufacturers who sold DOPE drugs at prices above the ceiling were subject to
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strict penalties under the RECA, including cancellation of licenses, fines and imprisonment.41
Accordingly, G-One submits that the RECA, 1965 and the DOPE Order, 2010 would regulate
essential commodities and not the Competition Act, 2002.
28. The aforesaid proposition would certainly hold good since Section 62 of the 2002 Act
provides that the provisions of the 2002 Act are in addition to, and not in derogation of the
provisions of any other law for the time being in force.42 Further, the intention of the Parliament
in enacting the Competition Act was not to curtail or whittle down the full scope of any other
law.43
iii. The Republian Government could have chosen to direct the manufacturers to increase
production during the harsh Republian Winter.
29. Paragraph 3 of the DPCO, 2013 provides that the Government may, in case of any
emergency or urgency, direct the manufacturer of any active pharmaceutical ingredient or bulk
drug formation to increase the production and to sell such active pharmaceutical ingredient or
bulk drug to such other manufacturers of formulations.44 Accordingly, the Republian
Government had the option of directing G-One to increase production during the harsh
Republian winter. However, they did not provide for any such direction.
30. Further, G-One submits that since the Government did not make any such direction
during the Republian winter, the Government cannot later contend that the alleged limiting of
production or supply was anti-competitive. The DOPE Order was the self-contained code to
regulate conduct of essential drug manufacturers. Therefore, for the Republian Government's
abovementioned inaction, blame cannot be shifted subsequently on the manufacturers for
perceived anti-competitive conduct.
iv. Similarly, the Government could have fixed the ceiling price as it deemed fit.
31. Paragraph 19 of the DPCO, 2013 provides that any notwithstanding anything contained
in the order, the Government may, in extraordinary circumstances, if it considers to do so in
the public interest, fix the ceiling price or retail price of any drug for such period, as it may
deem fit and where the ceiling price or retail price of the drug is already fixed and notified, the
Government may allow an increase and decrease in the ceiling price or the retail price, as the
case may be, irrespective of the annual wholesale price index for that year.45
32. Accordingly, it is submitted that during the relevant period, the Republian Government
could have chosen to reduce the ceiling price for dextromethorphan based cough syrup.
However, they chose not to do so. Thereafter, they themselves submitted the matter for
examination under the Competition Act, 2002 before the CCR.
33. G-One submits that inaction by the Government to reduce the ceiling prices during the
relevant period cannot be a ground to implicate the manufacturers post the relevant period.
v. Primacy should be given to respective regulators under the two acts.
34. Even if there is a conflict between the two regulators, the primacy should be given to the
two regulators i.e. the Republian Government under the RECA, 1965 and the CCR under the
Competition Act, 2002.46 Since the matter pertains to regulation of an essential commodity
under the RECA, 1965, the Government would have primary jurisdiction and only if the
government found a violation, the CCR could have exercised jurisdiction according to the ratio
of the Supreme Court in the Airtel Case.47
35. However, since the Government as the sectoral regulator of essential commodities never
found any prima facie anti-competitive practices by G-One, the CCR would be barred from
exercising jurisdiction in the present case.48 G-One reiterates that inaction by the Government
to act under the DOPE Order, 2010 during the Republian Winter cannot be a ground to
implicate G-One after the relevant period.
vi. The Manufacturers including G-One strictly adhered to the ceiling prices.
36. G-One submits that it strictly adhered to the ceiling prices fixed under the DOPE Order,
201049 and had any direction been given by the Republian Government, it would have complied
with the same. Further, G-One submits that out of all the manufacturers, it sold the cough
syrup at a lower price and even after the commencement of the DOPE Order, it sold the syrup
at a competitive price.50
37. In view of these circumstances, G-One submits that it did not engage in excessive
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pricing or abuse of dominance and therefore, its application be allowed by the KCAT.
E. The DG contravened the principles of natural justice during the search and seizure.
38. G-One submits that the DG contravened the principles of natural justice during search
and seizure in July 2015 for the following reasons.
i. The DG failed to provide right to legal representation.
39. G-One submits that the DG while conducting investigation has violated the right to
provide legal representation as the Appellants lawyers were not present when the physical and
electronic documents were seized by the Director General.51 A person has the right to be
represented by a legal practitioner of his choice. When a man's right or reputation is at stake,
he also has a right to speak through counsel or solicitor.52 The right to legal representation
must also be available at the preliminary-inquiry stage.53
40. It is necessary to prevent rights from being irreparably damaged during preliminary
inquiry procedures such as investigations which may be decisive in providing evidence of the
unlawful nature of conduct engaged in by undertakings and for which they may be liable.54 G-
One submit that its lawyers should have been provided access to the premises during an
inspection, and they should have been heard and examine the documents which are about to
be seized.55
41. Section 30 of the Advocates Act, 1961 confers a right to practice on Advocates and it
provides that every advocate shall be entitled to practice throughout India in all Courts and
Tribunals or before person legally authorized to take evidence.56 The right to practice would
include accompanying a person who has been summoned before the DG for investigation.57
42. While the police has no power to record evidence on oath but the DG has been vested
with such a power.58 The search and seizure operations conducted by the DG form a part and
parcel of its investigation.
43. Even though the Inspectors of an investigation decide and determine nothing and only
reported, it was held that the same would however not minimise the significance of their task
because the report which they prepared had wide repercussions owing to containing findings of
facts accusing, condemning and leading to judicial proceedings and exposing those against
whom they are directed to civil action.59
44. Accordingly, G-One submits that the DG has egregiously violated the principles of
natural justice and rendered their existence infructuous, otiose and nugatory.
II. G-ONE HAS NOT VIOLATED SECTION 4 OF THE 2002 ACT .
45. G-One will establish that it has not violated Section 4 of the 2002 Act. There are
primarily 3 stages in determining whether an enterprise has abused its dominant position.60
Based on these 3 stages, G-One will establish that it has not violated Section 4 of the Act. The
first stage is to define the relevant market. Without a definition of the market, there is no way
to measure the defendant's ability to lessen or destroy competition.61
A. The relevant market presently is the market for dextromethorphan to cure dry
cough.
46. Section 2(t) of the 2002 Act defines a ‘relevant product market’ as market comprising of
all the products which are interchangeable or substitutable by the consumer with reference to
(i) characteristics of the product, (ii) price (iii) intended use.62 For determining the relevant
product market, the demand side substitutability is the decisive factor63 because whether a
consumer would consider any other product as a substitute or inter-changeable with the
products manufactured by the opposite parties will determine what all goods can be included in
the relevant product market definition.64
47. Presently, the DG defined the relevant market as the market for the ‘sale of safe and
efficacious dextromethorphan based cough syrup in Republia’.65 However, the Appellants
submit that the delineation of the relevant market by the DG is incorrect. The DG did not
consider all the products which were interchangeable or substitutable by the consumer with
reference to the intended use of the product for defining the relevant product market.
48. During the Republian winter, people purchased imported bottles on the black market,
while others attempted to manufacture dextromethorphan at makeshift labs in the kitchen.66
Their intended use was to cure the dry cough that infected the children. These products were
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interchangeable or substitutable by the consumer with reference to both characteristics of the


product as well as intended use. Therefore, G-One submits that the delineation of the relevant
market by the DG and subsequently by the CCR was incorrect.
49. Based on the demand side substitutability factor67 , the relevant market presently would
be the ‘market of dextromethorphan to cure dry cough’ and would include the imported bottles
available in the black market and the manufacture of dextromethorphan at makeshift labs at
home.
50. G-One states if the relevant product market is the market of ‘dextromethorphan to cure
dry cough’, the market shares of the players will be substantially different and therefore, G-One
may not even be the largest player in the market. Acordingly, G-One submits that the relevant
market presently is the market for ‘dextromethorphan to cure dry cough’ and not the market
for ‘sale of safe and efficacious dextromethorphan based cough syrup’.
B. G-One is not placed in a dominant position.
51. The second stage of determining alleged abuse of dominance is to determine whether
the enterprise is in a dominant position.68 The explanation to Section 4 defines ‘dominant
position’ as the position of strength enjoyed by an enterprise which enables it to operate
independently of competitive forces prevailing in the relevant market; or affect its competitors
or consumers or the relevant market in its favour.69
52. Accordingly, G-One states that the threshold to determine dominant position is the
power to behave independently of its competitors.70 Further, the dominant position has to be
tested based on the factors contained in Section 19(4) of the 2002 Act.71 G-One submits that it
is not placed in a dominant position for the following reasons.
i. G-One is not capable of operating independently of competitive forces prevailing in the
relevant market.
53. The first requirement of dominant position is not fulfilled presently. Operating
independently refers to when an enterprise can manipulate the relevant market in its favour to
the economic detriment of its competitors and consumers.72 Presently, G-One is incapable of
operating independently of the competitive forces due to the DOPE ceiling price.73 G-One
cannot increase its selling price beyond the ceiling price and therefore, it is not capable of
setting prices and therefore cannot operate independently of the prevailing market forces.
54. Assuming but not conceding that G-One was in a dominant position, G-One could have
played a significant role in determining the prices and would have influenced the market forces
of demand and supply. However, G-One cannot influence the market since there is a ceiling
price in place and therefore G-One is not operating Independently of the prevailing market
forces.
ii. G-One is not capable of affecting rivals in the relevant market.
55. G-One submits that the relevant market is the market for ‘dextromethorphan to cure dry
cough’. In the relevant market for dextromethorphan, there are imported dextromethorphan
based cough syrups as well as makeshift laboratories to manufacture dextromethorphan.74
Therefore, G-One submits that there are sufficient substitutes available and G-One is not
capable of affecting rivals in the relevant market.
iii. G-One's alleged market share of 42% is of no consequence presently.
56. While Section 19(4) of the 2002 Act prescribes market share as a factor to determine
dominance, the position of strength is not some objective attribute that can be measured along
a prescribed mathematical index or equation. Rather, it is a rational consideration of relevant
facts, holistic interpretation of seemingly unconnected statistics or information and application
of several aspects of the Indian economy.75 The test is to see whether a particular player has
clear comparative advantages.76 Presently, G-One does not have any clear comparative
advantages in the present relevant market.
57. In fact, in the relevant market, G-One's market share will also change and it will also
include foreign manufacturers who import dextromethorphan based cough syrups in Republia
and those entities that manufacture dextromethorphan at makeshift laboratories. G-One
submits that considering the presence of these entities, it does not have a dominant position in
the relevant market.
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iv. G-One does not have economic power and does not have any commercial advantage over
Competitors.
58. Section 19(4) also provides that the CCR must consider economic power of the
enterprise including commercial advantage over competitors.77 G-One submits that the
existence of a price ceiling has negated any commercial advantage over competitors that it
could possibly have. Further, there is price fixation with respect to dextromethorphan as well as
further, the production can also be dictated by the Republian Government under Paragraph 3 of
the DOPE Order. Therefore, G-One submits that it did not possess any commercial advantage
over competitors and that therefore it is not in a dominant position. Therefore, G-One submits
that it is not in a dominant position and therefore has not contravened Section 4 of the 2002
Act.
C. Alternatively, G-One Pharmaceuticals has not abused its dominance.
59. The third and the final stage to determine abuse of dominance it to examine abuse by
the concerned entity.78 Mere dominant position is alone not prohibited by the Competition Laws
and dominance assumes a special responsibility on the part of the dominant undertaking.79
Presently, the CCR has found that G-One has violated Sections 4(2)(a)(ii) and 4(2)(b)(i) of the
2002 Act.80
60. G-One shall establish that it has not abused its alleged ‘dominance’ for the following
reasons.
i. G-One Pharmaceuticals has not indulged in unfair pricing.
61. Imposition of unfair price has been explicitly stated to be an abusive act under Section 4
(2)(a)(ii) of the 2002 Act.81 There shall be an abuse of dominant position, if an enterprise or a
group directly or indirectly imposes unfair or discriminatory prices in purchase or sale of goods
or services.82 ‘Excessive pricing’ forms a subset of unfair price in the Indian context.83
62. The CCR may contend that G-One has indulged into excessive pricing and therefore, it is
imperative for G-One to address this present issue. There is a two-fold test to examine
excessive pricing. First, the difference between the costs incurred by the dominant entity and
prices actually charged must be in excess and second, the price under consideration also must
be unfair either in itself or when compared to prices of competing products.84
63. In April 2013, the average variable cost of cough syrup was 65 and the selling price was
132.85 Out of the selling price, the margins remained over 40%.86 Therefore, the total cost was
RPD 94 and the average fixed cost was 29. Trade Margin is the difference between the price at
which the manufacturers sell the drugs to the stockist and the final price to patients.87 It is
submitted that this 40% margin was not unreasonable and not excessive. Further, considering
the presence of highly co-ordinated intermediaries including stockists, such a margin was only
reasonable so that out of the 40% margin, the intermediaries could also derive profits out of
the margin. Further, there is a fixed practice of trade margins to the retailers and wholesalers
in the pharmaceutical market.88
64. Further, there are high R&D and innovation costs involved in drugs and therefore, the
margin is justified.89 Therefore, G-One submits that it has not indulged in excessive pricing for
the purposes of Section 4(2)(a)(ii).
ii. Secondly, the DOPE Ceiling Price only pertained to retailers and retailers could sell the syrup
at a price higher than the ceiling.
65. G-One submits that the DOPE ceiling price only pertained to retailers and this is
reiterated by the DG's findings.90 Accordingly, the retailers could have chosen to sell the cough
syrup at a price above the ceiling. Accordingly, the cough syrup being sold in the market was
the result of higher pricing by the distributors and retailers and not due to G-One. Further,
black marketing is a natural consequence of price fixation.91 Accordingly, G-One has not abused
its dominance as a result of the black marketing.
iii. G-One Pharmaceuticals has not limited production and therefore not contravened Section 4
(2)(b)(i) of the 2002 Act.
66. Section 4(2)(b)(i) pertains to limiting or restricting production of goods or services and
such limiting or restriction of goods or provision of services shall be treated as abuse of
dominance.92 The DG has found that between October 2013 and January 2014, the demand
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spiked by nearly 300%. During the same time, the installed capacity was 150% while the
production capacity increased in the range of 120%.93 Against G-One, the DG has allegedly
found that G-One was a dominant player with capacity to increase the production. However, G-
One did not do so.
67. In response, G-One submits that it would be against economic efficiency to increase
production. The increase in demand was only temporary due to the harsh winter and if G-One
had produced upto 150%, G-One would most probably have suffered huge losses. Secondly,
the other manufacturers in the relevant market could also have increased production and
thirdly, imported cough syrup was also being sold in the market. Due to the existence of these
factors G-One's production is justified. Therefore, merely because G-One did not increase
production to 150% cannot be a ground for contravention of Section 4 of the Act.
iv. G-One could not have increased prices by limiting production since it was already selling the
cough syrup at the DOPE Ceiling Price.
68. G-One submits that it had no intention of deliberately limiting production and
accumulating unreasonable profits. Assuming but not conceding that G-One deliberately
limited production, it could not have increased its prices beyond the DOPE Ceiling Price.
Further, it is also an admitted fact that the presence of intermediaries is highly co-ordinated
due to the presence of their trade associations.94 The black marketing and sale of cough syrup
beyond the ceiling price was attributable to these intermediaries and stockists and not G-One.
69. If G-One increased production, it would have incurred more fixed costs and beyond a
point when one increases production, fixed costs increase again. Increase in production would
only have led to a loss to G-One especially when humanitarian aid was also brought from the
WHO.95
70. Lastly, G-One submits that under Paragraph 3 of the DOPE Order, 2010, the Republian
Government could have chosen to direct G-One to increase production. However, it did not do
so and that omission by itself indicates that G-One has not limited or restricted production
under the 2002 Act.
71. For the aforesaid reasons, G-One submits that it has not infracted Section 4 of the Act
and therefore, the order of the CCR deserves to be set aside.
III. THE DG AND THE CCR CANNOT PROCEED AGAINST THE DOPE DEPARTMENT.
72. The Appellants submit that the DG and the CCR cannot proceed against the DOPE
Department. Presently, the DG found that the DOPE Department contravened Section 3(1) read
with Section 3(3)(a) of the 2002 Act.96 Further, the CCR imposed a nominal penalty of RPD
100,000 against the DOPE Department since its turnover was effectively zero.97 In this appeal,
the Appellants will establish that the DG and the CCR could not have proceeded against the
DOPE Department. This is for the following reasons.
A. The DOPE Department is not an enterprise for the purposes of Section 2(h).
73. Section 3 of the 2002 Act can be invoked against an entity only if it falls within the
definition of an ‘enterprise’ under section 2(h) of the act. Section 2(h) enlists the activities an
entity must perform to fall within the definition of ‘enterprise’. However, the DOPE Department
is not an ‘enterprise’ since it is not engaged in any activity enumerated in section 2(h) of the
Act.98
74. Presently, The DOPE Department was not involved in dealing in respect of
purchase/sales of dextromethorphan cough syrup for the, nor is a player within the relevant
market.99 The Department is not a stakeholder in the market as none of the characteristics of
being an enterprise within the meaning of the Act are found to be present.
75. Further, the Department was not carrying out any commercial functions to fall within the
definition of an enterprise.100 Further, the DOPE Department was merely created to enforce the
DOPE Order.101 It has no further role than to enforce the DOPE Order and the price ceiling was
also determined by the Republian Government based on a fixed formula102 and therefore, the
DOPE Department does not fall within the definition of an ‘enterprise’ for the purpose of Section
2(h) of the Act.
B. The DOPE Department merely performs statutory functions.
76. The DOPE Department while determining the ceiling price of drugs performed statutory
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functions entrusted to it under RECA, 1965. The exercise of such functions by itself is not in
violation of the provisions of the Act.103 It merely performs regulatory and statutory functions
under the RECA and the DOPE Order and while discharging such regulatory and statutory
functions it cannot be said to fall within the purview of the term ‘enterprise’.104 The regulatory
actions of enforcing the DOPE Order are not per se amenable to the jurisdiction of the CCR.
Further, the CCR has admitted that the DOPE Department's turnover was effectively zero.105
77. The Appellants proffer that if government department is considered to be an ‘enterprise’
solely on the ground that it issues orders granting approval to entities to operate at a particular
price in the market, then any and every department of any state would also fall within the
definition of ‘enterprise’.
78. Further, all government acts of granting approval would per se tantamount to business
or commercial acts of limiting output or fixing price in those relevant markets. If such activities
of the DOPE Department are construed to fall within the definition of ‘enterprise’, it would
naturally be dominant because of its ability to operate completely independently of “market
forces”.106
C. The DOPE Department has not indulged in any commercial or economic activity.
79. A Government Department not directly engaged in any economic and commercial
activities and doing activities without any commercial consideration cannot be held as
enterprise.107 Presently, the DOPE Department does not perform any commercial or economic
activity. In Competition Law, for an entity to be an ‘enterprise’ it must always be operating in
the relevant market with an inherent desire to acquire more market power or earn higher
profits.108
80. The Appellant state that the activities of the DOPE Department are not guided by the
general economic principles of demand, supply and price. Its behaviour is not similar to the
firms engaged in economic and commercial activities and are competing at a market place or
are acquiring (or buying), controlling an article or product or service and are thereafter selling
it in the market in competition with others with a motive to earn profit or drive out competition.
81. Therefore, unless the DOPE Department was solely engaged in the commercial or
business activities of production, storage, supply, distribution, acquisition or control of articles
or goods, or the provision of services or other activities mentioned in Section 2(h), its other
activities do not fall under the definition of ‘enterprise’.109
D. The DOPE Department in not in control of goods.
82. The word “control” used in section 2(h) in relation to “articles or goods” should be in
nature of business or commercial purchases or control of any article or good. If the purchase or
control does not go into the production chain of any further commercially produced or sold
article or good, it would not qualify an entity as ‘enterprise’ under section 2(h). In other words,
to qualify as an ‘enterprise’, the person must be engaged in some economic activity in some
market and must be buying or selling some article, good or service in pursuit of its economic
activity.110
83. This fundamental principle has also been adopted by jurisdictions including the
European Union111 which defines an ‘undertaking’ as an entity engaged in an economic activity
which consists of offering of goods and services in a given market as its relevant characteristic.
Therefore, since the DOPE Department is not in control of the goods, the Appellants state that
it is not an enterprise for the purposes of Section 2(h) and therefore the DG and the CCR could
not have proceeded against the DOPE Department. Further, the imposition of the nominal
penalty of RPD 100,000 should be set aside.
E. No prima facie case was made out against the DOPE Department.
84. If the DG proceeds against any enterprise, it is necessary that a prima facie case is
made out against such enterprise. Existence of a prima facie case is a sine qua non for
investigation by DG. However, there was no prima facie case made out against the DOPE
Department presently.
85. The information received from the government under section 19(1)(b) was only against
the manufacturers and there was even no mention of DOPE Department as a contravening
party.112 The matter was expedited and CCR did not hold a preliminary conference which clearly
indicates that the informant and opposite parties were not heard and the CCR did not had
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knowledge of any allegations made out against the DOPE Department. The Appellants submit
that the DG is at liberty to report such contravention of the act by the DOPE Department only
when the Commission had considered any information against the DOPE Department while
forming its prima facie case.
86. The findings of the Ketchum Commission Report contain no allegations the DOPE
Department. Thus, based on the reference of government the prima facie case by CCR was
made out only against the manufacturers and not the DOPE Department. By proceeding against
the DOPE Department the DG has broadened the scope of investigation which goes against the
scheme of the act.113 Thus, the report submitted by DG is not valid in law as an investigation
could not be ordered against the DOPE Department without a prima facie case being made
against it and the DG and CCR could not proceed against them.
F. There was no appreciable adverse effect on competition due to the DOPE
Department.
87. For invoking Section 3(1) read with Section 3(3), the CCR would have to prove the
appreciable adverse effect on Competition as a result of the agreement. However, presently,
there is no appreciable adverse effect as a result of the DOPE Department's Actions. Even if
such effect existed, the Republian Government was responsible for the same as they could
have directed the manufacturers to reduce the price or increase production during the harsh
Republian Winter.
88. Since there was no appreciable adverse effect on Competition and since the DOPE
Department did not fall within the definition of an ‘enterprise’, the Appellants submit that the
DG and the CCR could not have proceeded against the DOPE Department. Therefore, the KCAT
should allow the appeal and set aside the decision of the CCR.
IV. THE MANUFACTURERS AND THE DOPE DEPARTMENT HAVE NOT VIOLATED SECTION 3(3) OF THE
ACT .
89. The Appellants will establish that the manufacturers have not violated Section 3(3) of
the 2002 Act.
A. There was no agreement between the manufacturers.
90. The condition precedent to invoke Section 3(3) of the 2002 Act is the establishment of
an agreement. Presently, there was no agreement between the manufacturers and this is for
the following reasons.
i. The Pharmaceutical industry reflects oligopolistic characteristics.
91. An oligopoly is a market where the majority of the market is concentrated in the hands
of few. The market power in the pharmaceutical sector is concentrated in the hands of few
significant players, thereby rendering its oligopolistic nature and pricing.114 Presently, the 6 top
firms hold 90% market share and this reflects its oligopolistic nature.115
92. Oligopolies are markets where profit maximising competitors set their strategies by
paying close attention to how their rivals are likely to react. But the laws do not prohibit
conscious parallelism. Accordingly, firms in an oligopoly might imitate their rivals pricing yet
without reaching an explicit agreement.116 Presently, merely because the firms sold the sough
syrup at a similar price is not indicative of an agreement but shows the oligopolistic tendency
of the market.
93. In an oligopoly a reduction in price would swiftly attract the customers of the other two
or three rivals, the effect upon whom would be so devastating that they would have to react by
matching the cut.117 Similarly an oligopolistic could not increase its price unilaterally, because
it would be deserted by its customers if it did so. Thus the theory runs that in an oligopolistic
market rivals are interdependent and they are acutely aware of each other's presence and are
bound to match one another's marketing strategy.118
94. Therefore, it can be inferred that similar pricing by the manufacturers was not due to an
agreement as prohibited by the Act, but a mere feature of the existing oligopolistic market
structure.
ii. Conscious price parallelism alone may not prove an agreement.
95. Economic theory has demonstrated convincingly that “conscious parallelism”, is not
uncommon in homogeneous oligopolistic markets. Competing firms are bound to be conscious
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of one another's activities in all phases, including marketing and pricing. Aware of such
outcomes especially where there is little real difference in product, conscious parallelism may
be dictated solely by economic necessity.119
96. Presently, merely because the appellants sold the cough syrup at the ceiling price120 , it
cannot be concluded that there was an agreement between these parties, in the absence of any
other evidence corroborating the said factum of quoting identical price. In fact, the DG has
found no evidence that the top executives of all firms communicated in the relevant period.121
Communication evidences may lead to the finding of a contravention, but there is admittedly,
no such communication evidence in the present case.122
iii. Conscious Parallelism in and of itself cannot be considered as collusion.
97. Price uniformity may be a normal outcome of rational economic behaviour in markets
with few sellers and homogenous products. In oligopolistic markets, the burden proof must be
higher than circumstantial evidence of concerned or parallel behaviour and uniform pricing and
output policies. In other words, conscious parallelism in and of itself should not necessarily be
construed as evidence of collusion.123
iv. Price parallelism cannot be regarded to be an evidence of cartel agreement.
98. The Appellants state that a mere instance of price parallelism cannot be said to
constitute evidence of existence of any cartel agreement. However, in order to determine the
existence of a cartel, price parallelism must be supported by an evidence of an agreement or
collusion or action in concert.124 However, there is no such evidence in the present case.125
99. Contrary to any allegations of a cartel, Serran, Rocachem and Chhetri have attempted to
gain share against G-One and that by itself shows the absence of a cartel.126
v. Similar pricing was a result of profit maximisation objective.
100. The rationale for doing any business is to earn some profit out of it. Earning of zero
profit or accumulating losses for indeterminate period can never be the goal of any commercial
enterprise.127 Presently, the Appellants submit that they intended to maximise their profits and
they did so by selling the cough syrup at the ceiling price. The Manufacturers have consistently
adhered to the ceiling price determined by the DOPE Department.128
101. Therefore, the CCR cannot contend that the similar pricing by the manufacturers is
indicative of an agreement. In view of the foregoing reasons, the Appellants submit that there
is no agreement for the purposes of Section 3(3) and therefore, Section 3(3) is not attracted.129
B. There was no agreement between the manufacturers and the DOPE Department.
102. The CCR has imposed a nominal penalty of 100,000 dollars against the DOPE
Department for infraction of Section 3(3).130 However, the Appellants submit that the DOPE
Department has not contravened Section 3(3) and in fact, there is no agreement for invoking
Section 3(3) for the following reasons.
i. The DOPE Department is not an enterprise under Section 2(h) of the Act.
103. To invoke Section 3(3) of the act, it has to be established that the DOPE Department is
an ‘Enterprise’ under section 2(h) of the 2002 Act. The DOPE Department was established to
carry out 2 major functions : (a) to fix the ceiling prices, and (b) to prohibit the manufacturers
from selling the drugs above the ceiling.131 Both these functions were duly taken care of by the
department.
104. It is an established fact the DOPE Department is a regulator of the drug prices, and
carries out no economic activity as mentioned in Section 2(h). Therefore, it does not fall under
the definition of an enterprise. The CCR itself has found that the DOPE Department's turnover
was effectively zero. Hence, no agreement.132
105. If a body is not undertaking any economic activity by itself, it will not be treated as an
“enterprise” under section 3. Therefore, if we were to look into the “agreement” of such a body,
it may not fall Under Section 3(1) of the Act as it is not in respect of any production, supply,
distribution, storage, acquisition or control of goods or provision of services.133
ii. The findings of the DG showed no evidence to suggest an agreement between the parties.
106. The DG, in its findings failed to gather any evidence to show that there was
communication between the manufacturers and the DOPE Department in relation to price
fixing. Further, the fixation of price would be of no benefit to the DOPE Department since it was
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not involved in any economic activity. The DG's report is silent on the involvement of DOPE
Department in any “agreement” with the manufacturers. Therefore, Section 3(3) cannot be
invoked due to the absence of an agreement between the two.
C. Alternatively, there was no appreciable adverse effect on Competition.
107. Alternatively, if there was an agreement, the Appellants submit the agreement would
not cause any appreciable adverse effect on Competition. While it may be presumed that there
exists appreciable adverse effect, such presumption is a rebuttable presumption.134 The
Appellants will rebut this presumption by establishing that there is no appreciable adverse
effect on Competition.
108. Section 19(3) of the Act provides the factors to be considered by the Commission while
determining appreciable adverse effect.135 Unless the activities carried out by an enterprise has
an effect on the market in the manner provided under the section it will not be an appreciable
adverse effect.
i. The entry barriers were not due to the Manufacturers but due to the Drugs and Cosmetics
Act, 1940.
109. Presently, the entry barriers existed due to the Republian Drugs and Cosmetics Act,
1940 and not due to the actions of the Manufacturers.136 The Pharmaceutical Industry had
considerable entry barriers due to the approval from licensing authorities. Therefore, it is
submitted that the manufacturers actions have not led to any entry barriers.
ii. There is accrual of benefits to the customers.
110. Serran, Rocachem and Chhettri attempted to gain market share against G-One
Pharmaceuticals137 and hence, this is a pro-competitive practice which will lead to non-price
competition and prevent G-One's emergence as a monopoly in the future. Such non-price
competition will lead to improvement in the quality of the product and accordingly, benefits will
accrue to the customers.
iii. The manufacturers conformed to the DOPE Ceiling Prices.
111. Presently, all brands of cough syrups were priced at the ceiling price permitted by the
DOPE Department.138 The practices of industries seeking to evolve common standards shall not
be questioned unless they are acting against any statutory framework.139 In the present case,
there is no breach of any statutory order by the manufacturers, since the prices were fixed in
compliance with the ceiling.
iv. The Manufacturers were not involved in Black Marketing.
112. Presently, the practice of black marketing prevailed not due to the pricing by the
manufacturers, but by the unfair practices of the retailers who sold the drug at exorbitantly
high rates.140 The DOPE Order provided for a price cap only for the manufacturers.141 The
retailers had the liberty to charge any price irrespective of the ceiling which they used to their
benefit at the cost of the consumer interests.
v. The Republian government could have directed the manufacturers to increase production and
supply.
113. Presently, the Republian Government could have directed the manufacturers to
increase production pursuant to Paragraph 3 of the DOPE Order, 2010. However, during the
relevant period, no such order was given by the Republian Government to increase production.
It is submitted that if any appreciable adverse effect existed, the Government would have
directed the manufacturers to increase production.
114. Therefore, absence of any direction by the Republian Government itself shows that
there was no appreciable adverse effect on Competition. Further, it is the Government who
regulates essential commodities including dextromethorphan and not the CCR. Therefore, the
Appellants submit that there was no appreciable adverse effect on Competition in Republia and
the decision of the CCR deserves to be set aside.
PRAYER
In light of the foregoing, the Appellants humbly pray to this KCAT to adjudge and declare
that:—
A. The order of the CCR dated 10th January, 2019 was bad in law and should be set aside.
B. G-One Pharmaceuticals application should be allowed without any finding of liability.
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C. The CCR did not have jurisdiction in the present case.


D. The Director General contravened the principles of natural justice and on that ground
alone the CCR's order should be set aside.
E. G-One Pharmaceuticals did not contravene Section 4 of the Act.
F. The DG and CCR could not have proceeded against the DOPE Department.
G. The Manufacturers and the DOPE Department have not violated Section 3 of the Act.
And/or pass any other order that this KCAT may deem fit in the interests of justice, equity
and good conscience.
1
Moot Proposition, ¶22.
2 Moot Proposition, ¶22.
3 Moot Clarifications, ¶14.
4
Competition Act, 2002, §53-O, No. 12, Acts of Parliament, 2002 (India) [hereinafter “The Competition Act, 2002”].
5 1 SM DUGAR , GUIDE TO COMPETITION LAW 977 (6th ed. 2016) [hereinafter “SM DUGAR”].
6
Dhakeshwari Cotton Mills v. CIT, AIR 1955 SC 65, ¶14.
7
Santosh Kumar v. Bhai Mool, AIR 1958 SC 321, ¶14.
8 Siemens India v. K. Subramaniam, (1983) 34 CTR (Bom) 23, ¶20.
9
Moot Proposition, ¶19.
10
The Competition Act, 2002, supra note 4, §53-D.
11
The Competition Act, 2002, supra note 4, §53-D.
12 JJ Merchant v. Srinath Chaturvedi, (2002) 6 SCC 635 : AIR 2002 SC 2931, ¶11 [hereinafter “JJ Merchant”].
13
CCI Chambers v. Development Credit Bank, (2003) 7 SCC 233 : AIR 2004 SC 184, ¶9 [hereinafter “CCI Chambers”].
14
James v. Federal Bank, III (2005) CPJ 360 (Ker), ¶1.
15 CCI Chambers supra note 13, ¶7.
16
Moot Proposition, ¶19.
17 Moot Proposition, ¶21.
18
JJ Merchant, supra note 12, ¶12.
19
Versatile Commotrade v. Balraj, ¶28.
20 CCI v. Bharti Airtel, (2019) 1 CompLJ 1 (SC), ¶89 [hereinafter “Bharti Airtel”].
21
Moot Proposition, ¶22.
22
Sitaram Sugar v. Union of India, (1990) 3 SCC 223, ¶57 [hereinafter “Sitaram Sugar”].
23
Union of India v. R. Gandhi, (2010) 11 SCC 1, ¶14.
24
Gupta Sugar Works v. State of UP, 1987 Supp SCC 476 : AIR 1987 SC 2351, ¶4 [hereinafter “Gupta Sugar Works”].
25
Gupta Sugar Works, supra note 24, ¶4.
26
Sitaram Sugar, supra note 22, ¶59.
27 Reckitt Benkiser v. Union of India, 2015 (151) DRJ 381, ¶62 [hereinafter “Reckitt Benkiser”].
28
Union of India v. Cynamide India, (1987) 2 SCC 720 : AIR 1987 SC 1802, ¶7.
29 Prag Ice and Oil Mills v. Union of India, (1978) 3 SCC 459 : AIR 1978 SC 1296, ¶36.
30 Moot Proposition, ¶11.
31
Mineral Enterprises v. Ministry of Railways, [2013] 118 SCL 55 (CCI), ¶21 [hereinafter “Mineral Enterprises”].

32
Gupta Sugar Works, supra note 24, ¶4.
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33
Mineral Enterprises, supra note 31, ¶21.
34 Department of Agriculture v. Mahyco Monsanto, 2016 SCC OnLine CCI 93, ¶55.1 [hereinafter “Mahyco Monsanto”].

35
Moot Clarifications, ¶2.
36
Drugs Price Control Order, 2013, ¶31.
37
CCI v. JCB India, (2014) 146 DRJ 531, ¶15.

38 Reckitt Benkiser, supra note 27, ¶10.


39
Moot Proposition, ¶11.
40 Mahyco Monsanto, supra note 34, ¶55.1.

41
Moot Proposition, ¶8.
42 SM DUGAR, supra note 5, p. 1008.
43
Telefonaktiebolaget LM Ericson v. CCI, (2016) 4 CompLJ 122 (Del), ¶147.

44 Drugs Price Control Order, 2013, ¶3.


45 Drugs Price Control Order, 2013, ¶19.
46
Bharti Airtel, supra note 20, ¶90.

47 Bharti Airtel, supra note 20, ¶99.


48
Bharti Airtel, supra note 20, ¶90.
49 Moot Proposition, ¶22.

50 Moot Proposition, Annexure II.


51 Moot Proposition, ¶19.
52 Pett v. Greyhound Racing Association, (1970) 1 QB 46.

53
Dow Chemical Ibérica v. Commission, 1989 ECLI 380, ¶97 [hereinafter “Dow Chemical”].
54 Dow Chemical, supra note 53, ¶98.
55
Cour de Cassation [Société Europcar France] [Supreme Court for judicial matters] crim., Nov. 27, 2013, Bull. crim., No.
102 (Fr.).

56
The Advocates Act, 2002, § 30, No. 25, Acts of Parliament, 1961 (India).
57 CCI v. Oriental Rubber, 251 (2018) DLT 137, ¶19 [hereinafter “Oriental Rubber”].
58 Oriental Rubber, supra note 57, ¶19.

59
Re : Pergamon Press Ltd. (1971) 1 Ch. 388.
60
ABIR RO Y & JAYANT KUMAR , COMPETITION LAW IN INDIA 159 (2nd ed. 2018) [hereinafter “ABIR RO Y ”].
61 Walker Process v. Food Machinery, 382 US 172 (1965).

62
The Competition Act, 2002, supra note 4, §2(t).
63
Om Datt Sharma v. CCI, 2015 CompLR 529, ¶8.
64 SM DUGAR, supra note 5, p. 140.

65
Moot Proposition, Annexure II.
66
Moot Proposition, ¶16.
67
Atos Wordline v. Verifone India Sales, 2015 CompLR 327, ¶6.12.

68 ABIR ROY, supra note 60, ¶159.


69
The Competition Act, 2002, supra note 4, §4.
70
United Brands v. Commission, [1978] ECR 207, ¶65 [hereinafter “United Brands”]; Hoffmann-La Roche v. Commission,
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[1979] ECR 461, ¶38.

71 SM DUGAR, supra note 5, p. 425.


72
Shamsher Kataria v. Honda Siel Cars, 2014 CompLR 1 (CCI), ¶20.5.59.
73
Moot Proposition, ¶11.

74 Moot Proposition, ¶16.


75 MCX v. NSE India, 2011 CompLR 129 (CCI), ¶21.36 [hereinafter “MCX”].
76
MCX, supra note 75, ¶21.36.

77 SM DUGAR, supra note 5, p. 733.


78
ABIR ROY, supra note 60, ¶159.
79 Michelin v. Commission of the European Communities, [1983] ECR 3451.

80 Moot Proposition, ¶19.


81 The Competition Act, 2002, supra note 4, §4.
82 ABIR ROY, supra note 60, ¶236.
83
SM DUGAR, supra note 5, p. 477.
84 United Brands, supra note 70.
85
Moot Proposition, Annexure II.
86
Moot Proposition, ¶17.
87 Resolution No. 33/7/97-PI.I dated 29th August 1997, ¶6.
88 Sandhya Drug Agency v. Assam Drug Dealers, 2014 CompLR 61 (CCI), ¶18.33.
89
Biocon v. Hoffman La Roche, ¶80.
90
Moot Proposition, Annexure II.
91 AK DASGUPTA , “The Theory of Black Market Prices” 97 (1950) available at
https : //www.epw.in/system/files/pdf/1950_2/3/the_theory_of_black_market_prices.pdf.
92
SM DUGAR, supra note 5, p. 510.
93
Moot Proposition, Annexure II.
94 Moot Proposition, Annexure II.
95
Moot Proposition, ¶16.
96
Moot Proposition, ¶19.
97
Moot Proposition, ¶20.
98
Manju Tharad v. Eastern India Motion Picture Association, 2012 CompLR 1178 (CCI), ¶5.
99
India Sugar Mills Association v. Indian Jute Mills Association, 2014 CompLR 225 (CCI), ¶183.
100
Mineral Enterprises, supra note 31, ¶15.
101
Moot Proposition, ¶8.
102
Moot Proposition, ¶11.
103
Mineral Enterprises, supra note 31, ¶6.
104
Dilip Modwil v. IRDAI, ¶13.
105 Moot Proposition, ¶20.
106
Debapriyo Bhattacharya v. State of Andhra Pradesh, 2012 CompLR 172 (CCI), ¶22 [hereinafter “Debapriyo
Bhattacharya”].
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107
Rajat Verma v. Public Works (B&R) Department, [2015] 130 SCL 1 (CCI), ¶9 [hereinafter “Rajat Verma”].
108 Rajat Verma, supra note 107, ¶9.
109
Debapriyo Bhattacharya, supra note 106, ¶30.
110
Debapriyo Bhattacharya, supra note 106, ¶32.
111
Fenin v. Commission, 2006 ECLI 453, ¶25.
112 Moot Proposition, ¶19.
113
Grasim Industries v. CCI, 2014 CompLR 109 (Delhi), ¶10.
114 PATRICK REY ON THE USE OF ECONOMIC ANALYSIS CARTEL DETECTION , available at
http://www.eui.eu/RSCAS/Research/Competition/2006(pdf)/200610-COMPed-Rey.pdf
115 Moot Proposition, Annexure II.
116
ORGANISATION FOR ECONOMIC CO -OPERATION AND DEVELOPMENT, POLICY ROUND T ABLES 1 (1999) available at
https : //www.oecd.org/daf/competition/1920526.pdf.
117
RICHARD WHISH & DAVID BAILEY , OXFORD'S COMPETITION LAW 561 (7th ed. 2012) [hereinafter “Richard Whish”].
118 RICHARD WHISH , supra note 117, ¶561.
119
All India Tyre Dealers' Federation v. Tyre Manufacturers, 2012 SCC OnLine CCI 65, ¶278.
120
Moot Proposition, ¶17.
121 Moot Proposition, Annexure II.
122
Builders Association v. Cement Manufacturers Association, 2017 SCC OnLine CCI 21, ¶5.
123ORGANISATION FOR ECONOMIC CO -OPERATION AND DEVELOPMENT, GLOSSARY OF INDUSTRIAL ORGANISATION ECONOMICS AND
COMPETITION LAW 26 (1993) available at http://www.oecd.org/regreform/sectors/2376087.pdf.
124 In Re : Glass Manufacturers of India, 2012 SCC OnLine CCI 7, ¶7.3.
125
Moot Proposition, Annexure II.
126
Moot Proposition, Annexure II.
127 MCX, supra note 75, ¶21.40.
128
Moot Proposition, ¶17.
129 Rajasthan Cylinders v. Union of India, 2018 (13) SCALE 493, ¶103.
130 Moot Proposition, ¶20.
131
Moot Proposition, ¶8.

132
Moot Proposition, ¶20.
133
Bharti Airtel, supra note 20, ¶47.
134 Sodhi Transport v. State of UP, AIR 1986 SCR (1) 939.

135
SM DUGAR, supra note 5, p. 729.
136 Moot Proposition, Annexure II.
137 Moot Proposition, Annexure II.

138
Moot Proposition, ¶17.
139
Jyoti Swaroop Arora v. Tulip Infratech, 2015 SCC OnLine CCI 26, ¶349.
140 Moot Proposition, Annexure II.

141
Moot Proposition, ¶8.

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