PSDA: Investment & Competition Law (LLB 308)

BEFORE

THE HON’BLE COMPETITION COMMISSION OF INDIA

CASE NO. _____/2024

IN THE MATTER OF:-

DANISH KHAN & SANTOSH KUMAR ………..COMPLAINANT

VERSUS

DELAWARE LIMITED LIABILITY COMPANY (DLLC) &

RAMESHWARAM INDIA PVT LTD (RIPL) …….….RESPONDENT

NAME ENROLLMENT NO. ISSUE

SIMARPREET SINGH 00117703821 ISSUE 1 FOR OPPOSITE

BINDRA PARTY

KUNAL RUHELA 04217703821 ISSUE 2 FOR OPPOSITE

PARTY
GAURAV 00117703821 ISSUE 3 FOR
COMPLAINANT
ADITYA LAMBA 04217703821 ISSUE 4 FOR
COMPLAINANT

Submission Date: 25 April 2024

[MEMORIAL ON THE BEHALF OF RESPONDENTS]

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TABLE OF CONTENTS

S.No. TABLE OF CONTENTS Pg No.

1. INDEX OF AUTHORITIES

2. STATEMENT OF JURISDICTION

3. STATEMENT OF FACTS

4. STATEMENT OF ISSUES

5. SUMMARY OF ARGUMENTS

6. ARGUMENTS ADVANCED

ISSUE 1: Whether there is a violation of § 3(3)(a) of the Competition Act 2002?

ISSUE 2: Whether there is a violation of § 3(3)(c) of the Competition Act 2002?

7. PRAYER

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INDEX OF AUTHORITIES

CASES:

1. Escorts Ltd. v. CCI, 2015 SCC OnLine Comp AT 1167.

2. Uniglobe Mod Travels Pvt. Ltd. v. Travel Agents Federation of India, 2011 SCC
OnLine CCI 63.

BOOKS:

1. Shahi, G., & Kumar, S., Taxmann's Indian Competition Law: A comprehensive section-
wise commentary on Competition Act 2002. (2st Ed. 2022)
2. Kapoor, G. K., & Dhamija, S. (2022). Taxmann’s Company Law & Practice (26th Ed.
2022)

WEBSITES:

1. http://www.scconline.com/
2. http://www.indiankanoon.com/
3. http://www.judis.nic.in/

STATUTES:

Competition Act, 2002, No. 12, Acts of Parliament, 2003 (India)

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STATEMENT OF JURISDICTION

The Counsel on behalf of Informant 1, Rustik in the instant matter hereby, most humbly and
respectfully submits to the jurisdiction of the Hon’ble Competition Commission of Meckley
invoked under §19(1) read with §26(1) of the Competition Act, 2002.

§ 19(1):

“19. Inquiry into certain agreements and dominant position of enterprise-

(1) The Commission may inquire into any alleged contravention of the provisions contained in
sub-section (1) of Section 3 or sub-section (1) of Section 4 either on its own motion or on—

(a) [receipt of any information, in such manner and] accompanied by such fee as may
be determined by regulations, from any person, consumer or their association or
trade association;

(b) a reference made to it by the Central Government or a State Government or a

statutory authority;

[Provided that the Commission shall not entertain an information or a reference unless it is
filed within three years from the date on which the cause of action has arisen:

Provided further that an information or a reference may be entertained after the period
specified in the first proviso if the Commission is satisfied that there had been sufficient cause for
not filing the information or the reference within such period after recording its reasons for
condoning such delay.]”

§ 26(1):

“26. Procedure for inquiry under section 19-

(1) On receipt of a reference from the Central Government or a State Government or a

statutory authority or on its own knowledge or information received under Section 19, if the
Commission is of the opinion that there exists a prima facie case, it shall direct the Director
General to cause an investigation to be made into the matter:
Provided that if the subject matter of an information received is, in the opinion of the
Commission, substantially the same as or has been covered by any previous information
received, then the new information may be clubbed with the previous information.”

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STATEMENT OF FACTS

1. Delaware Limited Liability Company (DLLC) is a Chennai-based company incorporated

in 2010. It has developed an operating system called Endroid and provides services like
Delaware Mail, Delaware Map, Delaware Search, and Delaware U-Tube.
2. Rameshwaram India Pvt Ltd (RIPL) is a Delhi- based company incorporated in 2010. It
has developed an operating system named N-droid and provides services such as
Rameshwaram Mail, Rameshwaram Search, Rameshwaram Map etc.
3. The operating systems developed by DLLC and RIPL are used by the smartphone and
tablet manufacturer to run applications and programs.
4. The owners of DLLC and RIPL are IITians and good friends who studied B.Tech at IIT
Madras together.
5. DLLC and RIPL jointly conduct capacity-building programs and training for their
employees in Delhi or Chennai once every two years.
6. The top executives of the two companies meet twice a year to discuss business strategies
and expansion programs.
7. DLLC's operating system and services are not available in North and North-East India,
while RIPL's operating system and services are not available in South India.
8. Both companies provide their products and services at the same price all over India and
do not allow their purchasers to deal with the operating systems and services of the other
company.
9. The sellers are required to adhere to the maximum permissible discount as directed by
the companies, failing which they will not be allowed to deal with the companies in the
future.
10. Danish Khan and Santosh Kumar filed a complaint against DLLC and RIPL, alleging
anti-competitive behavior.
11. The Competition Commission of India (CCI) framed four issues concerning potential
violations of Sections 3(3)(a), 3(3)(c), 3(4)(b), and 3(4)(e) of the Competition Act, 2002.

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STATEMENT OF ISSUES

-I-

WHETHER THERE IS A VIOLATION OF § 3(3)(a) OF THE COMPETITION ACT 2002?

-II-

WHETHER THERE IS A VIOLATION OF § 3(3)(c) OF THE COMPETITION ACT 2002?

-III-

WHETHER THERE IS A VIOLATION OF § 3(4)(b) OF THE COMPETITION ACT 2002?

-IV-

WHETHER THERE IS A VIOLATION OF § 3(4)(e) OF THE COMPETITION ACT 2002?

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SUMMARY OF ARGUMENTS

ISSUE I - Whether there is a violation of § 3(3)(a) of the Competition Act 2002?

It is most humbly submitted before the Hon’ble Commission that the agreement between
the DLCC and RIPL is not in violation of Sec 3 (3) (a) of the Competition Act, 2002. It is
not a horizontal anti-competitive agreement and is a valid agreement. The agreement
between DLCC and RIPL is not an anti-competitive agreement as it does not cause an
appreciable adverse effect on competition in India. The agreement does not violate any
anti-competitive conditions specified under Section 19 (3) of the Competition Act, 2002
and also fulfils procompetitive conditions specified under the same section, so it would be
wrong to suggest that such an agreement is a horizontal anti-competitive agreement.

ISSUE II - Whether there is a violation of § 3(3)(c) of the Competition Act 2002?

It is most humbly submitted before the Hon’ble Commission that the agreement between
the DLCC and RIPL is not in violation of Sec 3 (3) (a) of the Competition Act, 2002. It is
not a horizontal anti-competitive agreement and is a valid agreement. The agreement
between DLCC and RIPL is not an anti-competitive agreement as it does not cause an
appreciable adverse effect on competition in India. It would be incorrect to suggest that
such an agreement between the DLCC and RIPL is a horizontal anti-competitive agreement
because the arrangement does not breach any of the anti-competitive circumstances listed
under Section 19(3) of the Competition Act, 2002 and also adheres to the pro-competitive
circumstances specified under the same section.

MEMORIAL ON THE BEHALF OF RESPONDENTS

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ARGUMENTS ADVANCED

ISSUE I - Whether there is a violation of § 3(3)(a) of the Competition Act 2002?

It is most humbly submitted before the Hon’ble Commission that the agreement between the
DLCC and RIPL is not in violation of Sec 3 (3) (a) of the Competition Act, 2002. It is not a
horizontal anti-competitive agreement and is a valid agreement.

Sec 3 (3) (a) of the Competition Act, 2002 provides that any agreement entered into between
enterprises or associations of enterprises or persons or associations of persons or between any
person and enterprise or practice carried on, or decision taken by, any association of enterprises
or association of persons, including cartels, engaged in identical or similar trade of goods or
provision of services, which directly or indirectly determines purchase or sale prices shall
be presumed to have an appreciable adverse effect on competition.

The essence of price parallelism has been very clearly stated in the OECD definition of
conscious parallelism contained in its Glossary of industrial Organization Economic and
Competition Law:
“Under conditions of oligopoly, the pricing and output actions of one firm have a
significant impact upon [those] of its rivals. Firms may after some period of repeated
actions become conscious or aware of this fact and without an explicit agreement
coordinate their behaviour as if they were engaged in collusive behaviour or a cartel to
fix prices and restrict output. This form of conscious parallel behaviour or tacit
collusion generally has the same economic effect as a combination, conspiracy or price
fixing agreement. However, whether or not conscious parallel behaviour constitutes an
illegal action which is restrictive of competition is a subject of controversy in both
competition law and economics. Price uniformity may be a normal outcome of rational
economic behaviour in markets with few sellers and homogenous products. Arguments
have been advanced that 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.”

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The Hon'ble Commission in the Tyre Cartel order has also recognized that in a concentrated
market with homogenous product price parallelism per se may not fall foul of the Competition
Act unless the same is a result of concerted action.1

In Uniglobe Mod Travels Pvt Ltd v. Travels Agents Associations of India2, the Competition
Commission of India observed that the presumption of an appreciable adverse effect on
competition could be rebutted by the parties to such agreements or arrangements if they are
able to prove that their conduct has pro-competitive effects or that it does not cause an
appreciable adverse effect on competition in India.

The agreement between DLCC and RIPL is not an anti-competitive agreement as it does not
cause an appreciable adverse effect on competition in India. Section 19 (3) of the Competition
Act, 2002 provides that The Commission shall, while determining whether an agreement has
an appreciable adverse effect on competition under Section 3, have due regard to all or any of
the following factors, namely:
(a) creation of barriers to new entrants in the market;
(b) driving existing competitors out of the market;
(c) foreclosure of competition by hindering entry into the market;
(d) accrual of benefits to consumers;
(e) improvements in production or distribution of goods or provision of services; or
(f) promotion of technical, scientific and economic development by means of
production or distribution of goods or provision of services.

Regarding Section 19 (3) (a) and 19 (3) (c) of the Competition Act, 2002, the agreement
between the DLCC and RIPL has not created any barriers to the new entrants in the market or
hindered any entry of any other company in the market which has caused foreclosure of
competition. Any company or any person which desire to enter the market can enter the market
at will.

Regarding Section 19 (3) (b), there is nothing to suggest that the agreement between the DLCC
and RIPL has driven out existing competitors from the market. Moreover, the agreement was
entered into by DLCC and RIPL so that the competition between both the companies could
survive and thrive at the same time. If DLCC had provided goods and services at lower prices

1
Escorts Ltd. v. CCI, 2015 SCC OnLine Comp AT 1167.
2
Uniglobe Mod Travels Pvt. Ltd. v. Travel Agents Federation of India, 2011 SCC OnLine CCI 63.

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as compared to RIPL, then there might be a possibility of creation of monopoly in favour of

DLCC which would have driven RIPL out of the market.

Regarding Section 19 (3) (d), by providing the goods and services at the same price all over
India, the ultimate beneficiary is the consumer who is at liberty to buy any goods or services
of DLCC and RIPL as the price of the goods and services of both the companies is same. By
providing goods and services at the same price, the consumer need not look at the price of the
goods and services and will be able to avail the goods and services of the company of his
choice.

Regarding Section 19 (3) (e) there is nothing to suggest that there has been any setback or
deterioration in the production or distribution of the goods and services the agreement between
the DLCC and RIPL.

Regarding Section 19 (3) (f), the agreement between the DLCC and RIPL has promoted the
technical, scientific and economic development by jointly conducting capacity-building
programs and training for employees either in Delhi or in Chennai which is generally conducted
once in two years.

The agreement does not violate any anti-competitive conditions specified under Section 19 (3)
of the Competition Act, 2002 and also fulfils pro-competitive conditions specified under the
same section, so it would be wrong to suggest that such an agreement is a horizontal anti-
competitive agreement.

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ISSUE II - Whether there is a violation of § 3(3)(c) of the Competition Act 2002?

It is most humbly submitted before the Hon’ble Commission that the agreement is not in
violation of Sec 3 (3) (c) of the Competition Act, 2002. It is not a horizontal anti-competitive
agreement and is a valid agreement.

Sec 3 (3) (c) of the Competition Act, 2002 provides that Any agreement entered into between
enterprises or associations of enterprises or persons or associations of persons or between any
person and enterprise or practice carried on, or decision taken by, any association of enterprises
or association of persons, including cartels, engaged in identical or similar trade of goods or
provision of services, which shares the market or source of production or provision of
services by way of allocation of geographical area of market, or type of goods or services,
or number of customers in the market or any other similar way shall be presumed to have
an appreciable adverse effect on competition.

DLLC and RIPL's geographical market allocation is a legitimate business strategy, not an
anticompetitive market sharing agreement. The agreement allows the companies to cater to
regional preferences and optimize operations while ensuring customers in each region have
access to both DLLC and RIPL's products optimizing customer satisfaction. The objective is
to efficiently serve customers in respective regions based on strengths and capabilities, not to
divide the market and eliminate competition.

In Uniglobe Mod Travels Pvt Ltd v. Travels Agents Associations of India3 , the
Competition Commission of India observed that the presumption of an appreciable adverse
effect on competition could be rebutted by the parties to such agreements or arrangements if
they are able to prove that their conduct has pro-competitive effects or that it does not cause an
appreciable adverse effect on competition in India.

3
Uniglobe Mod Travels Pvt. Ltd. v. Travel Agents Federation of India, 2011 SCC OnLine CCI 63

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The agreement between DLCC and RIPL is not an anti-competitive agreement as it does not
cause an appreciable adverse effect on competition in India. Section 19 (3) of the Competition
Act, 2002 provides that The Commission shall, while determining whether an agreement has
an appreciable adverse effect on competition under Section 3, have due regard to all or any of
the following factors, namely:
(a) creation of barriers to new entrants in the market;
(b) driving existing competitors out of the market;
(c) foreclosure of competition by hindering entry into the market;
(d) accrual of benefits to consumers;
(e) improvements in production or distribution of goods or provision of services; or
(f) promotion of technical, scientific and economic development by means of
production or distribution of goods or provision of services.

Regarding Section 19 (3) (a) and 19 (3) (c) of the Competition Act, 2002, the agreement
between the DLCC and RIPL has not created any barriers to the new entrants in the market or
hindered any entry of any other company in the market which has caused foreclosure of
competition. Any company or any person which desire to enter the market can enter the market
at will. Moreover, DLCC has captured the market in South India and earned the trust of people
residing in South India so if RIPL makes a move to enter the market of South India, the
company may incur heavy losses as it is not an efficient business strategy because it would be
very difficult to decrease the market share enjoyed by DLCC in South India and vice versa.

To quote an example at least eight foreign automakers including General Motors, Fiat and Ford

Motor have left India, the world's fourth-largest automobile market, since 2017 because they

were not able to capture the geographic market. Ford Motors which has been in India for over

30 years, had invested about US$2.5 billion (S$3.4 billion) in plants, and incurred losses of

over US$2 billion. Italian carmaker Fiat stopped operations in India after seven years in March

2019 over poor sales. while General Motors exited in 2017 after over two decades in India due

to mounting losses and inadequate interest in its Chevrolet and Opel models.4

4
https://www.straitstimes.com/asia/south-asia/foreign-automakers-quit-india-over-dismal-
sales#:~:text=South%20Korean%20SsangYong%20Motor%20Company,its%20Chevrolet%20and%2
0Opel%20models.

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Regarding Section 19 (3) (b), Nothing indicates that the arrangement between RIPL and DLCC

has forced away current rivals from the market. DLLC and RIPL's geographical market

allocation is a legitimate business strategy, not an anti-competitive market sharing agreement.

Regarding Section 19 (3) (d), the benefit is accrued to the customer as the agreement allows

both the companies to cater to regional preferences and optimize operations while ensuring

customers in each region have access to both DLLC and RIPL's products optimizing customer

satisfaction.

Regarding Section 19 (3) (e) there has been improvements in production or distribution of

goods or provision of services as both the companies have to allocate the goods and services

for their respective region only ensuring that the there is no shortage of goods and services and

they are easily available in their respective markets, thus improving the distribution of goods

and services.

Regarding Section 19 (3) (f), the arrangement between the DLCC and RIPL has promoted the

technical, scientific and economic development of the society by jointly conducting capacity

building programs and training for employees either in Delhi or in Chennai which is generally

conducted once in two years.

It would be incorrect to suggest that such an agreement between the DLCC and RIPL is a

horizontal anti-competitive agreement because the arrangement does not breach any of the anti-

competitive circumstances listed under Section 19(3) of the Competition Act, 2002 and also

adheres to the pro-competitive circumstances specified under the same section.

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PRAYER

Wherefore, in the light of the facts stated, issues raised, arguments advanced and

authorities cited, it is humbly prayed before this Hon’ble Commission that it may be

pleased to hold, adjudge and declare that:

12. The DLLC and RIPL have not violated the section 3(3)(a) of the Competition Act, 2002.

13. The DLLC and RIPL have not violated the section 3(3)(c) of the Competition Act, 2002.

And pass any other order, direction, or relief that this Hon’ble Commission may deem
fit in the interests of JUSTICE, EQUITY, and GOOD CONSCIENCE.

All of which respectfully submitted

For this Act of Kindness, the Respondent as in Duty Bound shall forever Pray.

Counsels for the RESPONDENTS

MEMORIAL ON THE BEHALF OF RESPONDENTS