Introduction:

The year 2021 has been quite enriching for the competition law regime in India with multiple investigations ordered into varied sectors such as technology, sports, cinema and automobile. The year ended with the Competition Commission of India (“CCI") directing an investigation into allegations of abuse of dominance by Apple in the market for app stores for iOS in India.[1]  In addition to the investigations, the CCI has also imposed penalties worth millions of dollars on entities violating the Competition Act, 2002 (“Act”). This is particularly commendable as the CCI nimbly adapted to the changes necessitated by COVID-19 pandemic (“pandemic”), such as e-filings and virtual mode of hearings, and simultaneously regulated the competition landscape of the country pro-actively. Several steps were taken by the CCI during the year 2020 which are still in force with minor alterations. Despite the unpredictable changes it had to make, the CCI only tightened the noose on antitrust violators in the year 2021, as is evident from the data below:

• 7 orders were passed initiating investigations into anti-competitive conduct, only 1 of which was initiated suo moto, while the others were passed on the basis of information filed under Section 19(1)(a) (“Private Enforcement”). 6 investigations were mainly focused on allegations of abuse of dominance while 1 was focussed on vertical restraints. Conversely, the CCI dismissed 37 informations filed under Section 19 of which, only 1 was a reference made by a government department under Section 19(b). This hints towards an increasing awareness of competition law in India amongst private parties. However, the stark difference between the number of investigations ordered vis a vis those rejected, demonstrated the high scrutiny and thresholds followed by the CCI in directing investigations.
• In addition to cases dismissed at the outset, the CCI has also passed 7 orders closing the cases, after consideration of the investigation report of the Director General (“DG").
• Further, the CCI in 13 cases, found violations of the Act, out of which in 7 cases, it imposed a penalty in addition to ordering the parties to cease and desist from the anti-competitive behaviour. The amount of penalty imposed aggregated to a humongous INR 1,074 crores approximately [USD 143 million app.]. In the other 6 cases, the CCI only directed the contravening parties to cease the anti-competitive conduct and desist from indulging in it in future in light of the poor financial conditions of the parties which were mainly micro, small and medium enterprises (“MSMEs”).

• Out of the 13 cases, 9 pertained to anti-competitive horizontal agreements, 1 dealt with vertical restraints and 3 related to abuse of dominance.
• The CCI also adjudicated upon 4 requests to pass interim orders in the past year and found 3 of them fit for grant of interim measures.

In addition to enforcement orders, the CCI has also approved 57 combinations in the past year. This shows the high level of M&A activity in the country. In this article, from the large number of orders passed as an ex-post enforcer, we will briefly discuss the major highlights of the year gone by.

Antitrust Enforcement at a glance

The CCI’s stance on cartel and changing penalty trend

Cartel enforcement by the CCI showed an interesting trend where the level of scrutiny of cartelists remained as intense as always. Since the onset of the pandemic in 2020, the CCI has exhibited an empathetic approach and refrained from penalising MSMEs in five cases and closed the cases with cease-and-desist orders.[2]  On the contrary, the CCI did not show any restraint in penalising large corporations as was seen in the case of the beer industry where 3 beer companies and the All India Brewers’ Association (“Association”) was imposed with a cumulative penalty of approximately INR 871 crore (USD 116 million approx.) for collusion in relation to the supply and sale of beer in India.[3] Interestingly, the case was started based on a whistle-blower’s application. The penalty order has been stayed by the National Company Law Appellate Tribunal (“NCLAT”) on appeal.[4]

In the paper manufacturing industry, despite noting the economic downturn caused by pandemic, a symbolic penalty of INR 5 lakh was imposed on each party for cartelisation in fixing prices of writing and printing paper.[5] It is nevertheless important to note that the lenient approach might only be an exception that the CCI is making in the wake of the pandemic or other mitigating factors, having regard to the facts and circumstances of each case.

Moreover, waiver of penalty is not a right of parties but discretion of the CCI. This is bolstered by the CCI penalising parties, albeit nominally for bid rigging in tenders floated by GAIL (India) Limited, despite their deplorable condition[6]

The CCI also ordered the associations of Tamil and Telugu film producers to cease and desist from limiting and controlling the production, supply and provision of services etc. in Tamil cinema by way of strike and boycott calls.[7] However, no penalty was imposed having regard to the nature and duration of the conduct.

Vertical restraints

In the second case of Resale Price Maintenance (“RPM”)[8] violation in India, Maruti Suzuki India Limited was penalised a hefty amount of INR 200 Crore by the CCI, for setting a minimum price at which their cars could be sold.[9]. The penalty-order, however, has been stayed by the NCLAT.[10] In automobile sector, the CCI previously directed an investigation against Tata Motors Ltd. for coercing dealers to stock vehicles as directed and restricting them from indulging in any other business, thereby abusing its dominance in the market for manufacture and sale of commercial vehicles in India.[11] Recently, the CCI also rejected a request for granting an interim relief in this case.[12] 

Recently, the CCI has also directed an investigation in the cinema industry for vertical restraints such as exclusive supply, refusal to deal and tie-in arrangements by Digital Cinema Equipment (“DCE”) suppliers.[13]

Abuse of dominance across sectors

In the technology sector, the CCI is investigating Google for anti-competitive vertical agreements and abuse of its dominance by imposing restrictive obligations in its contracts with smart TV and mobile original equipment manufacturers, in the market for licensable smart television device operating system in India.[14]

Investigation has also been directed against WhatsApp[15] for exploitative and exclusionary conduct in garb of policy update, and Apple for abuse of dominance in the market for app stores for iOS in India.[16]  

The CCI has also launched investigations into the sports sector for abuse of dominance by various apex sports associations.

The investigations pertain to the markets for organization of baseball matches[17] and table tennis matches[18]. Both the cases involved the apex associations restricting their respective players from participating in tournaments organized by unrecognized bodies. The CCI in the baseball case has also issued an interim order restricting the apex association from threatening players or issuing directions to its affiliated associations in order to dissuade players from taking part in events organised by unrecognized bodies.[19] It is notable that the CCI which has until 2021 issued interim orders only four times[20], issued 3 interim orders in 2021 itself.[21]

The CCI also found abuse of dominance by Grasim Industries Limited in the market for supply of viscose staple fibre to spinners in India and ordered it to cease and desist from charging discriminatory prices to its customers, denying market access and imposing supplementary obligations upon its customers.[22] However, no penalty was imposed since a penalty worth INR 301.61 crores, for similar conduct in a similar period had already been imposed in a previous order.

Conclusion

As noted above, the year 2021 was extremely busy for the competition regulator in India and was marked by a large number of investigations, penalty orders, interim orders and dawn raids etc. A major shift in the CCI’s enforcement trend was witnessed in relation to interim measures.

An increased understanding of market realities and practical difficulties, like long gap between the initiation of an investigation and passing of the final order, probably led to CCI’s increased use of interim measures for aggrieved parties.

During 2021, the CCI also conducted market studies in the telecom[23] and the pharmaceutical sectors[24].

A discussion paper on blockchain technology and competition was also released pre-empting the potential concerns that may arise in this novel frontier.[25]

The market studies and the discussion paper are welcome moves as it shows the commitment of the CCI towards understanding new-age markets.

The regulatory vigour as noted above coupled with legislative changes like the three amendments to various regulations of CCI this year[26] and the expected changes to the Act with the Draft Competition Amendment Bill, 2020[27], potentially the first amendment to the Act since its coming into force in 2009, are welcome signs of India transforming into a mature competition law jurisdiction.

[The authors are Partner, Joint Partner and Associate, respectively, in the Competition and Anti-trust practice of Lakshmikumaran & Sridharan Attorneys, New Delhi]

[1] 24-of-2021.pdf (cci.gov.in)

[2]05-of-2017.pdf (cci.gov.in); 03-of-2016.pdf (cci.gov.in); 02-of-2018.pdf (cci.gov.in); 07-of-2018_0.pdf (cci.gov.in);02-of--2016.pdf (cci.gov.in) (these cases pertained to domestic automotive and industrial bearings market, brake block manufacturers supplying to Indian Railways, axle bearings manufacturers supplying to Indian Railways, manufacturers of low density poly-ethylene covers and manufacturers of carbon brushes supplying to Indian Railways)

[3] 06-of-2017.pdf (cci.gov.in)

[4] Competition Appeal (AT) Nos. 16 and 21-27 of 2021; United Breweries Stay Order

[5] 05-of-2016_0.pdf (cci.gov.in)

[6] 41-of-2019.pdf (cci.gov.in)

[7] 07-of-2018.pdf (cci.gov.in)

[8] The first case where a finding of violation of Section 3(4) (e) of the Act, i.e., RPM, was Fx Enterprises vs Hyundai Motors.

[9] SM-01-of-2019.pdf (cci.gov.in)

[10] I.A. Nos.2491 of 2021 & 2492 of 2021 in Competition Appeal (AT) No. 15 of 2021.

[11] CNos21of201916of2020.pdf (cci.gov.in)

[12] 16-of-2020.pdf (cci.gov.in)

[13] 11-of-2020.pdf (cci.gov.in)

[14] 19-of-2020.pdf (cci.gov.in)

[15] SM01of2021_0.pdf (cci.gov.in)

[16] 24-of-2021.pdf (cci.gov.in)

[17] 03-of-2021.pdf (cci.gov.in)

[18] *19-of-2021.pdf (cci.gov.in)

[19] 03-of-2021-final.pdf (cci.gov.in)

[20] https://www.cci.gov.in/sites/default/files/case no. 40 of 2017 - Interim order.pdf; https://www.cci.gov.in/sites/default/files/Case No. 01 of 2018_0.pdf; https://www.cci.gov.in/sites/default/files/1072015-interim order.pdf; https://www.cci.gov.in/sites/default/files/06201533.pdf

[21] https://www.cci.gov.in/sites/default/files/16-of-2020.pdf; https://www.cci.gov.in/sites/default/files/19-of-2021_0.pdf; https://www.cci.gov.in/sites/default/files/03-of-2021-final.pdf; https://www.cci.gov.in/sites/default/files/Interim_Order_14-of-2019and01-of-2020.pdf

[22] 51-54-56-of-2017.pdf (cci.gov.in)

[23] https://www.cci.gov.in/sites/default/files/whats_newdocument/Market-Study-on-the-Telecom-Sector-In-India.pdf

[24] https://www.cci.gov.in/sites/default/files/whats_newdocument/Market-Study-on-the--Pharmaceutical--Sector-in-India.pdf

[25] https://www.cci.gov.in/sites/default/files/whats_newdocument/Blockchain.pdf

[26] https://www.cci.gov.in/sites/default/files/regulation_pdf/GN.pdf; https://www.cci.gov.in/sites/default/files/regulation_pdf/GN2021.pdf (amendment in light of the High Court of Delhi’s observation in SRB10042019CW114672018.pdf); https://www.cci.gov.in/sites/default/files/regulation_pdf/GN06-09-2021.pdf

[27] https://www.taxmanagementindia.com/file_folder/folder_5/Draft_Competition_Amendment_Bill_2020.pdf