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Law of Competition - Case Laws
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2015 (3) TMI 1446
Enterprise under Section 2(h) of the Competition Act, 2002 or amenable to Hon’ble Commission’s jurisdiction and can be investigated under the Competition Act, 2002 - DDA owing to its statutory functions, being a State under Article 12 of the Constitution of India - functioning of DDA, can be construed to be in violation of the Competition Act, 2002 or not?
Refusal to decide the issue of jurisdiction as a preliminary issue and directing the same to be decided at the time of final determination of the matter - HELD THAT:- No direction was needed for CCI to, at the time of final determination to consider the objection taken by appellants as to jurisdiction. There was no other question for adjudication in the writ petition. Had the learned Single Judge been of the opinion that the objection raised by the appellants of the jurisdiction of the CCI over the appellants was not to be decided as a preliminary issue and was to be dealt with at the time of final determination only, as ordered by the CCI also on 1st May, 2014, the writ petition would have been dismissed and there would have been no need for the learned Single Judge to issue a direction “that the CCI will determine the issue of jurisdiction. If the CCI were to come to a conclusion that it has jurisdiction in the matter, it will immediately proceed to decide the matter on merits”. The very fact that the writ petition was not dismissed but was disposed of with the direction aforesaid, read with the grievance urged in the petition, leads to unequivocal conclusion that the direction in para no.5 of the order dated 21st January, 2015 though not most happily worded is for the issue of a jurisdiction to be decided as a preliminary issue i.e. in the first instance and only if CCI were to hold that it has jurisdiction in the matter, is the CCI to proceed with the decision on merits. It also cannot be held that the use of the words in para 5 of the order dated 21st January, 2015 “immediately proceed to decide the matter on merits” negate the said intention.
Neither the CCI in its order dated 4th February, 2014 has so stated nor has the counsel for the respondent No.1 CCI argued that there is any impediment to the legal issues raised by the appellants to the jurisdiction of the CCI being decided in the first instance.
Conclusion - The High Court clarified that the CCI must first decide the jurisdictional question as a preliminary issue. Only if the CCI concluded that it had jurisdiction should it proceed with the merits of the case - The order dated 23rd February, 2015 of the learned Single Judge of dismissal of CM No.2982/2015 filed by the appellants for clarification of the order dated 21st January, 2015 in the writ petition.
Appeal allowed.
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2015 (3) TMI 1149
Competition Commission of India - whether it is possible, in the context of the scheme of the Competition Act, 2002, for two adversaries to reach a settlement, thereby closing the doors for an investigation or inquiry? - Held that:- It is clear that a settlement is possible both in the European Union and in the United States to the extent indicated above. To some extent, the obligations imposed by the World Trade Organisations upon its member countries, are the same. In such circumstances, we do not see any reason as to why the Scheme of the Competition Act, 2002 should be taken to prohibit any settlement, especially when the scope of Section 27 of the Act is very wide, conferring jurisdiction upon the Commission to pass residuary orders. Hence, our answer to the first question is that it is possible within the framework and scheme of the Competition Act, 2002, to allow settlements and compromises to be reached between parties, provided the Commission is of the considered view that such settlements and compromises (1) would not lead to the continuance of Anti-Competitive Practices (2) would not allow the abuse of dominant position to continue and (3) would not be prejudicial to the interest of consumers or to the freedom of trade.
Whether this court can record a memorandum of settlement like the one that the parties have reached in this case - Held that:- In the case on hand, the Director General of the Competition Commission of India has already completed the investigation and filed a report. In Chapter 8 of the Report, the Director General has concluded that the practices and conduct of the appellant are restrictive in nature to control the film exhibition business. This conclusion has been reached only on the ground that the appellant limited and controlled the exhibition of movies as well as innovative use of technology in the exhibition of feature films in the territory of Tamil Nadu, unless its own directions are obeyed. It is also pointed out in the Report that the appellant was guilty of violation of the provisions of Section 3(3) (b) read with Section 3(1) of the Act. The Director General has placed on record that in yet another case, initiated at the instance of Reliance Big Entertainment (Private) Limited, the appellant was imposed with a penalty.
The investigation Report of the Director General not only concludes that the appellant is guilty of violation of the provisions of the Act relating to Anti-Competitive Practices, but also points out that it is the second instance of such nature. Therefore, we are of the considered view that the appellant should file the memorandum of compromise/settlement before the Competition Commission itself so that the Commission will be in a better position to appreciate whether the same could be accepted with or without modifications.
In view of the above, the writ appeals are disposed of permitting the appellants to file the Memorandum of Compromise/Settlement entered into between them and the second respondent, before the Competition Commission. Upon the parties filing the Memorandum, the Competition Commission may look into the same in the context of what we have indicated above and pass appropriate orders either rejecting the compromise or accepting the same with or without modifications. The Commission may bear in mind that if in the light of the compromise, any further proceeding would only be an exercise in futility, the same shall not be undergone just for the purpose of completion of formalities.
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2015 (3) TMI 772
Abuse of dominant position under section 4(2)(a)(i) of The Competition Act,2002 - Change in the terms of allotment of flats - Held that:- As per OP's own website, it had only one residential project in the relevant market. The informants did not submit any information on the presence of other players in the relevant market in which OP was operating. However, as per the information available in public domain, there are many other real estate developers such as Supertech, Amrapali Group, K.V. Developers, Nirala Group, Earth Infrastructure Group etc. which are operating in the relevant market. Further the size and resources of OP does not seem to be much in comparison to these other players in the relevant market. Also there seems to be no entry barriers or any dependence of buyers on OP for any reason whatsoever. Therefore, prima facie, it does not appear that OP held a dominant position in the relevant market.
Since OP, prima facie, does not appear to be in a dominant position in the relevant market, there seems to be no question of abuse of its dominant position within the meaning of the provisions of Section 4 of the Act. - Case close down.
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2015 (3) TMI 725
Abuse of dominant position in supply and distribution of natural gas - Contravention of the provisions of section 4 of the Competition Act - Report of the DG - Unilaterally terms and conditions in Gas Sales Agreement - Held that:- In the result, the Commission is of opinion that the relevant market in the present case is the market of supply and distribution of natural gas to industrial consumers in the district Faridabad.
In the present case, the Commission observes that the opposite party has 100% market share in the relevant market being the only entity authorized by Government of Haryana to set up and operate CGD network in Faridabad. Further, it appears that distribution of natural gas is regulated by the Petroleum and Natural Gas Regulatory Board (PNGRB) established under the Petroleum and Natural Gas Regulatory Board Act, 2006 (PNGRB Act). As per the provisions of the PNGRB Act and the regulations framed thereunder, PNGRB is empowered to register and authorize downstream market activities such as laying, building and operating natural gas distribution networks, ensure access to customers on a common carrier basis, register entities to market natural gas subject etc. It may also be noticed that the regulations contain provisions to grant 25 years infrastructure exclusivity to lay, expand or operate a CGD network. Moreover, the Authorization Regulations provide up to three years marketing exclusivity from the date of authorization to an existing CGD networks and five years from the date of authorization to a new CGD network from the purview of common or contract carrier, after which there is a provision for "open access", which allows competition and choice to the consumer.
In the aforesaid circumstances and after further taking into account the absence of any countervailing buying power, market structure and size thereof as also the entry barriers, the Commission holds the opposite party to be in dominant position in the defined relevant market.
It may be noted that though clause 11.2.4 absolves the opposite party from consequential damages in the event of disruption of supply, clause 21.5 (Exclusion of Consequential Loss) of GSA executed between the opposite party and its industrial consumers provides that neither party shall be liable for any indirect, incidental or consequential loss or damage or loss of opportunity or profits. Moreover, this clause is a reflection of the upstream agreement of the opposite party with its supplier i.e. GAIL. In these circumstances, it may be observed that the impugned clause, in light of conspectus of various clauses as discussed, appears to be evenly balanced and no contravention of the Act can be found on this count.
The Commission is of the opinion that the clause regarding likely termination of contract by the opposite party on account of failure to off-take 50% or more of the cumulative DCQ by the buyer during a period of 45 consecutive days as against the longer period available to the opposite party from GAIL, amounts to imposition of unfair conditions in contravention of section 4(2)(a)(i) of the Act. As the opposite party had uniformly stipulated the said condition in the GSAs executed with all its industrial consumers, the allegations of the informant regarding discriminatory conduct of the opposite party in terms of section 4(2)(a)(i) of the Act is not made out.
In view of the above discussion, the Commission is of opinion that the opposite party has contravened the provisions of section 4(2)(a)(i) of the Act by imposing unfair conditions upon the buyers under GSA. Order issued to opposite party to cease and desist from indulging in conduct which is in contravention of the provisions of the Act and to modify in gas supply agreement accordingly.
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2015 (3) TMI 724
Abuse of dominant position - Arbitrary clauses in Buyer Builder Agreement - Contravention of the provisions of section 4 of the Competition Act - Held that:- The Informant alleged that OPs were dominant in the relevant market. However, having regard to the factors stated under section 19(4) of the Act, it does not appear so. Apparently, there are several other real estate developers such as DLF, Ramprastha Group, Anantraj Group, Earth Infrastructure Group etc. which are operating in the relevant market. As per informants own submissions, the land bank of OPs in the relevant market in Gurgaon is around 778 acres. As per the information available in public domain the land bank of other players e.g. DLF (over 3000 acres), Ramprastha Group (over 1000 acres), Anantraj Group (around 100 acres) is also enormous. Accordingly, it seems unlikely that with such land bank, the OPs had huge size or resources or any other advantage that could have capacitated them to work independently of their competitors.
Since the case under section 4 of the Act depends primarily on the position of the Opposite Parties i.e. whether they held a dominant position or not, in the absence of OPs holding a dominant position the Commission need not go into the question of abuse.
Based on the foregoing, no prima facie case of contravention of the provisions of section 4 of the Act is made out against the opposite parties. It is a fit case for closure under section 26(2) of the Act and the same is hereby closed.
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2015 (3) TMI 547
Appeal against order passed by Competition Commission of India (CCI) - Order passed without issuing notice and without hearing appellant - Held that:- The reasons given by the Supreme Court for holding that no notice or hearing is required to be given, to the person/enterprise informed/referred against, by the CCI before forming a prima facie opinion and directing investigation under Section 26(1) of the Act, apply also to the stage under Section 26(7) of the Act. The stage of Section 26(7) is also an "initial stage" which is not determinative in nature and substance; "further investigation" is also a pre-cognizance stage; issuance of notice to the person/enterprise informed/referred against, at that stage cannot be implied.
Secondly, just like Section 26(1) does not contemplate any adjudicatory function and the function of the CCI thereunder has been held to be of a preliminary/departmental/administrative nature with no person being condemned at that stage, similarly the function of the CCI under Section 26(7) insofar as of directing further investigation is concerned is also not adjudicatory and of a preliminary/department/administrative nature only, with the person/enterprise informed/referred against being not condemned at that stage also. We have already noticed above that ordering investigation against anyone does not amount to condemning that person/enterprise.
We therefore hold that the challenge by the appellant to the order dated 1st July, 2013 of the CCI on the ground of the same having been passed without giving any opportunity of hearing to the appellant, which is the enterprise informed against, has no merit. Resultantly, the appeal is dismissed. - Decided against the appellant.
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2015 (3) TMI 197
Jurisdiction to levy penalty by Competition Commission of India (CCI) - Sections 3 and 4 of the Competition Act, 2002 - Principles of natural justice - Held that:- This Court is of the opinion that the petitioner's argument of lack of jurisdiction is misplaced as neither CCI nor Competition Appellate Tribunal (COMPAT) lack inherent jurisdiction to decide the petitioner's first submission as to whether Act, 2002 applies to the proceedings or not. This Court is of the view that issues of applicability of Act, 2002 or Monopolies and Restrictive Trade Practices Act, 1969 and levy of penalty are not equivalent to lack of inherent jurisdiction to decide the case. Consequently, in the opinion of this Court, it is only the CCI and COMPAT which have the jurisdiction to decide the issue of applicability of Act, 2002 as well as the issue of levy of penalty thereunder.
As far as the issue of principles of natural justice is concerned, this Court is of the opinion that both COMPAT and CCI have adhered to it and parties have been given not only liberal, but a full hearing even at the interlocutory stage. The issue as to whether two reports prepared by the Director General, namely, Case No.29/2010 and RTPE 52/2006 are practically identical, would be examined by the COMPAT at the final hearing stage. This Court is also in agreement with the prima facie conclusions arrived at by COMPAT in its impugned order.
Moreover, this Court is of the view that COMPAT has also passed similar orders requiring other cement manufacturers to pre-deposit ten per cent of the penalty imposed on them by CCI. In the light of said orders, this Court is of the view that the impugned order is fair and reasonable and requires no interference at this interlocutory stage in writ proceedings. - Decided against the appellant.
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2015 (2) TMI 1414
Whether the process commenced under Section 48 of the Act Competition Act, 2002 is premature, in view of the fact that the CCI has not returned any finding as to the contravention of the Act, as yet? - HELD THAT:- There cannot be two separate proceedings in respect of the company (i.e. VeriFone) and the key-persons. As the scheme of the Act, to my mind, does not contemplate such a procedure. As in every such matter, including the proceedings under Section 138 of the Negotiable Instruments Act, 1881 (in short N.I. Act), a procedure of the kind suggested is not contemplated.
The judgment of the Supreme Court in the case Aneeta Hada [2012 (5) TMI 83 - SUPREME COURT]dealt with proceedings under Section 138 of the N.I. Act. The judgment does not deal with issue at hand, which is whether adjudication in two parts is permissible. The judgment is distinguishable.
It is no doubt true that the petitioners can only be held liable if, the CCI, were to come to a conclusion that they were the key-persons, who were in-charge and responsible for the conduct of the business of the company. In the course of the proceedings qua a company, it would be open to the key-persons to contend that the contravention, if any, was not committed by them, and that, they had in any event employed due diligence to prevent the contravention. These arguments can easily be advanced by key-persons without prejudice to the main issue, as to whether or not the company had contravened, in the first place, the provisions of the Act, as alleged by the D.G.I., in a given case.
Conclusion - The Competition Act does not require separate proceedings for the company and its key-persons and that key-persons can present their defenses during the unified proceeding.
Petition disposed off.
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2015 (2) TMI 1410
Abuse of dominant position by the appellant - determination of relevant market - guilty of contravention of Section 4(2)(c) of the Competition Act, 2002 - rule of audi alteram partem/principles of natural justice - HELD THAT:- The ambit and scope of principles of natural justice has been considered by the Courts across the globe. In India, the High Courts and Supreme Court have invoked these principles in innumerable cases and quashed administrative, quasi judicial or even judicial orders the ground of violation thereof.
The judgment in State of Orissa vs. Dr. (Miss) Binapani Dei and others [1967 (2) TMI 96 - SUPREME COURT], contains a lucid exposition of the principles of natural justice and their applicability to what was then thought as purely administrative action. The facts of that case were that the respondent had been retired from service by the State Government by relying upon the date of birth which was unilaterally changed by the competent authority. The Orissa High Court quashed the retirement of the respondent by declaring that it was punitive and amounted to removal from service within the meaning of Article 311 of the Constitution. The High Court further held that the order of retirement was vitiated because the writ petitioner had not been given a reasonable opportunity of showing cause against the proposed change in the date of birth recorded in her service book.
In Kothari Filaments and another vs. Commissioner of Customs (Port), Kolkata and others [2008 (12) TMI 28 - SUPREME COURT], the Supreme Court considered the correctness of an order passed by the Calcutta High Court dismissing the writ petition filed by the appellant against the order of the Customs, Excise and Gold (Control) Appellate Tribunal, Calcutta, which, in turn, approved the order of confiscation and penalty passed by the competent authority under the Customs Act, 1962.
In State (NCT of Delhi) v. Navjot Sandhu [2005 (8) TMI 663 - SUPREME COURT], the Supreme Court held that print outs taken from the computers/servers by mechanical process and certified by a responsible official of the service providing Company can be led into evidence through a witness who can identify the signatures of the certifying officer or otherwise speak to the facts based on his personal knowledge. This would make the call records admissible. The Supreme Court went further on to state that irrespective of the compliance of the requirements of Section 65B of the Evidence Act which is a provision dealing with admissibility of electronic records, there is no bar to adducing secondary evidence under the other provisions of the Evidence Act, namely Sections 63 & 65. The Court held that merely because a certificate containing the details in sub-Section (4) of Section 65B is not filed in the instant case, does not mean that secondary evidence cannot be given even if the law permits such evidence to be given in the circumstances mentioned in the relevant provisions, namely Sections 63 & 65.
The finding recorded by the Commission on the issue of abuse of dominance is legally unsustainable and is liable to be set-aside because the information downloaded from the net and similar other material do not have any evidentiary value and, in any case, the same could not have been relied upon by the Commission without giving an effective opportunity to the appellant to controvert the same.
The discussion made by the Commission in the context of clause 9.1(c)(i) of the media agreement is also vitiated due to breach of principles of natural justice because the same was neither referred in the order passed under Section 26(1) nor the Director General recorded any finding qua its validity or otherwise and on this count the appellant did not get an opportunity to defend the said clause.
The impugned order is set aside and the matter is remitted to the Commission for fresh disposal in accordance with law - Appeal allowed.
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2015 (2) TMI 1043
Entertainment tax on Direct-to-home service providers (DTH) under provisions of the Jharkhand Entertainment Tax Act, 2012 - Taxable under service tax under category broadcasting service - Ultra virus provisions to the Constitution of India - Covered under entry 92C of the Union list or entry 62 of the State list - Doctrine of harmonious construction - Aspect theory -
Held that:- In our view, the respondents as a cable operator, for the purpose of levy and collection of tax under sub-section (4a) of section 4A of the Act have direct and close nexus with the entertainments made available to the viewer through their cable television network. The performance, film or programmes shown to the viewers through the cable television network come within the meaning of entertainments and therefore within the legislative competence of the State Legislature under entry 62 of List II of the Seventh Schedule to the Constitution of India to make law for the levy and collection of tax on such entertainments.
We also see no substance in the submission that the impugned legislation impinges on the field occupied by the Central legislation. The aforesaid Central legislation has been enacted to regulate the operation of cable television network in the country and matters connected therewith or incidental thereto whereas the State legislation is for levy of entertainment tax on entertainment within the legislative field exclusively assigned to the State Legislature under entry 62 of List II of the Seventh Schedule to the Constitution. Thus the objects sought to be achieved by two different Acts enacted under two different legislative fields exclusively assigned to the respective Legislatures are entirely distinct and separate. The Cable Television Networks (Regulation) Act, 1995 of the Union Legislature does not denude the State Legislature for levying entertainment tax on entertainment.
In this context, it is important to refer to the case of Express Hotels Private Ltd. [1989 (5) TMI 52 - SUPREME Court] in which the Constitution Bench had dealt elaborately with Western India Theatres Ltd. [1959 (1) TMI 23 - SUPREME COURT]. In the said case, with reference to entry 50 in Schedule VII of the Government of India Act, 1935, which is identical to entry 62, contention was raised that levy with respect to luxuries, entertainments or amusements can be made on person's receiving such luxuries or entertainment and that there can be no levy of tax on those who are givers or providers of such luxuries, entertainments, etc. While rejecting such a contention that it is only the receivers who can be taxed and not the giver, the learned judges observed that there can be no reason to 'differentiate between the giver and the receiver of entertainments and amusements and both may with equal propriety be made amenable to the tax'.
Therefore, there is no substance in the contention that taxable event is entertainment and there can be no tax if there is no entertainment. As held by the Constitution Bench, existence of means of providing entertainment would be sufficient to support a law imposing tax thereon and that means of providing entertainment provides the nexus between the taxing power and the subject of tax.
In the case of Kesoram Industries Ltd. [2004 (1) TMI 71 - SUPREME Court] , the honourable Supreme Court referred to the aspect theory and pointed out that the transaction may involve two or more taxable events in its different aspects. Merely because they overlap, the same does not detract from the distinctiveness of the aspects. Thus, there could be no question of a conflict solely on account of two aspects of the same transaction being made a subject-matter of legislation by two Legislatures falling within two fields of legislation respectively available to them. So long as the essential character of the levy is not departed from within the four comers of the particular entry, the measure of tax or the manner of levying the tax would not have any vitiating effect.
In the present case the question which is required to be determined is whether the levy of tax by the State Legislature was on the service aspect or the entertainment aspect. As has been held in the case of Federation of Hotel [1989 (5) TMI 50 - SUPREME Court] by the honourable apex court, if the same transaction involved two or more taxable events in its different aspects, the fact that there is an overlapping does not detract from the distinctiveness of the aspect which can be subjected to legislation under different legislative power of the Union and the State Legislature.
The distinction between the two aspects/spheres/profession on the one hand and service on the other hand, was considered by the honourable Supreme Court in the All India Federation of Tax Practitioners [2007 (8) TMI 1 - Supreme Court].The honourable Supreme Court drew distinction between the two aspects/spheres, i.e., profession on the one hand and service on the other hand and upheld the levy of service tax on chartered accountants or cost accountants.
The validity of the levy of entertainment tax on DTH providers by the State of Uttarakhand was challenged before the High Court of Uttarakhand. Referring to the distinction drawn by the apex court between the two aspects/spheres, i.e., profession on one hand and service on the other hand in All India Federation of Tax Practitioners [2007 (8) TMI 1 - Supreme Court] and treating the similar distinction between the two aspects/spheres on DTH broadcasting service, i.e., service on the one hand and entertainment on the other hand, the Uttarakhand High Court held.
We fully agree with the view taken by the Uttarakhand High Court and we hold that there are two different aspects/spheres of "direct-to-home" (DTH). One is broadcasting service, for which service tax is levied and another one entertainment, for which entertainment tax is levied by the State of Jharkhand. Applying the doctrine of "aspect theory" in a similar case reported as Tata Sky Limited [2010 (10) TMI 930 - PUNJAB & HARYANA HIGH COURT] , the Punjab and Haryana High Court held that levy of service tax on the providing of service vide entry 97 read with entry 92C of List I and levy of entertainment tax covered by entry 62, List II of the Seventh Schedule to the Constitution of India can co-exist and can be harmonized on being different aspects.
In the case of Purvi Communication P. Ltd. [2005 (3) TMI 438 - SUPREME COURT OF INDIA] , the honourable Supreme Court upheld the levy of "entertainment tax" on cable television by the State of West Bengal. Ratio of the decision in Purvi Communication upholding the levy of entertainment tax on cable operators by the West Bengal Legislature is squarely applicable.
The contention of the petitioners is that the value of set top box or other equipments cannot be included in valuable consideration and gross collection. The learned senior counsel for the petitioner urged to segregate the cost of set top box or other equipments and other instruments of like nature from valuable consideration received by the assessee and from gross collection. By reading of section 2(aj), we do not think that the value of set top box is included as valuable consideration. What is stated as valuable consideration in section 2(aj)(ii) in respect to direct-to-home (DTH) broadcasting service means any cash, deferred payment by way of contribution, subscription, installation or rent or security or activation charges or connection charges or any other charges collected in any manner whatsoever for direct-to-home (DTH) broadcasting service with the aid of any type of set top box or any other instrument of like nature at a residential or non-residential place. We are of the view that the connection charges are integral part of "entertainment" and have to be taken into account for the valuable consideration received by the assessee for calculating the gross collection.
Jharkhand Entertainment Tax Act, 2012 levying tax on "entertainment" through direct-to-home (DTH) in pith and substance, is on entertainment which falls under entry 62 of List II of the Seventh Schedule. The levy of "entertainment tax" is different from the levy of tax on "broadcasting service" which falls under entry 92C of List I of the Seventh Schedule to the Constitution of India.
Entry 62 of State List and entry 92C of the Union List operate in two different spheres. There is no transgression or encroachment upon the field of Union legislation and the levy of tax on "entertainment" through direct-to-home (DTH) by the State Legislature is not ultra vires the power of the State Legislature provided under entry 62 of List II of the Seventh Schedule to the Constitution of India.
In view of the fine distinction between direct-to-home service and cable T. V., levy of "entertainment tax" at the rate of 10 per cent. on direct-to-home (DTH) service vis-a-vis 7.5 per cent. on the "entertainment" through cable TV, is not discriminatory.
Applying the R. M. D. Chamarbaugwalla [1957 (4) TMI 56 - SUPREME COURT] the principle of severability, section 2(s)(v) read with section 2(aj)(ii) of Jharkhand Entertainment Tax Act shall not include the cost of set top box or any other instrument or equipment of like nature to levy entertainment tax.
The impugned demand notices issued to the writ petitioners are in consonance with the provisions of the Jharkhand Entertainment Tax Act, 2012, the prayer sought for by the petitioners to quash the impugned notices is liable to be rejected. - Decided against the appellants.
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2014 (12) TMI 1433
Contravention of the provisions of Section 4 of Competition Act, 2002 - Locus of CCI to prefer an appeal - validity of search conducted at the office premises of the petitioners by Director General.
Whether CCI has locus to prefer the present appeal challenging the order of the learned Single Judge staying the investigation by the Director General? - HELD THAT:- CCI which is a body corporate in terms of Section 7(2) of the Act, having perpetual succession and a common seal with power to sue and be sued in its name, has a right of representation in any appeal before the tribunal as has been specifically mentioned under Section 53-S(3) and it even has a right of appeal under Section 53-T before the Supreme Court - since the investigation by the Director General forms part of the regulatory jurisdiction exercised by CCI, any order hampering the investigation process directly affects the statutory functioning of CCI. Under the circumstances, the right to assail an order staying the investigation cannot be confined only to the informant, but the CCI also being an equally aggrieved party, is entitled to do so - CCI has locus standi to present the appeal against the order of the learned Single Judge staying investigation by the Director General.
Scope of the powers of the Director General under the Competition Act, 2002, particularly concerning search and seizure operations - HELD THAT:- It is relevant to note that the learned Single Judge initially by order dated 04.04.2014 allowed the Director General to proceed with the investigation, however, granted stay only to the extent of passing a final order/report. The said order has been accepted and acted upon by both the parties. It appears that the whole grievance of the writ petitioner is only with regard to the manner in which the Director General has been proceeding with the investigation. The Director General who was directed to file his personal affidavit is not a party to the proceedings before the learned Single Judge and admittedly the matter is being contested by the CCI alone. Be that as it may, since the matter is still pending before the learned Single Judge and the counters are yet to be filed by the CCI and other respondents therein, it is always open to the CCI/appellant herein to file the necessary counter and seek for vacating the order dated 26.09.2014 including the direction that the Director General shall file his personal affidavit. Therefore, the interference at this stage is unwarranted.
Conclusion - The CCI has the locus standi to appeal against orders affecting its statutory functions. The Director General's investigative powers are subject to procedural safeguards. Since the matter is still pending before the learned Single Judge and the counters are yet to be filed by the CCI and other respondents therein, it is always open to the CCI/appellant herein to file the necessary counter and seek for vacating the order dated 26.09.2014 including the direction that the Director General shall file his personal affidavit.
Appeal disposed off.
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2014 (11) TMI 1269
Violation of principles of natural justice (Audi alteram partem) - Direction u/s 26(1) of the Competition Act, 2002 for investigation into the allegations made by the informants i.e., respondent Nos.1 and 2 herein, and for submission of report - whether opinion formed by the Commission with regard to the existence of a prima facie case, to direct the Director-General to cause an investigation into the matter, calls for interference?
HELD THAT:- The Commission having deliberated, found that there exits a prima facie case and directed the investigation by the Director- General. The finding in Annexure-A being only for the limited purpose of directing investigation into the allegations made in Annexure-C, by the Director-General, shall have no bearing either on the investigator or even on the Commission, at a subsequent stage. When once report of investigation is received, the matter shall have to proceed in accordance with Sub-sections (4) to (8) of S.26 of the Act. Annexure-A having made reference to certain aspects, cannot be said to be perverse or is without any basis and thus, arbitrary to warrant interference under Article 226 of the Constitution.
Non providing of opportunity of hearing while issuing the direction - Principles of natural justice - HELD THAT:- The points raised for consideration has no merit and should fail.
Since the petitioner has further opportunity to raise its objections as against the said report before the Commission, order passed on 23.09.2014, on the memo filed and submissions made by Sri Krishna S.Dixit, that the report dated 30.04.2013 of respondent No.9 shall be kept in abeyance and not to act upon the same, until further orders, is hereby recalled.
Both the legal points raised by the petitioner are covered by the Judgment referred to hereinbefore, this writ petition being devoid of merit is dismissed. Liberty is reserved to the petitioner to file its objections to the report dated 26.04.2013, in view of Sub-section(6) of S.26 of the Act.
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2014 (10) TMI 1082
Direction to respondent/Competition Commission of India to consider his candidature for engagement as an Expert in the field of law, by giving weightage to his qualifications and experience - HELD THAT:- It is a settled law that when an employer invites applications for appointment to a particular job, it is his prerogative to stipulate the educational qualifications and other criteria for selection to the post, including seeking documents to establish the work experience, etc., gained by a candidate.
If a candidate is called upon to submit certain documents to establish his educational qualifications and demonstrate his work experience, then an application devoid of the relevant details and lacking in the supporting documents would have to be treated as incomplete and be liable to be rejected at that stage. Admittedly, the petitioner herein had submitted his application without the supporting documents as prescribed by the respondent/CCI. In such circumstances, the respondent/CCI cannot be blamed for treating the petitioner’s application as incomplete in all respects and resultantly, refusing to shortlist him for the interview that was held in the first phase in June, 2012 and in the second phase in October, 2012.
This Court is of the opinion that the respondent/CCI was justified in declining to consider the petitioner’s application for engagement as an Expert in the field of Law. There was no material placed before the respondent/CCI to assess the petitioner’s expertise in the field of law so as to arrive at any reasonable conclusion. It is fallacious on the part of the petitioner to contend that the certificate of enrollment issued by the Bar Council of Delhi in the year 2006 was sufficient for the respondent/CCI to infer that he had been practicing as a lawyer in the courts ever since then.
Conclusion - The respondent/CCI cannot be faulted for declining to consider his application for appointment to the subject post, the same not being in order and not fulfilling the requirements stipulated in the notice dated 28.03.2012.
The present petition is dismissed as being devoid of merits.
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2014 (10) TMI 1081
Seeking a direction to respondent No.1-CCI to frame and decide the issue of jurisdiction prior to passing of orders on merits of the cases and deferring the matters until final adjudication by the Supreme Court - HELD THAT:- This Court is of the opinion that it would be futile to ask respondent no. 1-CCI to re-decide the issue of jurisdiction and that too as a preliminary issue! Consequently, no preliminary issues are warranted in the facts of the present cases.
Though this Court in proceedings under Article 226 has the jurisdiction to pass an order directing the respondent no. 1-CCI to hear and decide the preliminary issue of jurisdiction, yet it is of the opinion that a writ petition is not maintainable as a matter of right for seeking framing of a preliminary issue in any proceeding pending before a statutory or quasi- judicial body. It is pertinent to mention that Section 36 of the Act, 2002 gives power to respondent no.1-CCI to regulate its own procedure.
The present writ petitions and applications are dismissed.
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2014 (8) TMI 1251
Imposition of penalty on NSE - Abuse of dominant position by NSE - violation of Section 4 of the Competition Act, 2002 on the part of NSE or not - introducing predatory pricing by waiving transaction fee altogether in the newly established Currency Derivatives Segment (CD) - also alleged that NSE was using its dominance in the non-CD segments to enter into and protect its position in the CD Segment and was also causing denial of market access by promoting MCX SX, Financial Technologies of India Ltd. (FTIL) from offering its software ODIN for the use of its CD Segment.
HELD THAT:- The CCI has thoroughly discussed all the arguments, which were placed before it. The appreciation of the material put before the CCI is quite satisfying. The uncertainty in the application of law was also pressed into service like it was done before the CCI. The CCI is agreed upon in its observations about these aspects. It was tried to be said that there were benefits of zero pricing and that there was no denial of market access. The CCI is agreed upon, for the reasons given for rejecting these contentions and for the same reasons, these contentions are rejected. Much was made about penalty levied @ 5% of the average turnover.
The case of M/s. Excel Crop vs. CCI [2017 (5) TMI 542 - SUPREME COURT] was pressed into service to suggest that the relevant turnover should alone be considered for the sake of penalty. All these arguments of relevant turnover should fall to the ground in the wake of finding that the relevant market in this case IS the services of stock exchange in all the segments. In M/s. Excel Crop's judgment, there were well defined distinct markets and it was a multi-commodity company. That is not a case here.
Then, it was pointed out that the relevant turnover on account of the zero transaction fees policy was also zero. So, it was asked to adopt a notional turnover figure. It is pointed out that the NSE was making tons of profits from the relevant market on account of its services in the other segments. Therefore, there can be no justification for taking any lenient view, nor is it necessary to consider the concept of notional turnover figure, when the turnover of the NSE is well available on the basis of Annual Reports. The contention that the turnover for the CD segment should be the relevant turnover is rejected. Enough reasons to hold that the whole turnover of NSE should be taken into consideration, in view of the finding on the relevant market. The order of CCI in this behalf need not be modified.
As regards, the other remedies imposed, the NSE has submitted that it should not be required to maintain segment wise account as in a multi-product firm, it is difficult to apportion shared based fixed costs and further that AS 17 does not requires the maintaining of segment wise accounts. In view of finding that the relevant market is the services of Stock Exchange, in all the segments it will not be necessary to maintain segment wise accounts. This direction by the CCI is not approved and is ordered to be deleted.
There are no merits in the Appeal - Accordingly, the Appeal is dismissed.
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2014 (6) TMI 190
Breach of section 3(3)(b) of the Competition Act, 2002 - M/s. B.R. TV, Mumbai was a producer of the TV serial 'Mahabharata' and had entrusted the sole and exclusive rights to M/s. Magnum TV Serials to dub the Hindi version of the said serial in Bangla and for exploiting its Satellite, Pay TV, DTH, IPTV, Video, Cable TV and Internet Rights till September 2016 - Informant was appointed sub-assignor by M/s. Magnum TV Serials and the said serial Mahabharata was dubbed in Bangla language by the Informant. - OP-4, Shri Sanjoy Das received a letter from OP-2, CTVN (the 'Appellant') to stop the telecast of the above serial - It was also pointed out to OP-4, M/s. CTVN Plus that if the telecast is not stopped, its channel will face non-cooperation - Whether the act and conduct of imposing restrictions on telecast of the said serial is in violation of provisions of the Act.
Held that:- Relevant market as held by majority order is too broad to be accepted. Nature of the Information does not show anything, which could even be distinctly connected with the whole 'Film and Television Industry in the State of West Bengal'. The Information is only against showing the dubbed serials on the television. It has no relation, whatsoever, with production, distribution etc of any film or any other material on the TV channels. The controversy is very specific. While some channels were actually showing the other language serials, dubbed in Bangla, that precisely was being opposed. The relevant market is, therefore, the 'telecasting of the dubbed serials on the television in West Bengal'. In this behalf, the finding by the minority order appears to be more appropriate, as compared to the majority order.
There is no question of trading of any goods, or provision of any services, much less by the persons engaged in identical or similar trades or provision of services. These were protests raised by the Co-ordination Committee of which there were few members, who were either technicians or artists and all that they were doing, was protesting against the showing of the dubbed films/ TV serials. Now there had to be some evidence available to show that any such action, limited or controlled the production, supply, markets, technical development and investment or provision of services. There is no such evidence available. In fact, because of the strikes or demonstration, as the case may be, the OP-4, CTVN Plus did not even stop showing the 'Mahabharata' serial on its channel. Further, OP-3, Channel-10 stopped showing the said serial on its channel on account of advise by leading actor Shri Mithun Chakraborty. Essentially, section 3(3)(b) applies to the competitors. The action as contemplated in section 3 should, therefore, result in limiting or controlling the production, supply by the competitors or should at least limit or control the market or the technical development, or investment or provision of services.
In so far as the competitors are concerned, nothing of that sort has happened. In our opinion, the decision by the majority order that the viewers were deprived of seeing dubbed Mahabharata serial on a TV channel is also faulty, since OP-4, CTVN Plus never gave-in to the protests by the members of the Co-ordination Committee. The Co-ordination Committee was legitimately protesting and voicing their grievance for the benefit of their members. They may be under the wrong impression that showing of the dubbed TV serial would affect their prospects of getting further work, but that by itself does not raise a competition issue. This is not a case, where the production of the television serials or supply thereof has been affected. If at all, the complaint could have been made only by a competitor. In our opinion, therefore, the CCI has committed an error in holding the Co-ordination Committee guilty of contravention of section 3(3)(b). - Decided in favour of Appellants.
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2014 (4) TMI 586
Discrimination in search advertising and online search - Abuse of dominant position - CCI had ordered investigation into allegations of abuse of dominant position by Google by practices like search bias, search manipulation, denial of access etc and creation of entry barriers of competing search engines and Google engaged in dilatory tactics to prolong investigation - Non submittion of documents called for - Held that:- scope of the present investigations ordered under section 26(1) of the Act is very broad and encompasses various aspects relating to Google's policies with respect to online search advertising. Further, it is not limited to advertisers of any particular industry and would cover all who advertise on Google. Against this background, information sought by the Office of the DG with respect to the suspensions of Adword accounts of remote tech support advertisers, squarely falls within the ambit of the present investigation.
In view of the sequence of events adumbrated above, it is evident that the opposite parties have failed to comply with the directions given by the DG in exercise of its powers under section 41(2) read with section 36(2) of the Act. The Commission is constrained to note that despite liberal indulgence shown by the DG to the opposite parties, the opposite parties engaged in dilatory tactics in order to procrastinate and prolong the investigations without any justifiable reason - Commission notes that no cause, much less any reasonable cause, was shown by the opposite parties save and except raising and advancing the pleas based on abstract propositions (broad and complex scope of investigations stretching to every facet of Google's businesses etc.) as noticed and detailed above. In fact, as noted earlier, the opposite parties have conceded the non-compliance with the requisitions made by the DG within the stipulated period - Commission has no hesitation in holding that the opposite parties have rendered themselves liable to be proceeded and punished in terms of the provisions contained in section 43 of the Act.
When law casts an obligation upon the party to comply with a direction, the same needs to be complied with in the manner and the time stipulated therein. Further, it is trite to state that every failure to comply with the directions and requisitions constitutes a separate ground for imposition of penalties. In the instant case, as detailed hereinabove, it is manifest that the opposite parties have failed to comply fully with the various notices issued by the DG on different occasions. Despite reminders and opportunities extended by the DG, the opposite parties advanced frivolous and vexatious pleas to delay and avoid compliance. It may be noted that the period of failure to comply commenced w.e.f. 26.02.2013 in terms of the first notice of the DG dated 12.02.2013 whereby the opposite parties were directed to comply with the requisitions contained therein before the said date - fine of rupees one crore is imposed upon Respondent - Decided in favour of appellant.
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2014 (4) TMI 538
Contravention of the order of the Commission and the Tribunal - The applicant has stated that the "cease and desist" order passed by the Commission and confirmed by the Tribunal was binding on the opposite party - Held that:- The plea is thoroughy misconceived. It is no doubt true that after passing of final orders in terms of the provisions contained in section 27 of the Act, the inquiry conducted by the Commission comes to an end. However, the proceedings contemplated under section 42 of the Act, by very nature, will arise post passing of the orders by the Commission. The inquiry envisaged under section 42 of the Act may be initiated by the Commission either suo moto or on an application moved by any member of the public bringing to the notice of the Commission the alleged contravention by a party against whom an order was issued by the Commissions - The Commission has noticed the various orders passed by COMPAT in those proceedings. No stay on the cease and desist order passed by the Commission has been granted by COMPAT. In fact, when the applicant approached COMPAT with an application seeking stay on the impugned demands, COMPAT requested the Commission to dispose of the said application instead.
Opposite party No. 1 had contravened the order of the Commission dated 31.01.2012 by issuing the impugned demand letters dated 28.11.2012. The opposite party No. 1 has failed to show any cause, much less any reasonable cause, for non-compliance of the aforesaid order. It is made clear that order passed by the Commission need to be complied with by the parties and the same cannot be permitted to be opted out by the parties through negotiations. No stay on the cease and desist order passed by the Commission was operating when the non-compliance occurred. The said demand letter has not been withdrawn till date - opposite party No. 1 is directed to pay the fine accordingly - Decided in favour of appellant.
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2014 (3) TMI 445
Suo-moto enquiry u/s 19(1) of the Act - Determination of sale price - Anti-competitive practice - Whether the BCDA is engaged in anti-competitive practice of directly or indirectly determining the sale price of drugs and controlling the supply of drugs in a concerted manner in violation of Section 3(3)(a) and 3(3)(b) of the Competition Act, 2002 – Held that:- BCDA being an association of its constituent enterprises, is taking decisions relating to distribution and supply of pharma products on behalf of the members who are engaged in similar or identical trade of goods and that such practices carried on, or decisions taken, by BCDA as an association of enterprises are covered within the scope of Section 3(3) of the Act - It is evident from the various minutes that BCDA and its affiliated District and Zonal Committees have taken concerted action against the retailers, largely the chain stores, who have indulged in sale of medicine below MRP by offering discounts to the customers - They had launched organizational movement with effect from 1st April, 2012 against these entities and have tried to enforce their decision regarding sale of drugs on MRP by activating Vigilance and Zonal Committees in the various Districts and Zones of Kolkata - Thus, the contention raised by BCDA that it has not taken any measures against those members who offered medicines at discounts does not appear to hold any trace of truth in it and is bound to be rejected.
BCDA has not brought on record any evidence to suggest that the business of significant number of retailers was seriously affected by heavy discounts being offered by big retailers leading to closure of their business which compelled it to pass such resolutions - Even assuming without conceding that the argument put forth by BCDA is based on true facts/actual state of affairs, no such practice or decision which contravenes the law of the land in force can be allowed to continue - irrespective of the provision under which notice was issued, nonetheless an opportunity was given to Shri Tushar Chakraborty to meaningfully respond to the observations of the Commission – thus, there was no violation of principles of natural justice.
The Commission holds that the BCDA and its District and Zonal Committees were engaged in anti-competitive practices of directly or indirectly determining the sale prices of drugs and controlling or limiting the supply of drugs through concerted and restrictive practices, in violation of the provisions of Section 3(3)(a) and (b) read with Section 3(1) of the Act - The plea taken by the BCDA that since it has ceased from the practices of opposing sale of drug on discounts or selling them below MRP cannot be accepted – thus, the Commission directs the BCDA and its office bearers & executive committee members to seize and desist from indulging in anticompetitive practices found to be anticompetitive in terms of the provisions of Section 3 of the Act.
Penalty u/s 27 of the Act – Held that:- The anticompetitive acts and conducts require to be penalized to cause deterrence in future among the erring entities engaged in such actions - it is required that the degree of punishment is scaled to the severity of the violation - the position of BCDA to control the market of drugs and medicines in its area of operation is undoubted - the conduct of BCDA and its office bearers & executive committee members requires to be sternly dealt with - no mitigating factor is shown by the parties and none is borne out from the records – thus, the Commission decides to impose a penalty on the BCDA and its those office bearers who are directly responsible for running its affairs and play lead role in decision making @10% and on the executive committee members @7%, of their respective turnover/income/receipts based on the financial statements filed by them – Decided against the association.
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2014 (2) TMI 1398
Unfair and discriminatory conditions with respect to its Continuing Professional Education (CPE) scheme of OP - structured CPE credits and organization of the seminars/conferences/workshops for obtaining these credits - relevant product market - market for organizing recognised CPE Seminars/Workshops/Conferences - HELD THAT:- There seems to be force in the allegations of the informant that the restriction put in by OP in not allowing any other organization to conduct the CPE seminars for CPE credits, createdan entry barrier for the other players in the relevant market. Further, the choice of the consumer (members of OP) in this case was being limited. The members of OP had no option, but to attend the seminars organized by OP (whatever be the quality of seminars) to get the requisite CPE credits.The restriction put on by OP does not meet the objectives sought to be achieved by the policy. There are hundreds of seminars and conferences organized every month across India by reputed chambers of commerce like CCI, FICCI, ASSOCHAM, NASSCOM, etc. However, these seminars/conferences are not recognised by OP for CPE credits. Prima facie, it appears to be an unreasonable restraint and the members CA of OP are left with no option but to compulsorily attend seminars organized by OP and its organs.
Informant has pointed out in his information that the 64th Annual Report of OP for the Financial Year 2012-13 shows that the OP earned gross revenues of ₹ 45 crores from organizing seminars and conferences, which is around 8% of the OP’s total revenue. Informant also pointed out there were no similar restrictions imposed by other accounting bodies of the world, i.e. in US, UK, Singapore, Australia, etc.
The Commission directs the Director General (DG) to cause an investigation to be made into the matter and to complete the investigation within a period of 60 days from receipt of this order. If during the course of investigation, involvement of any other party is found, the DG shall investigate the conduct of such other parties including the conduct of group companies, if any, in terms of the proviso to section 27 of the Act - the DG is also directed to investigate the role (if any) of the persons who were in charge of, and were responsible to the companies for the conduct of the businesses of such companies, after giving due opportunity of hearing to such persons.
Application disposed off.
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