TMI Blog2002 (7) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... se appeals are against orders passed by the Monopolies and Restrictive Trade Practices Commission (hereinafter referred to as the MRTP Commission ) whereby Indonesian manufacturers of float glass had been restrained from exporting the same to India at allegedly predatory prices. 3. Respondent No. 1 is an association of float glass manufacturers in India. During March-April, 1998, complaints were made by the said respondent to the Customs Department, alleging that the Indonesian manufacturers of float glass, in association with Indian importers were allegedly indulging in heavy under-invoicing. The respondents were, however, informed by the Customs Department in Calcutta that if they had any genuine grievance, the same could be made before the Designated Authority, Ministry of Commerce dealing with anti-dumping complaints. On 26th May, 1998, the respondent No. 1 presented a complaint before the Designated Authority. This complaint appears to have been filed before the Anti-dumping Authority and the same was possibly not pursued by the complainant. 4. On 10th September, 1998, the respondent No. 1 filed a complaint before the MRTP Commission under Section 33(1)(j), (ja) and Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant herein that the cost of production of float glass was lower in Indonesia than in India and float glass was not being exported to India at predatory prices. 6. The application under Section 12A for interim injunction was heard by the Chairman of the Commission and a second Member. There was a difference of opinion amongst them. While the Chairman vide order dated 18th January, 1999, allowed the application and restrained the Indonesian companies from exporting to India their float glass production at predatory prices, Dr. S. Chakravarthy, the second Member dismissed the application, inter alia, holding that there was no evidence to substantiate the plea of predatory pricing at this stage. By order dated 9th February, 2000, the third Member who heard the case concurred with the view taken by the Chairman and passed an order of injunction against the Indonesian companies. 7. While Civil Appeal No. 2330 of 2000 is filed by the Indian importer who was the caveator before the Commission, Civil Appeal No. 3572 of 2000 has been filed by P.T. Muliaglass which is the subsidiary of P.T. Mulia Industrindo. It is the case of P.T. Muliaglass that the holding company does not carry out a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervailing measures. Even the preamble of the Customs Tariff (Amendment) Act, 1995, No. 6 of 1995 also provides that the provisions of Sections 9, 9A and 9B of the Customs Tariff Act, 1975, have been replaced by the new Sections 9, 9A and 9B to reflect the changes in the domestic law, consequent upon coming into effect the Agreement on Anti-dumping (i.e. an Agreement on implementation of Article VI of the GATT 1994) ..under the Uruguay Round on 1st January, 1995. 11. Section 9A, inter alia, provides that where any article is exported from any country or territory to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article. The said section indicates how the normal value and the margin of dumping is to be ascertained. Section 9B contains provisions which provide for exemption from levy under Section 9 or Section 9A in certain cases while Section 9C gives the right of appeal against the order of determination or review thereof regarding the existence, degree and effect of any subsidy or du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or material retardation of the establishment of such an industry, and shall be interpreted in accordance with the provisions of this Article. 13. Thus, it was submitted, the remedy for imposition of anti-dumping duty has been provided so as to prevent distortion, impairment and restriction of competition in domestic industry. A specific authority, i.e., the Designated Authority on Anti-dumping has been constituted under the Anti-dumping Duty Rules framed under the Customs Tariff Act which has the powers to conduct investigation upon receipt of a complaint from the domestic industry or suo motu relating to dumping of goods by a foreign company to identify the existence, degree and effect of any alleged dumping in relation to import of any article and injury to domestic industry, threat of injury to domestic industry, material retardation to establishment of domestic industry, etc. and to recommend to the Central Government the amount of anti-dumping duty to remove the injury to the domestic industry, based on which the Central Government imposes provisional or final anti-dumping duty upon importation of the concerned goods into India as a result of which the cost for the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India v. D.J. Bahadur and Others - (1981) 1 SCC 315; at 349, 350-354. (iv) Damji Valji Shah and Another v. Life Insurance Corporation of India and Others [1965] 3 SCR 665; at 673. (v) Gobind Sugar Mills Ltd. v. State of Bihar and Others - (1999) 7 SCC 76; at 80-82. (vi) Shriram Mandir Sansthan v. Vatsalabai and Others - (1999) 1 SCC 657; at 661 and 662. 15. On behalf of the respondents, it was submitted that the provisions of the Customs Tariff Act, 1975, relating to imposition of anti-dumping duties do not in any way oust the jurisdiction of the MRTP Commission over the restrictive trade practice of predatory pricing. It was contended that the two statutes occupied different fields and were distinct in their scope and applicability. There was no overlap or conflict between the statutes and hence the question of repeal, whether implied or express, did not arise. The Customs Tariff Act is concerned with the imposition of duties of customs. Imposition of customs duty is the policy decision of the Government in the realm of taxation. Section 9A read with the Rules provide for the determination of certain objective criteria on the basis of which the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propriate case to the MRTP Commission. He contended that like the EEC as well as the USA, the law in India was the same, namely, that if the effect of a restrictive trade practice came to be felt in India because of a part of the trade practice being implemented in India, the MRTP Commission would have jurisdiction. This effects doctrine was, therefore, sought to be invoked with a view to clothe the MRTP with jurisdiction to pass orders even though a transaction which resulted in exporting goods to India at predatory price, which was in effect a restrictive trade practice, had been carried outside the territory of India. He submitted that where the effect of restrictive trade practice carried out outside the territory of EEC or USA is felt within the EEC or USA, the authorities enforcing competition law in the EEC or the USA exercise jurisdiction in regard to such conduct. He relied upon the decision of the European Court of Justice in the Wood Pulp case rendered on 27th September, 1988. There, while interpreting Article 85 of the EEC Treaty which prohibited any agreement, decision and concerted practice which have the effect of prevention, restriction or distortion of competitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess of interpretation the Indian MRTP Act should be emasculated and a beneficiant anti-monopoly jurisdiction exercised world-wide should be denied to the Indian MRTP Commission. 22. What is the scheme of the Act, insofar as it is relevant to the present case, relating to allegation of restrictive trade practice and the jurisdiction and power of the Commission in regard thereto. 23. As the preamble indicates the MRTP Act, inter alia, prohibits restrictive trade practices. Section 2(o) defines restrictive trade practice while Section 2(u) defines trade practice. 24. Section 10 gives the jurisdiction to the Commission to inquire into any restrictive trade practice. This jurisdiction can be exercised either upon receiving of a complaint or upon reference made by the Government or upon an application by the Director General or upon its own knowledge or information. Before a process is issued requiring the attendance upon any person the Commission may require, under Section 11, the Director General to make an investigation and to submit a report. Section 12A contains the power of the Commission to grant temporary injunctions and the same reads as follows :- 12A. Power of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the present case, it was the contention of the respondents that there were agreements between the Indian importers and the foreign parties which were registerable under Section 33 of the Act. So far as the import of float glass is concerned, it was contended that the provisions of Section 33(1)(j) were attracted. The relevant portions of Section 33 are as follows :- Registerable agreements relating to restrictive trade practices.- (1) Every agreement falling within one or more of the following categories shall be deemed, for the purposes of this Act, to be an agreement relating to restrictive trade practices and shall be subject to registration in accordance with the provisions of this Chapter, namely - (a) xxx xxxx (b) xxx xxxx (c) xxx xxxx (d) any agreement to purchase or sell goods or to tender for the sale or purchase of goods only at prices or on terms or conditions agreed upon between the sellers or purchasers; (e) xxx xxxx (f) xxx xxxx (g) xxx xxxx (h) xxx xxxx (i) xxx xxxx (j) any agreement to sell goods at such prices as would have the effect of eliminating competition or a competitor; (ja) any agreement restricting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or determination of the agreement is made by an instrument in writing, by the production of the original or a true copy of that agreement; and (b) in so far as the agreement or any variation or determination of the agreement is not so made, by the production of a memorandum in writing signed by the person by whom the particulars are furnished. (5) The particulars to be furnished under this section shall be furnished by or on behalf of any person who is a party to the agreement or, as the case may be, was a party thereto immediately before its determination, and where the particulars are duly furnished by or on behalf of any such person, the provisions of this section shall be deemed to be complied with on the part of all such persons. Explanation I. - Where any agreement subject to registration under this section relates to the production, storage, supply, distribution or control of goods or the performance of any services in India and any party to the agreement carries on business in India, the agreement shall be deemed to be an agreement within the meaning of this section, notwithstanding that any other party to the agreement does not carry on business in India. xxx xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no extra territorial operation. Section 1(2) specifically provides that the Act extends to the whole of India except the State of Jammu and Kashmir, thereby defining the geographical boundary of the operation of the Act. Section 2(e)(iii) defines goods as including those goods which are supplied, distributed or controlled in India or the goods imported into India. The emphasis is on the words in India or into India . Paraphrasing the said sub-section goods would mean those goods supplied in India or goods distributed in India or goods controlled in India or goods imported into India . In the present case, we are concerned with float glass which was sought to be imported into India. For the purpose of the Act, it is only the goods imported into India which will fall within the definition of the word goods in Section 2(e). As such for the Commission to exercise any jurisdiction goods must be those which are imported into India. As long as the import has not taken place and the goods are merely intended for export to India the same will not fall within the definition of the word goods in Section 2(e). 33. Even if there was any manner of doubt the same would stand dispelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which tends to obstruct the flow of capital or resources into the stream of production, or (ii) which tends to bring about manipulation of prices, or conditions of delivery or to effect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions; 36. The expression trade practice has been defined under Section 2(u) which reads as under : trade practice means any practice relating to the carrying on of any trade, and includes - (i) anything done by any person which controls or affects the price charged by, or the method of trading of, any trader or any class of traders, (ii) a single or isolated action of any person in relation to any trade; 37. Section 33 of the Act deals with certain types of agreements stipulated therein to be an agreement relating to restrictive trade practice and such agreement requires to be registered. Section 37(1) gives the Commission power to inquire whether an agreement is governed by Section 33 and has been registered under Section 35 or not. Section 37 reads as under : 37. Investigation into restrictive trade practices by Commission. - (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve trade practice as defined in Sections 2(o) and 2(u) of the Act. The restrictive trade practice may or may not be directly connected with or be the result of any agreement between the parties in India. Any act which falls under the category of restrictive trade practice can be investigated into and orders passed under Section 37(1). Sections 2(o) and 2(u) do not specifically indicate that the practice should be carried on only by a person or persons in India. If the trade practice is such that it becomes a restricted trade practice in India as contemplated by Section 2(o), then action can be taken under Section 37(1) in respect of such a trade practice. 39. Section 38 provides that every restrictive trade practice shall be deemed to be prejudicial to the public interest unless the Commission is satisfied of any one or more of the circumstances mentioned in Clauses (a) to (k) of Section 38 exists and it is further satisfied that the restriction is not unreasonable having regard to the balance between those circumstances and any detriment to the public or to persons not parties to the agreement. 40. Section 2(u) does state that trade practice means any practice relating to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictive trade practice and it would be immaterial as to where the agreement takes place in relation to the sale of those goods. The effects doctrine would be applicable only in relation to those goods which are within the territory of India before its sale referred to in Section 33(1)(j) of the Act. An agreement, which results in sale outside India and the export of the goods to India, even if that sale is at predatory prices, would not fall within the ambit of Section 33(1)(j) of the Act. It is a subsequent agreement of sale of the imported goods, if it has the effect of eliminating competition or a competitor, which would be registerable under Section 33(1)(j) of the Act. 44. Even if an agreement is executed outside India or the parties to the agreement are not in India and agreement may not be registerable under Section 33, being an outside India agreement, nevertheless, if any, restrictive trade practice, as a consequence of any such an outside agreement, is carried out in India then the Commission shall have jurisdiction under Section 37(1) in respect of that restrictive trade practice if it comes to the conclusion that the same is prejudicial to the public interest. 45. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to allow import or not and the terms on which an item may be imported is a matter of policy and regulated by law. 48. There is in this case no challenge to the import policy allowing import of float glass and even if such a challenge was to be there it would hardly succeed. The grievance of the respondents is that import is being made at predatory prices. The challenge is to the actual import. But allowing such a challenge will amount to giving the MRTP Commission jurisdiction to adjudicate upon the legal validity of the provisions relating to import, which jurisdiction the Commission does not have. It is not a Court with power of judicial review over legislative action. Therefore, it would have no jurisdiction to decide whether the action of the Government in permitting import of float glass even at predatory prices is valid or not. The Commission cannot prohibit import, it s jurisdiction commences after import is completed and any restrictive trade practice takes place. 49. Customs duty on import of any goods is levied under the provisions of the Customs Tariff Act. The rate at which the import duty is to be levied is a matter of policy. The rate of duty is determined by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red Consumers Association, or a reference can be made by the Central Government or the State Government or even by the Director General upon its own knowledge or information. [Section 10(1)(A) of the MRTP Act.] An Anti Dumping Petition can be filed by the Domestic Industry as defined under the Anti Dumping Rules or suo motu by the Designated Authority. [See Rules 2(b), 5(1) and 5(4) of the Anti Dumping Rules.] 3. Competition law procedures allow and require consideration of interest groups such as manufacturers, importers, exporters, consumers and the general public. Commercial actors can have their interests assessed through the determination of the market, causation or injury. Interests of consumers are taken into account when assessing the impact of a business practice on competition. No interest group other than domestic industry has full legal standing in anti-dumping cases. The predominant interest group is of domestic producers. Industrial users and consumers do not have legal standing to maintain a complaint. 4. In predatory pricing enquiries, the complainant has to establish that the predator acted with intent to eliminate compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantum of import in the present case is a small fraction of the total float glass which is manufactured and sold in India. The reduction in prices of the Indian importer is to the benefit of the Indian customer. It is only if there is an agreement between the Indian importer and the foreign seller which has such an effect that the production in India of float glass by efficient Indian industry would have to stop and such stoppage is considered prejudicial to the public interest, can an order under Section 12A or Section 37 be passed. It is the case of the petitioners that the Indian manufacturers have formed a cartel of their own and are charging high prices because of lack of competition. It is alleged that the Indian manufacturers are making much profits and despite import of float glass having taken place for the last 5-10 years the Indian industry has not suffered. On the other hand, the volume of sales has increased and the profit of the Indian producers not decreased. Under these circumstances, it was contended, the passing of the injunction was wholly uncalled for. 54. Import of material at prices lower than prevailing in India cannot per se be regarded as being prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any interim order being passed in the present case. Furthermore, the impugned order passed against the foreign manufacturers of float glass, who do not carry on business in India is clearly contrary to the provisions of Section 14 of the Act and, as such, cannot be sustained. 56. In our opinion, the MRTP Commission has no extra territorial jurisdiction. The action of an exporter to India when performed outside India would not be amenable to jurisdiction of the MRTP Commission. The MRTP Commission cannot pass an order determining the export price of an exporter to India or prohibiting him to export to India at a low or predatory price. 57. The matter may be examined from another angle. In this case, there is a sale of float glass by the exporter in Indonesia. If the float glass was ready and available, then being ascertained goods the sale would be regarded as having taken place where the goods existed at the time of sale, i.e., in Indonesia. If the glass had to be manufactured and not readily identifiable, then the sale would take place outside India when the goods are appropriated to the contract by the foreign exporter. Here the appropriation would take place in Indonesi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Customs Act and the Import Control Act, then an agreement in relation to such an import may not be liable to be registered under the provisions of the Act. It is only in respect of float glass, which is imported and thereafter if in respect to that a restrictive trade practice is indulged can the MRTP Commission have jurisdiction qua post import Indian end of the transaction. Conclusions : 60. From the aforesaid discussion and reasons, we arrive at the following conclusions :- 1. Anti-dumping provisions do not per se oust the jurisdiction of the MRTP Commission. 2. The MRTP Commission can, inter alia, take action whenever a Restrictive Trade Practice is carried out in India in respect of imported goods or otherwise. 3. It is only in respect of the Indian leg of the restrictive trade practice, can an order under Section 12A and/or Section 37 be passed. 4. Under Section 33 of the Act what can be registered is only an agreement in regard to which any party to an agreement carries on business in India [Section 35 Explanation I]. But this does not mean that if an agreement is entered into outside India and which results in a Restrictive Trade Practi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cers had agreed that all export sales by them or by any of their subsidiaries will be made through ANSAC which was set up as a Corporation in accordance with the provisions of the United States Export Trade Act, 1918. It was further alleged in the complaint that ANSAC in an attempt to invade the Indian market and undercut the Indian producers, it sold American Soda Ash to Indian consumers at an unrealistically low price of US $ 132 PMT-CIF. With a view to circumvent the prohibition in Indian law against monopolistic, restrictive and unfair trade practices, a strategy had been adopted by ANSAC by selling American Soda Ash to Indian consumers through the front of one M/s. G. Premjee of Singapore in whose favour the Indian producers had opened letters of credit. According to this complaint, there was a bulk sale of soda ash by ANSAC to the Indian Consumers through the conduit of M/s. G. Premjee of Singapore. On the basis of these averments, namely, that ANSAC was a Cartel of American Soda Ash Producers and was likely to affect maintenance of prices at reasonable and realistic levels in India and with a view to adversely affect the local production and availability of Soda Ash, the MRT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion issued injunction restraining it s import. Till today, therefore, no soda ash has been exported by the appellant to India. 68. It was submitted by the respondent that the agreement of 1983 formed a cartel and was registrable under Section 33(1)(d) of the MRTP Act. 69. In so far as Section 33(1)(d) is concerned, the scheme appears to be that every agreement falling under Section 33(1)(a) to (l) is presumed to be one relating to restrictive trade practice and is subject to registration. An agreement falling under Section 33 need not necessarily be one in writing inasmuch as Section 2(a) defines an agreement as including any arrangement or understanding as well. Therefore, if apart from written agreement there is an arrangement or understanding amongst the sellers or the purchasers with regard to the purchase or sale of goods to be only at the prices or on terms or conditions agreed upon amongst them then such an agreement would require registration. Section 33(1)(d) regards an agreement to be one relating to restrictive trade practice if such agreement relates to purchase or sale of goods or to tender for sale or purchase of goods only at prices or on terms or conditions agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 38 which deals with cases relating to presumption as to the agreement of the types mentioned therein being in the public interest. 71. The impact of reading of the provisions together is that what is sought to be targeted in relation to restrictive trade practice is not the nature or the factum of the restriction but such restriction should not be prejudicial to the public interest. For example, an agreement may be entered into amongst the purchasers in order to ensure constant supply of goods at a reasonable rate. Such an agreement even though it may fall under Section 33(1)(d) would not be regarded as being prejudicial to the public interest. 72. It is in this context that when we examine the provisions of Section 12-A, we find that the power of the Commission to grant temporary injunction arises only after it is satisfied that a restrictive trade practice or unfair trade practice is being carried on which is likely to affect prejudicially the public interest or the interest of trader or class of traders etc. It is only with a view to prevent the causing of a prejudicial effect that an interim order can be passed by the Commission under Section 12A. 73. As we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian party from importing goods from a cartel at predatory prices. Importing goods at a price lower than what is available in India is not per se illegal. We have provisions under the Customs Act which enables the Government to impose anti-dumping duties with a view to protect the Indian industry. Nevertheless, the era of protectionism is now coming to an end. The Indian industry has to gear up so as to meet the challenges from abroad. If the cartel is selling goods to India and still making profit then it will not be in the interest of the general body of the consumers in India to prevent the import of such goods. The remedy of the Indian industry, in such an event, is to take recourse to the provisions under the Customs Act in relation to the levy of anti-dumping duties. 75. A cartel is formed, inter alia, with a view that members of the cartel do not wage a price war and they sell at an agreed or uniform price. There may perhaps also be a cartel where members divide the territories to which each of them can export. There is little doubt that the object of an export cartel is to capture a market even if at first, it may result in a loss to the exporter. 76. The competition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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