TMI Blog2015 (3) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinuance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Act. The second respondent herein is a producer of feature films. On 8.1.2013, the second respondent filed a complaint before the Competition Commission of India (which is the first respondent herein), alleging that by a resolution dated 20.12.2012, the Tamil Nadu Theatre Owners Association decided to ban the screening of films which are released via DTH. It was claimed by the second respondent herein that the resolution would tantamount to an anti-competitive practice, violating Section 3(3)(b) of the Competition Act, 2002. 4. After examining the said complaint, the Competition Commission of India, passed an order on 16.01.2013 in terms of Section 26(1) of the Competition Act, 2002, holding that there existed a prima facie case requiring an investigation by the Director General of the Competition Commission. 5. In the meantime, the second respondent also faced opposition from a small group of intolerant people, who managed to force the Commissioner of Police, Chennai to issue an order on 23.1.2013 under Section 144 of the Code of Criminal Procedure, prohibiting the exhibition of the feature film Viswaroopam for public view. However, after a series of dramatic twists and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is being opposed by the learned Senior Counsel appearing for the Competition Commission on the ground that the Director General of Investigation had already filed a report before the Competition Commission, holding that the allegations relating to infringement of the provisions of the Act are found to be true and that therefore, a settlement inter parties cannot be accepted in matters of this nature. 12. In other words, the disputes as between the appellant and the second respondent have culminated in a settlement. But, that settlement has triggered a fresh dispute between the appellant and the Competition Commission. Therefore, it has become necessary to deal with a different set of questions in these appeals than those that were dealt with by the learned single Judge. 13. Before the learned single Judge, the appellant raised several issues including the issue of jurisdiction. But, today, those issues have paled into insignificance, in view of the settlement reached between the appellants and the second respondent. If it is a normal civil litigation of adversarial nature, we would have simply recorded the Memorandum of Compromise and closed the writ appeals without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsequence that may be produced by different sorts of agreements in varying time and circumstances. 17. Even before the advent of Glasnost and globalisation that started in the early 1990s, India had an Anti-Trust Act that was known as the Monopolies and Restrictive Trade Practices Act, 1969. Interestingly, the preamble to the MRTP Act, 1969 advocated a socialistic philosophy by declaring that the Act was intended to ensure that the operation of the economic system did not result in the concentration of economic power to the common detriment. The Act was intended to control Monopolies and to provide for the prohibition of Monopolistic and Restrictive Trade Practices. 18. But MRTP Act, 1969 was found to be very ineffective due to a variety of reasons, one of which was the frequent shift in the industrial policy of the Government. Chapter-III of the MRTP Act, 1969 conferred power upon the Central Government to regulate the expansion of and the establishment of a new undertaking by any undertaking falling under Chapter-III. But, after the new Industrial Policy was introduced in 1991, the Government removed some important regulatory provisions from Chapter-III of the Act. In othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust issues namely: (a) Anti-Competitive Agreements by an Enterprise or association of Enterprises or person or association of persons; (2) Abuse of Dominant Position; and (3) Combinations. While Anti-Competitive Agreements are dealt with by Section 3, Abuse of Dominant Position is dealt with by Section 4 and Combination by way of acquisition or merger or amalgamation is dealt with by Sections 5 and 6. Scheme of the Act:- 23. Having seen the historical background that lead to the enactment of the Competition Act, 2002, let us now have a look at the Scheme of the Act. The Act is divided into 9 Chapters, Chapter-I dealing with preliminaries, Chapter-II dealing with Anti-Competitive Agreements, abuse of dominant position and regulation of combinations, Chapter-III dealing with the establishment of the Competition Commission, Chapter-IV dealing with the duties, powers and functions of the Commission, Chapter-V dealing with the duties of Director General, Chapter-VI dealing with penalties, Chapter-VII dealing with Competition Advocacy, Chapter-VIII dealing with finance, accounts and audit and Chapter-IX dealing with miscellaneous. In between Chapters VIII and IX, we have Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise; (h) entry barriers, including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers; (i) countervailing buying power; (j) market structure and size of market; (k) social obligations and social costs; (l) relative advantage, by way of the contribution to the economic development, by the enterprise enjoying a dominant position having or likely to have appreciable adverse effect on competition; (m) any other factor which the Commission may consider relevant for the inquiry. Similarly, there are certain factors enlisted under Section 20(4) of the Act, in the context of which the Competition Commission may hold an inquiry into combinations. We are not concerned in this case, with combinations and hence, it is not necessary to make a reference to Section 20. 26. Section 26 of the Act indicates the procedure for inquiry under Section 19. The Commission is empowered under sub-sections (1) and (2) of Section 26 either to direct the Director General to cause an investigation or to close the matter, accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anti-Competitive Agreements or abuse of dominant position that has adverse effect on Competition and oppress freedom of trade; and (2) that the Commission has residuary powers under Section 27 to pass such other orders and issue such directions as it may deem fit. 33. Once it is conceded that the Competition Commission has residuary powers and its powers to pass such orders are wide in amplitude, it cannot be contended that the Commission would not have the power to accept a settlement or compromise between parties. Take for instance a case where an enterprise is found guilty of entering into Anti-Competitive Agreements in violation of Section 3(1). Such an agreement, to begin with, may only be between two or three parties. But, by the very nature of its composition, duties, powers and functions, the Competition Commission is not an adjudicatory body to resolve the private disputes arising out of such agreements. The Commission is primarily concerned with the question as to whether the agreement would have larger ramifications. If the Competition Commission finds after inquiry that there has been an Anti-Competitive Agreement or abuse of a dominant position, it is empowered to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in the European Union and the United States. (i) Both in the European Union as well as the United States, settlement is permitted in the case of cartels. The cartel settlement procedure under EU rules allows the Commission to settle a cartel case with the companies involved under a streamlined procedure if the parties agree with the Commissions findings on the infringement. This procedure was created in 2008 through an amendment of Commission Regulation 773/2004. Cartel settlement decisions are prohibition decisions based on Articles 7 and 23 of Regulation 1/2003. [COMMISSION REGULATION (EC) No 622/2008 of 30 June 2008 amending Regulation (EC) No 773/2004, as regards the conduct of settlement procedures in cartel cases] (ii) In the United States, plea bargain process can be initiated at any time. The settlement process may be initiated either by the Antitrust Division staff or the defendant at any state of the investigation. Discussions are held behind closed doors, away from the Courts. The plea agreement is filed before the court and the court must accept the plea and impose actual sentence. The rules governing the negotiation and acceptance of plea agreements can be fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition to continue and (3) would not be prejudicial to the interest of consumers or to the freedom of trade. Question:B:- 38. The second question that arises for consideration is as to whether this court can record a memorandum of settlement just as the one that the parties have reached in this case. 39. Section 62 of the Act declares that the provisions of the Competition Act, 2002 shall be in addition to and not in derogation of the provisions of any other law for the time being in force. Section 61 of the Act excludes the jurisdiction of Civil Courts, in respect of any matter which the Commission or the Appellate Tribunal is empowered by the Act to determine. But, the said bar of jurisdiction, may not apply to the jurisdiction of this Court under Article 226 of the Constitution, as it has been held to be part of the basic structure. 40. Therefore, despite the fact that the orders of the Competition Commission are subject to the Appellate jurisdiction of the Competition Appellate Tribunal and despite the fact that the orders of the Appellate Tribunal are subject to a statutory appeal under Section 53-T of the Act, the jurisdiction of this Court under Article 226 wil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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