GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (3) TMI 1149 - MADRAS HIGH COURT

2015 (3) TMI 1149 - MADRAS HIGH COURT - TMI - 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 countri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 Comm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tions 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 th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ppellant herein, one challenging an order of the Competition Commission of India directing an investigation to be initiated and the other seeking a direction to the local police, to take action on a complaint lodged by the appellant. 2. We have heard Mr.Nithyesh Nataraj, learned counsel for the appellant, Mr.G.Masilamani, learned Senior Counsel appearing for the Competition Commission of India, Mr.Rahul Balaji, learned counsel for the second respondent and Mr.R.Ravichandran, learned Additional G .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

creening 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 Com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2013 under Section 144(5) of the Code of Criminal Procedure, revoking the earlier ban order. Therefore, the film got released in the theatres. 6. However, the Director General of the Competition Commission issued a notice dated 1.4.2013 under Section 36 (2) read with Section 41(2) of the Act, calling upon the appellant to furnish certain information as well as documents. 7. Immediately upon receipt of the said notice, the appellant filed a writ petition in W.P.No.12085 of 2013 on the file of thi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

king a mandamus to direct the Commissioner of Police to take their complaint on record and initiate action against the second respondent. Both the writ petitions were taken up by a learned Judge and by a common order dated 16.8.2013, the learned Judge dismissed both the writ petitions. Aggrieved by the said order, the appellant is before us. 9. While ordering notice in the writ appeals, this Court took note of the fact that the Director General of Investigation of the Competition Commission was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nd respondent and the second respondent agreed to withdraw the complaint before the Competition Commission. Thereafter, the parties filed a memo praying for the recording of the compromise memo and the disposal of the writ appeals in accordance with the memo. 11. However, 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 tha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s 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 much ado. But unfortunately for t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

proportions, leaving the individual complainant, as a speck in the galaxy. Hence, the learned Senior Counsel appearing for the Competition Commission opposes the request made by the appellant and the second respondent to record the compromise and close the matter. 14. In view of the above, we are of the view that two questions of primary importance arise. They are:- (A) whether it is possible, in the context of the scheme of the Competition Act, 2002, for two adversaries to reach a settlement, t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hether the Scheme of the Competition Act, 2002 permits a compromise to be reached between two parties, it is necessary to examine the historical background of the Competition Act, 2002 and the Scheme of the Act. 16. Fundamentally, the Competition Act, 2002 is a law that addresses Anti-Trust issues. The Sherman Act, 1890, which proscribes agreements in restraint of trade, appears to be the earliest Anti-Trust Statute in the world. However, the Indian Contract Act, which is anterior in point of ti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alisation 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

provisions from Chapter-III of the Act. In other words, the pre-entry restriction on the investment by the Corporate Sector was removed. 19. Simultaneously with the process of liberalisation, India became a party to two important agreements of the World Trade Organisations (WTO), namely General Agreement of Tariffs and Trade (GATT) and Trade Related Aspects of Intellectual Property Rights (TRIPS). As a result, many multinational companies entered the Indian Market. Therefore, realizing that ther .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

TP Act and to enact a Competition Act for the regulation of Anti-Competitive Agreements and to prevent the abuse of dominance and combinations including mergers; (2) to eliminate reservation of products in a phased manner for the Small Scale Industries and the Handloom Sector; (3) to divest the shares and assets of the Government in State Monopolies and privatise them; and (4) to bring all industries in the private as well as Public Sector within the proposed legislation. 20. On the basis of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

informed the Supreme Court that they intended to make amendments to the Act. Thereafter, the Act was amended substantially by the Competition (Amendment) Act, 2007. Under the Amended Act, the Competition Commission was to function only as a Market Regulator and an Expert Body performing Adversary and Regulatory functions. In the year 2009, there was yet another amendment. 22. The Act, as it stands today, seeks to cover three Anti-Trust issues namely: (a) Anti-Competitive Agreements by an Enterp .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 deal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ions, namely Sections 18 to 39. Section 18 imposes upon the Competition Commission certain duties. The duties enlisted in Section 18 of the Act are:- (i) to eliminate practices having adverse effect on Competition; (ii) to promote and sustain Competition; (iii) to protect the interest of consumers; and (iv) to ensure freedom of trade carried on by other participants in the markets in India. 25. To enable the Commission to perform the duties imposed upon it under Section 18, the Commission is inv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

itors out of the market; (c) foreclosure of competition by hindering entry into the market; (d) accrual of benefits to consumers; (e) improvements in production or distribution of goods or provision of services; or (f) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services; (ii) to see whether the enterprise enjoys a dominant position, in the light of certain factors such as:- (a) market share of the enterprise; (b) si .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

under sub-sections (1) and (2) of Section 26 either to direct the Director General to cause an investigation or to close the matter, according as the case may be, depending upon whether a prima facie case exists or not. It is upon the report of the investigation by the Director General, that the Commission is empowered to pass orders as indicated in Section 27. 27. Section 27 of the Act empowers the Commission to pass all or any of the following orders namely: (i) to direct an enterprise or asso .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

) to direct the concerned enterprise to abide by such other orders as the Commission may pass and comply with the directions including payment of costs; (v) to pass such other orders and issue such directions as it may deem fit. 28. In Competition Commission of India vs. Sail [2010 (10) SCC 744], the Supreme Court of India held that the powers conferred upon the Commission are of wide magnitude and are of serious ramifications. The powers of the Commission include the power to issue such directi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

review conferred upon the Commission under Section 37 was also taken away by Amendment Act 39 of 2007. 31. Section 36 of the Act empowers the Commission to regulate its own procedure. The Commission is not bound to follow the procedure prescribed by the Code of Civil Procedure. But, it should be guided by the principles of natural justice. 32. Therefore, it is clear (1) that the Commission is not really concerned about a private dispute between two individuals, but is concerned about the existe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 whet .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

instance, a party which is held guilty of entering into an Anti-Competitive Agreement or abusing its dominant position comes up before the Commission and agrees for the discontinuance of the agreement with an undertaking not to re-enter into such agreements or to indulge in the abuse of dominant position, we see no reason as to why the same should not be accepted by the Commission. If a party agrees to abide by the mandate of Sections 3 and 4, the Commission will be actually saved of the bother .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

or the recording of any settlement or compromise. The only question that the Competition Commission may perhaps be obliged to look into, in cases where the parties arrive at a settlement, is to see whether the compromise or settlement is a cover up, so as to prevent an investigation being made into the Anti-Competitive practices or abuse of dominant position. Therefore, we are of the considered view that the Scheme of the Competition Act, 2002 allows the parties to enter into a compromise or set .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to Anti-Trust issues. Hence, it may be useful to have a look at the position prevailing 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 found in the Federal Rules of Criminal Procedure (FRCP), the Federal Rules of Evidence (FRE), the U.S. Attorney Manual (USAM), and the U.S. Sentencing Guidelines (USSG). (iii) In European Union, the Commission inves .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

there are certain pre conditions for the acceptance of a settlement. They are:- (A) Presence of a cartel (B) Admission of guilt or factual basis (the defendant entering into a plea agreement with the Antitrust Division must be willing to plead guilty to the charged cartel conduct at arraignment and make a factual admission of guilt) (C) Cartel participants cooperation (the inclusion in cartel settlement, agreements of commitment by the settling party to provide full, continuing, and complete co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eclares 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 th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tence, is different from holding that the jurisdiction itself stands ousted. 41. Once it is concluded that this Court would have jurisdiction (i) to do what the Competition Commission had failed to do or (ii) to undo what the Competition Commission had done, it follows as a corollary that this Court can also record the compromise or memo of settlement reached between the parties in a matter pending before the Competition Commission. But, in normal circumstances, this Court would not exercise suc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version