Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2018 (8) TMI 180

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... lear that the Commission while dealing with the market dealt with the ‘relevant market’ i.e. all regional markets of Cement, which are the relevant geographical market i.e. relevant product market of Cement. Penalty - Held that:- The Commission has imposed mere minimum penalty, no interference is called for against the same. Appeal dismissed - decided against appellant. - TA(AT) (Compt)No.22 of 2017 (Old Appeal No.61/2016) Along with TA (AT) (Compt.) No. 26 of 2017, Old Appeal No. 65/2016TA (AT) (Compt.) No. 8 of 2017, Old Appeal No. 46/2016, Along with TA (AT) (Compt.) No. 09 of 2017 And Old Appeal No. 47/2016 - - - Dated:- 25-7-2018 - Mr. S.J. Mukhopadhaya, Chairperson And Mr. Balvinder Singh, Member (Technical) TA (AT) (Compt.) No. 11 of 2017 Old Appeal No. 49/2016), Along with TA (AT) (Compt.) No. 12 of 2017, Old Appeal No. 50/2016, TA (AT) (Compt.) No. 13 of 2017, (Old Appeal No. 51/2016), Along with TA (AT) (Compt.) No. 27 of 2017, Old Appeal No. 66/2016, TA (AT) (Compt.) No. 14 of 2017, (Old Appeal No. 52/2016), Along with TA (AT) (Compt.) No. 15 of 2017, Old Appeal No. 53/2016, TA (AT) (Compt.) No. 16 of 2017, (Old Appeal No. 54/2016) Along with TA (AT) (Comp .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... d Mr. Shiv Johar, Ms Azra Rehman, Ms. Geetanjali Kapur, Ms. Sakshi Kotyal, Mr. Zafar Khurshid, Mr. Ibrahim and Ms. Arpit Shukla, Advocates.Sh. Samar Bansal, Ms Shreya Singh, Ms Gitanjali Kapur, Ms Sakshi Kotiyal, Advocates. Mr. Vasanth Rajasekaran, Mr. Ankush Walia, Mr. Saurabh Babulkar and Ms. Gayatri Verma, Advocates. JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. The Builders Association of India filed information under Section 19(1) (a) of the Competition Act, 2002, alleging anti-competitive agreement against the Cement Manufactures Association (hereinafter referred to as CMA - the Opposite Party No.1 ) and 11 Cement Manufacturing Companies- ( Appellants herein). After receiving the aforesaid information, the Competition Commission of India (hereinafter referred to as Commission ) formed prima facie opinion and assigned the matter to the Director General (hereinafter referred to as DG ) for detailed investigation as per procedure prescribed in the Competition Act, 2002. The DG after detailed investigation, reported the matter against the CMA and other Cement Manufacturing Companies. 2. The Commission, on hearing, initially passed an order on 20th Jun .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Ambuja Cements Limited 6. The main argument was advanced by Mr. C.A.Sundaram, learned Senior Counsel appearing on behalf of Ambuja Cements Limited which also covers similar arguments advanced by learned counsel for the rest of the Appellants. 7. It was submitted that the Commission has failed to establish an agreement to cartelize amongst the 11 cement companies ( Cement Companies for short) as required under section 3 of the Competition Act, 2002. 8. The Commission has also failed to show any direct or indirect evidence of an agreement between the Cement Companies to cartelize. 9. According to Appellants, in order to establish an infringement of the Competition Act, 2002 the Commission must prove collusion/meeting of minds through a coherent body of indirect evidence and indicia. The globally accepted principles state that competition authorities need to produce sufficient evidence to exclude the possibility that parties acted under normal market conditions. In particular, the evidence must show that the conduct of the parties cannot be explained other than as a result of a concerted practice (i.e. the but for test). 10. According to Appellants, the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s a cartel and the increase post CMA meetings would need to be analysed, then the weekly prices should be looked and the monthly weighted average prices will not be indica. 14. Further, the Commission has not carried out any analysis to dispel the existence of any alternate plausible explanation but for cartelization, which alternative explanations were offered by the Cement Companies. Therefore, the Commission has not discharged its burden of proof. Instead, in complete disregard to Indian law, EU law and US law, the Commission is contending, that the Cement Companies should prove that they have not colluded, which would amount to requiring the Cement Companies to prove the negative. 15. It was submitted that the approach of the Commission is completely erroneous as, if the Commission found that the CMA was the platform of the alleged cartelization, then the Commission could not have carved-out the 11 Cement Companies as being part of the cartel without examining the behaviour and role of: (i) all the attendees of the contentious high powered committee meetings; and (ii) all the CMA members. It is alleged that the Commission has attempted to carve out an alleged cartel withi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... rice data available on record is not uniform and therefore incomparable. As such, there can be no conclusions and findings of price parallelism based on comparison of such inconsistent price data as shown below: S. No. Manufacturers Level Price 1 ACC Limited ( ACC ) Weighted monthly average prices Net Selling Price 2 ACL Cements Limited Average Price Average price 3 Ultra Tech Limited ( Ultra Tech ) Average price Average bills rate 4 Jaiprakash Associates (Jaypee Cements) ( JAL ) Beginning of month Average price 5 The India Cements Limited ( India Cements ) Beginning of month Average Retail Price 6 JK Cements Limited ( JK Cements ) Gross Price Depot prices 7 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... elization unless the increase in price is artificially created, which would be done through a reduction in production and therefore, a cartel, if at all, can only be established through showing a concerted effort to decrease production by all members of the cartel so as to decrease the supply and create a scarcity which can be taken advantage of, through all members of the cartel increasing their price. 22. The methodology for price determination and its nexus with costs was also challenged by learned Senior Counsel for the Appellant. According to him, in a market for a commodity product, the prices will tend to be within a band and market players will be conscious of each other's prices from publicly available data. However, this structure of the cement industry and the commoditized nature of cement giving rise to the existence of similar conditions is what allows manufacturers to independently respond to the behaviour of their competitors in the industry. This is precisely why there may be a similar movement of prices. 23. The cement being a commodity product, according to Appellant, the price parallelism is an expected and natural characteristic of pricing patterns, as .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... to see whether for that period, the Cement Companies had stock on hand which was required to be sold and would therefore necessitate a lower production for that month. Nowhere do the records show (nor did the DG ever seek) the data with respect to the opening stock (for a month) from any of the Cement Companies. ii. The price movements being assessed by the DG and Commission is an all India price, averaged across all cities. The Commission have relied on incomparable price data which includes different price metrics for all Cement Companies, inconsistent period/levels for which price data was collected, inconsistent data on location (state v. city wise data), and the use of a representative city analysis, which is not part of the record. However, cement is a regionally fragmented market with significant variations in price across regions/cities. Further, there are also seasonal variations which affect demand and pricing across regions, depending on factors such as different timing of - (i) access to limestone quarries, which helps in delineation of the relevant regional market, as cement is a perishable commodity; (ii) timing of major festivals (e.g. Diwali in North India, .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... nth in terms of production of cement by Ambuja Cements Limited is explained by a variety of factors in 2010 such as: (a) high levels of production in the previous month (October increased by 18%); and (b) high levels of stock to start the month. When a company already has a large stock of cement, which is a perishable good and cannot be stored for long periods, the company will use up the existing inventory and will accordingly reduce production. 29. Learned Senior Counsel for the Ambuja Cements Limited also explained the following details of inventory levels of Ambuja Cements Limited in October and November (2009 and 2010) as under: Indicators Oct-09 Nov-09 Dec-09 Oct-10 Nov-10 Dec-10 Production( MT) 1,497,631 1,511,698 1,737,297 1,750,011 1,437,233 1,788,512 Production Growth 8% 1% 15% 18% -18% 24% Openi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... S. No State Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 1. ANDHRA PRADESH 174 220 238 238 243 255 2. CHANDIGARH 232 240 238 230 239 267 3. CHHATTISGARH 186 211 205 181 191 217 4. DELHI 233 245 236 226 227 258 5. GUJARAT 177 196 215 217 221 248 6. HARYANA 238 246 238 230 239 267 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... meeting in 20 cities across India shows that Ambuja Cements Limited weekly prices increased in 18 cities after 24th February 2011, however prices were already on the rise in 16 of those cities (i.e. except Amritsar and Rohtak) prior to the meeting. 35. Reasons for alleged price increases in Southern India from October 2010 was also explained, as noticed below: 36. It was submitted that the cartelization would have been made out if there was similarity of percentage increase or decrease in production and price. However, based on the data provided by the Cement Companies, it is clear that there is absolutely no similarity amongst the Cement Companies in percentage increase or decrease in production and price. 37. It was further submitted that mere increase or decrease in prices or production by the Cement Companies amounts to a cartel, then it is telling that the non-cartel members i.e. Non-OPs also exhibited a similar increase or decrease in price and production. This clearly establishes that there is no cartel amongst the Cement Companies and their behaviour is in line with market forces in a commodity industry, which is characterized by seasonality and a limited shelf lif .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... igher than total dispatches in October-December 2009 i.e. 4734 MT. C. Capacity utilization 45. Ambuja Cements Limited specifically submitted to the DG and the Commission that its capacity utilization on the basis of nameplate capacity was 83% and on the basis of actual available capacity it was 88.5% during the period 2010-11, (which was much higher compared to the industry average i.e. 73%). However, it is submitted that while the Commission has recorded the submission of Ambuja Cements Limited in the impugned order, it has failed to address thus specific factor pertaining to Ambuja Cements Limited in the impugned order. 46. Further, Ambuja Cements Limited average capacity utilization for the period 2006-2010 was 93.24% compared to industry average of 88.00%. The chart below highlights the difference in capacity utilization levels between the industry and the company. Ambuja Cements Limited capacity utilization has been higher than the industry level for the period 2006-2010, except in the year 2008. 47. It was submitted that the Commission has failed to give any consideration to key factors, such as, nameplate capacity versus available capacity, ramp-up period fo .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... nufacturers Association (CMA) as alleged by the Commission. Without prejudice to this fact, ACC Limited price movements, when compared to that of its competitors, bore no collusive trend. In fact, even when prices increased in certain regions, they dropped in other regions. This trend was visible both before and after the HPC meetings of the CMA meetings dated 3rd January 2011, 24th February 2011, and 4th March 2011, the minutes of which do not disclose either the participation of ACC Limited or the discussion of pricing behaviour. In fact, the ACC Limited prices in various regions (for example, Delhi, West Bengal, Uttar Pradesh, Assam, Odisha, Madhya Pradesh etc.), after these alleged meetings were lower than the prices prevailing at various points in time in the previous year. In addition, the Commission's analysis is inherently flawed given that it has considered incorrect monthly prices. 52. According to him, the Commission has failed in meeting the standard of proof, as all ACC Limited behaviour, taken individually or collectively, have strong objective justifications which are plausible explanations of behaviour, demonstrating that collusion is not the only explanation .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... price changes over the previous calendar month for various states in January and February 2011. State January February 2008 2009 2010 2011 2008 2009 2010 2011 Andhra Pradesh 0% -1% 6% 3% 0% 0% 5% 5% Chhattisgarh 0% -3% 6% 6% -4% 3% 8% 13% Goa 1% 0% 1% 0% 0% 0% 5% 2% Jharkhand 0% -4% 0% 0% 0% 3% 3% 5% Karnataka 1% 0% 0% -1 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... nt, reduces substantially during wet weather, and picks up when the weather is dry and warm. Thus, the South West monsoon, the North East monsoon and winter precipitation in north India reduces demand whenever they occur in any given State. b) Local cultural factors . Major festivals cause both demand and supply changes: (i) demand would reduce from the construction sector, as labourers would take time off to return to their native places to celebrate with their families; and (ii) supply is expected to reduce as workers in the cement plants also go home. The sum total of both these effects would be to reduce production. In this regard, the periods surrounding major festivals like Diwali, Navaratri, Durga Puja, Christmas and New Year face reduced demand. c) Other factors . The month of February has only 28 days (or 29, in leap years), which makes it as much as 10 per cent shorter than months like January and March, which have 31 days each. Thus, it is only natural that aggregate demand in February would be lower than in January or March even if the demand on any given day is the same. d) ACC specific factors . There were a series of significant disruptions to ACC Limited .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ilisation in 2009-10 as 57.7%. This figure is not at all indicative of the actual capacity utilisation by the Appellant. Instead of using pro-rated capacity, the DG has taken the figures for the installed capacity of the whole year. When calculated correctly, the actual capacity utilisation for 2009-2010 is 81.7%, which is much higher that the DG s calculation which has been relied upon by the Commission. 63. According to learned Senior Counsel, when a new plant is installed, the ramp up of the capacity utilization to optimum level takes considerable time due to the teething problems encountered in the initial period. The Commission has not taken this fact into account or made any adjustments to provide a stabilisation period for these plants whilst calculating and assessing the average capacity utilisation. As per the DG report itself, in its first year of production a plant is only able to produce 50% of its installed capacity. The Commission has wrongly relied upon the figure of 75.27% of 2010-11 even though if ramp up is taken into account, the correct capacity utilisation for 2010-11 will be 93.1%. extracts of the comments to the DG Report filed by the Appellant before the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... from the fact that during the period 2007-08 and 2010-11, ten new large players entered the market with a total capacity of 12.3 MT. further, market share of Cement manufactures has also seen frequent changes. It was also submitted that the Mandatory Tests laid down under Section 19(3)(a)(b) (c) were not conducted before arriving at finding of cartelisation. 69. The Appellant has also taken plea that there was a substantial increase in installed capacity which was increased during the period 2007-2011 from 179.1 MT to 286.38 MT i.e. almost 50% increase. Further, ten players doubled their capacity from 20.4MT to 46.20MT. 70. According to learned counsel for the Appellant, increase in profit margin is one of the indicators of cartel. The data on record shows that there is decrease in pre-tax and post-tax margins of major Cement manufactures during the years 2007-2011. 71. It was submitted that the Commission relied on the existence and the role of CMA to reach a finding of cartelization. However, the Commission with respect to CMA is completely different if not opposite. The Commission considered the CMA meeting as a basis to state that the conduct of the Appellants/Ce .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... a of each of the Companies. The data does not show any discreet changes in price of any of the companies. v. Cheery Picking with respect to CMA Meeting: There have been seven CMA meetings during the period under consideration by the Commission. The Commission by selectively picking three meetings has reached a finding that there must have been an agreement among the cement manufacturers. According to Appellant, this finding is patently erroneous for the following reasons: * Picking three out of seven meetings is in fact a case of cherry picking. In fact, the price fell after four meetings and went up after three meetings. Thus, showing no discernible pattern. * In any case, the finding that the price went up after the CMA meetings is itself wrong. Commission has taken the average monthly price. It does not show the price before and after the meetings. Further, Commission has used retail price in its analysis which is in any case irrelevant for the manufacturers of cement who are concerned with factory gate price and at the most wholesale price. Parties, in particular UltraTech has provided discreet price changes over a period of both before and after the CMA meetin .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ooring Manufacturer's Association vs United states, 268 US 563 (1925) in which the majority decision upheld, that trade associations or combinations of persons or corporations which openly and fairly gather and disseminate information as to the cost of their product, the volume of production, the actual price which the product has brought in past transactions, stocks of merchandise on hand, approximate cost of transportation from the principal point of shipment to the points of consumption as did these defendants and who, as they did, meet and discuss such information and statistics without, however, reaching or attempting to reach any agreement or any concerted action with respect to prices or production or restraining competition, do not thereby engage in unlawful restraint of commerce. 77. Further, according to learned counsel CMA cannot be construed as a common platform for collusion. The Commission considered irrelevant and inadmissible evidence for finding that CMA platform is for cartelization. 78. It was contended that the CMA has maintained the minutes of all meetings. Further, there is no finding or allegation that CMA has recorded the minutes wrongly or mani .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... arrangement or understanding or action in concert and reads as follows: 2(b) agreement includes any arrangement or understanding or action in concert, ( i) whether or not, such arrangement, understanding or action is formal or in writing; or ( ii) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceedings; [( ba) Appellate Tribunal means the Competition Appellate Tribunal established under sub-section (1) of section 53A;] 83. Section 2(c) defines cartel which includes an association of producers, sellers, distributers etc. as quoted below: 2(c) cartel includes an association of producers, sellers, distributors, traders or service providers who, by agreement amongst themselves, limit control or attempt to control the production, distribution, sale or price of, or trade in goods or provision of services. Therefore, it is clear that all cartels arise out of any agreement but all agreements are not cartel. 84. Chapter II of the Competition Act, 2002, deals with Prohibition of Certain Agreements, Abuse of Dominant Position and Regulation of Combination . Section 3 deals with A .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... y it is clear that Sub-section (3) of Section 3 relates to all agreements entered into between enterprises or associations of enterprises or persons or association of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical of similar trade of goods or provision of services, which- (a) directly or indirectly determines purchase or sale prices; (b) limits or controls production, supply, markets, technical development, investment or provision of services etc. will be presumed to have an appreciable adverse effect on competition. 87. The Competition Law seeks to protect the competition process but not an individual competitor. Violations, if alleged must be based upon demonstrable economic effects rather than upon formalistic line drawing. The main issue to be seen as to whether the agreement, unilateral (exclusionary) conduct or cartel, enhance or facilitate powers. Market power is the ability to control prices or exclude competition, but not all market power is bad. Market power can be shown through direct/or indirect evidence. 88. Market power .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ved in all sectors of economy and cement is no exception. However, Cement industry has been ploughing back the profits in creation of additional capacities, which is the need of hour. The cement industry is producing at the optimal level of more than 95% and to meet the growing demand for cement in the XI Plan period (2007-08 to 2011-12), the cement companies have planned for addition of adequate capacity, which would require huge investment. Forced Price Reduction resulting in reduction on margin would adversely affect capacity materialization in time. 90.3. Meeting of CMA dated 26th March, 2009, they discussed the issues related to supply of cement, which reads as follows: Minutes of the 92nd Meeting of the Managing Committee of Cement Manufacturers' Association held on 26.03.2009 in New Delhi 7 (a) Supply of Cement in the State of Uttar Pradesh Secretary General, CMA mentioned that Secretary (DIPP) had called a Meeting of Chief Executives of Cement Companies supplying cement in the State of UP and also CMA on 16.03.2009, to discuss the complaint by the UP Govt. Departments, wherein Secretary (DIPP) insisted that the prices be brought down to reasonable .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... try as on the last working day of each month by the 10th of the following month. For this, the companies have been designated by DIPP itself after a meeting of Cement Companies and CMA in Feb.2009. This is the information, which is used by DIPP for working out Wholesale Price Index (WPI). 10.1.4 President further informed that in view of the recent developments, the Stations covered by ACC Ltd. and Ambuja Cements Ltd. would have to be served by some other representatives of the Cement Companies who have a presence in each one of these places. 10.1.5 President requested Members to come forward and voluntarily take this up on a regular basis so that a system and procedure is put in place for collection of this information. The concerned Companies were also requested to send the names of their Nominated representatives to CMA, with their contact numbers, e-mail details, etc. 10.1.6 The following cement companies agreed to furnish range of the Wholesale and Retail cement prices details for the cities mentioned against their names. Co./Station Retail Cement Price Wholesale price Grasi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ropean Union. 90.7. The CMA itself decided to amend its regulations post issue of notice dated 20th August, 2010 by the Commission under Section 41(2) of the Competition Act, 2002. The amendments made in its meeting dated 23rd September, 2010, leave no manner of doubt that prior to the amendment, even formally and on record the purpose of the association was to bring about 'greater cooperation' between the Cement Companies and undertake activities which could be nothing else but acts of cartelization. 90.8. Further, while the CMA had been directed by the DIPP to collect information relating to indicative retail price ranges in 34 centres across India on a weekly basis and wholesale price index from 10 centres and submit it to the Government, the CMA chose to have the information collected at a retail level for 34 centres from various cement companies among themselves (Leaders in their respective areas). Effectively therefore, while it was never intended that the cement companies should have access to details such as prices, production capacity etc. of its competitors but it is the very same competitors who were collecting the said information from other competitors. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... cessarily be decided on its own facts . 56. In Guinness PLC and Distillers Company PLC the question before the Takeover Panel was whether Guinness had acted in concert with Pipetec when Pipetec purchased shares in Distillers Company PLC. Various factors were taken into consideration to conclude that Guinness had acted in concert with Pipetec to get control over Distillers Company. The Panel said :- The nature of acting in concert requires that the definition be drawn in deliberately wide terms. It covers an understanding as well as an agreement, and an informal as well as a formal arrangement, which leads to cooperation to purchase shares to acquire control of a company. This is necessary, as such arrangements are often informal, and the understanding may arise from a hint. The understanding may be tacit, and the definition covers situations where the parties act on the basis of a nod or a wink . Unless persons declare this agreement or understanding, there is rarely direct evidence of action in concert, and the Panel must draw on its experience and common sense to determine whether those involved in any dealings have some form of understanding and are acting in .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... to an Anti-competitive Agreement, resulting in bid rigging which had an appreciable adverse effect on competition 99. In some of the foreign judgment, the agreement has been noticed and defined on the basis of the European Law in line with the case-law of the Court of Justice of the European Union. The concept of a concerted practice refers to a form of coordination between undertakings by which, without it having reached the stage where an agreement properly so-called has been concluded, amounts to cooperation between them has been knowingly substituted for the risks of competition. 100. Information exchange can constitute a concerted practice if its reduces strategic uncertainty in the market thereby facilitating collusion, that is to say, if the data exchanged is strategic. In European Union Law, the aforesaid proposition has been shown in the guidelines on the applicability of Article 101 of the Treaty on the functioning of the European Union to horizontal co-operation agreements while explained. 101. In India the horizontal agreements if directly or indirectly determines purchase or sale prices, in effect will attracts Section 3(3)(a). If it limits or cont .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... data from the Cement Companies in respect of installed capacity, production, dispatch and prices of cement from January, 2007 to February, 2011. However, the Appellants chose to supply data as convenient to them. The rise in price in February 2011 was unusually high compared to previous years. In fact, if the price charts submitted by the Commission before the Appellants, based on data submitted by the Appellants are perused, it is clear that there are absolute change in price of Appellants in each state which would show clearly that the Appellants without any reason or justification grossly hiked the prices totally departing from their normal trends over the previous years. B) Price Charts A perusal of the table as handed over to the bench on 11th October, 2017 shows a Region/State wise break of the range of percentage change in prices (2007-2011). The same reflects on the Range of Percentage change in the month of October over September (2007-2011) for the Southern States and for the month of February over January (2007-2011) for Central, Northern and Eastern States highlighting the unprecedented trend for the percentage increase in the prices which was not .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... controlling and limiting the supply of cement in the market. d. Further, Commission inquired into the trends relating to Production and looking at the figures of various states the Commission found that the production fell drastically in all cases in November 2010-11 while that was not the case in November 2009- 10. Rajasthan (in tonnes) Company 2009 2010 October November Remarks October November Remarks ACC 103327 88425 Decrease 120695 115481 Decrease Shree 701611 708686 Increase 869064 655290 Decrease Ultra 275423 249253 Decrease 490792 348675 Decrease .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... November Remarks ACL 120011 111012 Decrease 124043 115123 Decrease Century 162780 163880 Increase 180980 160400 Decrease Lafarge 337981 294215 Decrease 366239 316538 Decrease Tamil Nadu Company 2009 2010 October November Remarks October November Remarks ACC 79212 78652 Decrease 79452 68483 Decrease Ultra 169795 153401 Decrease 184430 121582 Decrease India Cements 365833 3343 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Month Cement Production Cement Dispatches In Absolute %age change in 10-11 over 09-10 In Absolute %age change in 10-11 over 09-10 2010-11 2009-10 2010-11 2009-10 April 14.70 13.40 9.70 14.44 13.26 8.90 May 14.47 13.28 8.96 14.18 13.06 8.58 June 13.77 13.19 4.40 13.81 13.32 3.68 July 13.23 13.01 1.69 13.30 12.73 4.48 August 12.85 12.51 2.72 12.81 12.39 3.39 September .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Production in MMT Growth in % Capacity utilisation in % 2005-06 157.35 -- 141.81 -- 90 2006-07 165.64 5.26 155.64 9.75 94 2007-08 179.1 8.12 168.31 8.14 94 2008-09 205.96 14.99 181.61 7.90 88 2009-10 246.75 19.80 205 12.87 83 2010-11 286.38 16.06 210.85 2.85 73 a. Comparison of the years 2008-09 with 2009-10 and 2010-11 would show that (a) while the installed capacity was the highest in 2009-10 and thereafter in 2010-11 thus signifying .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... y 93 95 99 89 87 80 June 89 94 94 87 85 76 July 82 89 92 87 84 73 August 82 80 88 77 79 71 Sep. 80 88 87 81 73 70 Oct. 90 94 94 86 76 81 Nov. 85 91 89 83 77 65 Dec. 94 98 95 92 86 74 Jan. 98 102 97 93 87 78 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... 14.65 14.70 87 78 Feb. 17.40 19.16 13.93 14.78 82 78 Mar. 18.55 19.53 15.97 16.82 88 87 Total 199.21 224.41 160.75 168.29 83 76 g) Even if Diwali was to be made the benchmark - As it was 17th October 2009 and 7th November 2010 and the trends of one month prior to such event are considered, i.e. November of 2010 to be compared with October of 2009 - then also it is clear that the month of Diwali in 2009 saw an increase in production over the previous month and the month after Diwali in 2009 saw a further increase in production. On the other hand, in 2010 the month of Diwali saw a huge reduction from 14.7 to 11.84 MMT while the month of December, i.e. after Diwali saw a marginal increase only. The Appellant cement companies reduced production and dispatch exhibited their coordi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:- (a) creation of barriers to new entrants in the market; (b) driving existing competitors 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; (f) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services. 33. The word 'market' used therein has reference to 'relevant market'. As per sub-section (5) of Section 19, such relevant market can be relevant geographic market or relevant product market. The factors which are to be kept in mind while determining the relevant geographic market are stipulated in sub-section (6) of Section 19 and the factors which need to be considered while determining the relevant product market are prescribed in sub-section (7) of Section 19. These two sub-sections read as under: 19.(6) The Commission shall, while determining the releva .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... I is required to look at evidence that is available and relevant to the case at hand. The CCI has to define the boundaries of the relevant market as precisely as required by the circumstances of the case. Where appropriate, it may conduct its competition assessment on the basis of alternative market definitions. Where it is apparent that the investigated conduct is unlikely to have an adverse effect on competition or that the undertaking under investigation does not possess a substantial degree of market power on the basis of any reasonable market definition, the question of the most appropriate market definition can even be left open. The relevant market within which to analyse market power or assess a given competition concern has both a product dimension and a geographic dimension. In this context, the relevant product market comprises all those products which are considered interchangeable or substitutable by buyers because of the products' characteristics, prices and intended use. The relevant geographic market comprises all those regions or areas where buyers would be able or willing to find substitutes for the products in question. The relevant product and geographic mar .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates