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TMI Blog2018 (11) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... ), 4 (2) (c) and 4 (2) (e) read with Section 4 (1) of the Act. The Informant is a Bangalore based company registered under the provisions of the Companies Act, 2013, engaged in the business of design and manufacture of electronic products in India pursuant to Government of India's (GoI) 'Make in India' initiative. The OP is a leading multi-national corporation and technology company engaged in the designing, manufacturing and distribution of a wide range of information technology components, peripherals, computer systems, etc. as well as electronic devices relating to communications and computing such as Processors, Chipsets, Mother-Board/ Server-Board, Integrated Circuits, Network Interface Controllers, Flash Memory, etc. 2. As per the information, the Informant started its business under the GoI's Make in India initiative in 2015 and one of the electronic products that it manufactures is the 'Server'. From the information available in public domain, the Commission notes that a Server is a type of computer which is designed to process requests and deliver data to another computer over the internet or a local network. The Informant has stated that a Server is in itself a specific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oducts having Intel Processors only. Hence, as per the Informant, the OP holds a dominant position in the relevant market of "Processors for Servers in India" and the Informant is completely dependent on the OP for procuring Processors for its Servers. In support of its contention, the Informant has relied upon a previous decision of the Commission passed under Section 26 (6) of the Act, titled ESYS Information Technologies Private Limited v. Intel Corporation and Others, Case No. 48 of 2011 decided on 16.01.2014. 6. The Informant has stated that the other two sub-assemblies of the Server namely the Server-Board and the Chassis have to be designed in such a manner that they interface with the Processor. There cannot be an effective/ marketable Server unless the Server-Board and the Chassis interface with the Processor. Hence, to manufacture Server-Boards on its own, the Informant needs access to the reference designs from the Processor manufacturer i.e. the OP, so as to incorporate the same in the design of its Server-Board. In the absence of such reference designs from the OP, the Informant cannot develop its Server-Board which would interface or be compatible with the OP's Proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would continue its efforts to design its own Server-Boards without seeking any further files or support from the OP and the OP would have No-Objection to the same. Accordingly, on 09.05.2018, the Informant sent an e-mail to the OP seeking confirmation regards the same. However, till 16.05.2018, the OP only deferred the issuance of any response; thus, keeping the Informant in lurch. The OP also did not provide the demanded No-Objection to the Informant. 9. The Informant has averred that each Server model has a limited lifespan of 2 to 3 years and with change in each Server model, the design of the Server-Board is likely to become obsolete as a new Processor would be released by the OP by then and the market demand would be shifted to the latest model. In such a scenario, the Informant will have to start the process all over again. Therefore, the Informant has stated that all such delays being made by the OP are costing it dearly. 10. The Informant has submitted that such conduct of the OP has several adverse consequences. The consumers are deprived of competitively priced Servers. The cost of procurement of Servers remains high in India. The Informant may not qualify under the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iles/ documents/ information necessary for enabling the Informant to design/ develop and manufacture its own Server-Boards which are compatible with the Micro-Processors manufactured by the OP, in a discriminatory manner. This, as per the Informant, amounts to abuse of dominant position by the OP in contravention of Section 4 of the Act. 14. To assess the conduct of the OP under the provisions of Section 4 of the Act, a relevant market needs to be delineated first. If the OP is found to be in a dominant position in such relevant market, the Commission is required to analyse the alleged abusive conduct. 15. As per the Informant, the relevant market in the instant case would be the market for "Processors for Servers". The Informant argued that the conduct complained of is the denial to provide access to the reference design files, which inhibits the Informant's capability to design Server-Boards which are compatible with the OP's Micro-Processors. It has been contented that conduct pertains to withholding of integration/ interfacing information in the market for "Processors for Servers". Hence, the relevant market would be market for "Processors for Servers". The Informant placed r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nant player. Even in the Indian markets for Server- Boards or Servers, the OP is not dominant. As per the OP, the top players in the Servers market, both worldwide and in India, are HPE and Dell and the OP sells very minimal quantities of Servers and Server Systems as well as some of the components used in Servers in India such as White-Box Servers. Its major domain is Micro-Processors and not the downstream products like Servers and Server-Boards. The OP relies upon the IDC Reports placed on record by the Informant to stress upon the same. Hence, in absence of a dominant position of the OP in such markets, the OP argued that no case of abuse of dominance is made out against it. 20. In rebuttal, the Informant has stated that the OP's delineation of the relevant market is incorrect because the conduct complained of pertains to reference design files of Server- Boards for compatibility with Micro-Processors only. Further, relying upon the judgment of the Hon'ble Supreme Court in Competition Commission of India v. Fast Way Transmission Private Limited and Others, (2018) 4 SCC 316, the Informant has stated that the fact that it is operating in the downstream/ distinct market and is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Informant seeks to manufacture Servers under its own name for the Indian market. However, for manufacturing its own Server, if the Informant has to procure Server-Boards from its competitors in the Server market, it would lose its competitive edge. Therefore, it seeks to design its own Server-Boards for its Server. Random designing of such Server-Boards cannot be done and the Board has to be designed in such a manner so that the same is compatible with the Micro-Processor being used in the Server. Since the demand in the market is for Servers fitted with the OP's Processors mostly, the Informant has to design its Server-Board in a manner so that the same is compatible with the Micro-Processor of the OP. For such interfacing, the Informant requires reference design files from the OP, which are being provided to the other Server manufacturers. However, the OP is not providing all such files to the Informant which is affecting its ability to design and manufacture its own Server-Board. 25. The Commission notes that the Informant has submitted a list of files alongwith its information (Annexure 9 to the information) which it states are the files required for designing a Server-Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. 27. The OP has further stated that it does not develop an exhaustive set of collateral i.e. it does not necessarily develop reference designs for all Server-Boards which are compatible with Intel Micro-Processors. As a Server Platform is based on the same architecture, the OP aims to develop the reference designs for a Server-Board using at least one of the products within a Platform. The aim of developing reference designs for Server-Boards with at least one product within a Server Platform is to serve as a starting point for customers to design and develop their Server-Boards using their own resources and skills and to further design and develop Server-Boards for other products within the Platform. For such product, the OP may develop a full set of collateral: schematics, layouts, reference codes, thermal, electrical and power modellings, mechanical files, etc. In respect of other products within the Platform, the OP may develop only subsets of such collateral. Once the collateral are developed, the same are uploaded onto the IBL web portal. The OP's customers may rely on the reference designs developed by it or choose to develop their own designs. 28. The OP has stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors under the Purley Platform. 'Buchanan Pass', 'Wolf Pass', 'Silver Pass' and 'Sawtooth Pass' are the four designs of 'Skylake'. 31. The Informant has further stated that though the OP has provided to it access to the IBL portal, the portal does not contain all the requisite information/ files for enabling compatible between the Server-Boards being designed by the Informant and the OPs Processors. Annexure 9 of the information lists the design files/ information, the latest/ updated versions of which the Informant requires to integrate its product with the OP's Processors. Files at sl. nos. 1 to 6 are standard information required while files at sl. no. 2.8 include simulation models for the complete product (IBIS, SPICE). Having requested for these files since July 2017, the OP on 18.10.2017 furnished a link to the Informant for accessing the required documents. On accessing this link, the Informant could access/ download a document titled 'Purley Platform Message of the Week'. Page 36 of this document contained description as 'Full Collateral List'. On clicking at the collateral list, the Informant could access an Excel Sheet listing approx. 700 document references. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. In Annexure 9 of the information, there is no mention that the Informant is even seeking access to the Skylake Servers. It is only in certain e-mails relied upon by the Informant annexed with the information, that the Informant is seeking IBIS simulation files from the OP. Thus, the Informant itself is not clear as to what files it wants, but it expects the OP to provide the same to it. The OP hence, took an objection that in the written submissions filed by the Informant post the preliminary conference, new averments have been made, which neither form part of the initial information filed by the Informant nor were argued upon in the preliminary conference. As per the OP, though the Informant had ample time to collect, collate and file such submissions and documents at an earlier stage also before the preliminary conference was held, however, it only sought bring such new submissions on record at a belated stage as a dilatory tactic. Hence, such submissions of the Informant with regard to simulation files may not be taken on record by the Commission. 34. Next, the OP argued that it provides electrical simulation models for Server Platforms to its customers, available through I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the same cannot be accessed. However, as per Intel's record, file with the reference number has already been downloaded by the Informant. 36. With regard to the e-mail dated 22.02.2018, the OP has stated that the said e-mail does not state that IBIS files are made available to tier one customers only, rather what is written in the e-mail is that the required document/ file was released to a single tier one customer. The document referred in the e-mail is one of the customised files developed by the OP on special request of the customer to be used only with the customer's own design. 37. From the above opposing submissions of the parties, the Commission notes that the Informant's case is that IBIS simulation files, though are provided by the OP to its other customers i.e. ODMs/ OEMs, have not been provided to the Informant. Also, access to the complete set of SPICE files as well, has not been provided by the OP to the Informant. On the other hand, the case of the OP is that the Informant does not need IBIS files for designing a Server-Board at all as the Informant has already been provided with all the SPICE files which are nothing but an alternative to the IBIS files. 38. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the same are being provided to the other ODMs/ OEMs by the OP. To the Commission, the OP has been unable to provide a reasonable explanation for indulging into such discriminatory treatment. 40. Though the OP has stated in its latest written submissions that which has been provided to the Informant, however, the Commission notes that the said submission does not form part of the OP's undertaking. The OP was directed vide orders dated 12.07.2018 and 19.07.2018 to submit an undertaking categorically stating that it has given access to the Informant to all the files required to design and operate a Server-Board compatible with the OP's Micro-Processors and no extra files are being provided by it to the other ODMs/ OEMs, which have not been provided to the Informant. Though the OP can claim exemption for the customised files which it provides to the other ODMs/ OEMs, there is no reason for the OP not to provide the complete set of IBIS files to the Informant if they are more advanced and convenient to use than SPICE, specifically in view of the fact that the same are being provided by the OP to its other customers, by only stating that alternative SPICE files have been provided to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense for the Informant to procure the design files for compatibility with OP's Processor from any alternate source like procuring the designs from ODMs/ OEMs or hiring specialised companies like Wipro, L&T, Infosys, etc. at an enhanced cost when it can easily and conveniently get the same from the OP itself like the other ODMs/ OEMs are getting. 43. The OP has also explained that it categorises the manufacturers of Intel based Servers and Server-Boards into two categories - (i) ODMs/ OEMs who are well established IT companies who manufacture and design their own customised Servers and Server-Boards; and (ii) Licensed Manufacturers who enter into Licensing Agreements with the OP and are provided detailed documentation including standard reference designs to make Server-Boards based on such designs. The OP has stated that the Informant belongs to the second category. The OP entered into a Manufacturing Enablement Agreement with it to enable it to manufacture Intel Server-Boards based on Intel's designs. In accordance with the agreement, it provided the Informant all requisite documentation and materials as well as dedicated technical support. In consideration, the Informant paid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied to the Informant any deficiency/ incapacity as regards the size of its team/ resources employed. 46. On the other hand, as per the OP, the Informant, having no prior experience in the manufacturing of Server-Boards or Servers except for the work undertaken under the Enablement Agreement cannot jump straight to designing its own Server-Boards like the ODMs/ OEMs even with access to the reference designs, without serious support from the OP. Also, it lacks technical and R&D capability. The ODMs/ OEMs employ hundreds of engineers in their R&D division while in contrast, the Informant has only 59 out of which only 13 are design engineers. Further, in terms of total revenue also, the ODMs/ OEMs dedicate millions and millions of USD towards R&D division while the Informant in 2016-17 had total revenue from operations as $7.2 million only. In view of such assessment by the OP, it had sent the letter dated 04.05.2018 to the Informant stating that same level of support cannot be provided to it at this stage as is provided to the ODMs/ OEMs because at this point, the Informant does not possess sufficient expertise and resources. As per the OP, the Informant only wants to avail subsidies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such other manufacturers, support of a very high level by the OP is also given once they understand the design files. It is such support that the Informant is seeking. Similar level of support at this stage cannot be provided to the Informant as what the Informant is trying to do is 'to learn to run before it can walk'. The OP has made available to the Informant the entire database of reference design files, but the Informant lacks the ability to understand and synthesise the same. The OP, at this stage, cannot provide to the Informant the same level of support as is given to the other ODMs/ OEMs. The OP provides technical assistance to those who want to manufacture Server-Boards and Servers based on its Micro-Processors on an . Technical assistance comprises of - (i) Collateral i.e. documentation and materials which are the OP's intellectual property provided to the customers after executing necessary confidentiality agreements and which are provided to the Informant as well for the Purley Platform; and (ii) Support services i.e. customised services provided by highly trained Intel employees. These support services differ for the two categories of Intel customers as mentioned abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the MEITY meeting that it is capable of designing its Server-Boards with the material it has without any further assistance from the OP. However, the Informant has submitted in regards to this e-mail that even if the Informant could create the requisite data to ensure integration/ interfacing between the OP's Processors and the Informant's Server-Boards by having recourse to reverse engineering decoding, apart from the cost and time involved in adopting a trial and error approach, there is no certainty that the desired result can be achieved at all. The Informant would run a risk of significant financial and other liabilities. The Commission notes from the said e-mail that all that the Informant stated in the same was that till the time the issue is resolved, the Informant be given a No-Objection to "continue our efforts to design our server boards without seeking any further files or support from Intel". The same does not imply that no reference design files were required by the Informant anymore to help it design Server- Boards compatible with the OP's Micro-Processors. Further, as stated above, when the files are being provided to the other ODMs/ OEMs, there is no reason fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the OP. The intention/ motive behind the OP's such conduct can only be explained by the OP and anyhow, this fact would not be relevant in the instant matter. The Commission in this regard is of the view that at this stage the Commission is not required to go into the intent or motive of the OP in indulging into the alleged conduct that has been, prima facie, found to be abusive. Otherwise also the language of Section 4 does not impose any such obligation on the Commission. 57. Based on the above analysis of the facts and materials presented by the Informant and the OP, the Commission is of the opinion that there exists a prima facie case of contravention of the provisions of Section 4 of the Act by the OP in the matter. The Commission holds that the OP being in a dominant position in the market for "Processors for Servers in India" has, by refusing to provide access in a non-discriminatory manner to the complete set of files/ information necessary for the Informant to design its own Server-Boards which are compatible with the Micro-Processor manufactured by the OP, prima facie, denied market access to the Informant in contravention of Section 4 (2) (c) of the Act. Further, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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