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TMI Blog2022 (7) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter, the 'Opposite Party No. 2'/ 'OP-2'), M/s Port Contractors Welfare Association (hereinafter, 'Opposite Party No. 3'/ 'OP-3'), M/s Chennai Trailer Owners Association (hereinafter, 'Opposite Party No. 4'/ 'OP-4'), M/s Tamil Nadu Trailer Owners Association (hereinafter, 'Opposite Party No. 5'/ 'OP-5'), M/s Royapuram Trailer Owners Association (hereinafter, 'Opposite Party No. 6'/ 'OP-6'), M/s Interstate Container Transport Owners Association (hereinafter, 'Opposite Party No. 7'/ 'OP-7'), M/s Confederation of Surface Transport, Madhavaram, Chennai (hereinafter, 'Opposite Party No. 8'/ 'OP-8'), M/s Chennai Harbour Trailer Owners Association (hereinafter, 'Opposite Party No. 9'/ 'OP-9'), M/s Chennai Kanchi Rhiruvakkur Trailer Owner Welfare Association (hereinafter, 'Opposite Party No. 10'/ 'OP-10'), M/s Chennai Thuraimugam Trailer Lorry Drivers Anna Thozhilalalsangam (hereinafter, 'Opposite Party No. 11'/ 'OP-11') and Chennai Thuraimuga AITUC Tractor Trailer and Articulated Drivers (hereinafter, 'Opposite Party No. 12'/ 'OP-12') [hereinafter, collectively, referred to as the 'Opposite Parties'/'OPs'], alleging contravention of the provisions of Section 3 of the Act. 2. As per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rates were to be further revised on 31.03.2016 and it was decided that, during the said period, there should be no stoppage in movement of containers. On the same date, a trade notice was published for and on behalf of the OPs to notify the decisions taken at the meeting. The said meeting was stated to be called by the Chairman, Chennai Port Trust, and it was attended by the members of the Informant and various TOAs. 6. Thereafter, a letter dated 27.01.2015 was issued by the Chennai Trailer Owners Association, i.e.,14 Associations and 3 unions, to all the CFS, restricting CFS operations in terms of maximum number of vehicles that they can operate and by declaring that the CFS shall not increase their existing fleet. The reply dated 30.01.2015 was issued by NACFS to the abovementioned letter dated 27.01.2015 from Chennai Trailer Owners Association refuting the decision taken by the associations as being arbitrary and against the interest of its members. 7. Another meeting was stated to be conducted on 14.02.2015 by All Transport Owners Association and Driver and Cleaner Union for declaring that decisions must be taken by all the 14 associations jointly and not by any one associa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by the OPs on 05.02.2018 and it was found that the members of NACFS paid lesser rates than the tariff decided on 09.08.2014 to various trailer owners. The OPs accordingly conveyed to NACFS that the tariff will be increased by a further 20%, in addition to the rates decided on 09.08.2014 to allegedly account for the ongoing and day to day price increase in diesel, spares, insurance, tyres etc. It was also stated that members of the Informant shall make payment to the members of the said OPs within 15 days. Also, a limit was imposed whereby each member of the Informant could only ply a maximum of 20 trailers of their own. The letter also stated that if a joint meeting was not conducted within 7 days, the OPs would take an alternative step to seek a remedy. 13. The Informant replied to the letter dated 07.02.2018 on 24.02.2018, reiterating in support of individual negotiations. Pursuant to the said reply, the OPs issued a strike notice on 02.03.2018 to Chennai Port Trust pursuant to a decision taken at a joint meeting of the OPs held on 26.02.2018. The said notice contained a threat to go on an indefinite strike from 6 AM on 19.03.2018 until NACFS agrees with the demands of the O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainers are stuffed, de-stuffed and aggregation/segregation of export/import cargo takes place till completion of their examination and clearance. With the growing volume of international trade, the need for expeditious clearance of goods at the port within the minimum possible time has been gaining importance. This is more so when the ports are facing congestion at their premises. To move the container from port to CFSs, the CFS operators either use their own trailers or hire the services of various trailer owners and for the same, CFS operators enter into contracts with individual transporters. When CFS operators hire the services of trailer owners/transporters, trailer owners/transporters raise the bill in favour of the respective CFSs. 19. The DG further observed that the members of the Informant are mainly aggrieved by the OPs alleged involvement in fixing the prices for transportation of containerised cargo from port to CFS or vice versa by way of conducting meetings of various trailers/ trucks associations. As per the Informant, fixing the prices for transportation of containerised cargo from port to CFS or vice versa is the sole prerogative of CFS operators and individual t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ........." 22. From the reply of the Informant, the DG deduced that its members did not agree to the increase in price. Rather, the increase in price was allegedly forced and coerced upon the CFSs on the threat of strike and actual strikes. The DG also observed that the hike in the price had no correlation to the rise in price of fuel, insurance, spare, tyres, repair and maintenance, driver salary, etc. The Informant also submitted that the different CFSs are located at different locations, some within 10 kms from the port and the others beyond 50 kms from the port and in this scenario, to have a common increase without taking into consideration the most important factor in consideration, i.e. the distance, clearly brings to light that there is no rationale in the common increase in price. Further, the DG observed that the OPs had issued a Notice thanking the Chairman of the Chennai Port Trust and informing their members that the existing transport tariff shall be increased by Rs.900/- and Rs. 1400/- for 20'ft. and 40'ft. trailers, respectively. This, as per the DG, showed that the OPs not only convinced/ forced the Informant to increase the rates but also communicated to its memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... organised by Chennai Trade Facilitation Committee and attended by NACFS, some of the OPs and CCBA. Vide meeting dated 19.04.2018, it was, inter alia, decided for a 10% increase in rates over the 2014 agreement from 01.05.2018, pending payment up to 31.03.2018 should be settled by 30.04.2018 and by a maximum of 15.05.2018, the bill would be raised by TOA as per the 2014 agreement tariff w.e.f. 05.04.2018. In the second meeting held on 11.05.2018, the points of the meeting held on 19.04.2018 were discussed. The said meeting was also organised by the Chennai Trade Facilitation Committee and was attended by NACFS, some of the OPs and CCBA. It was informed during the meeting that regarding the payments issue, some CFSs have released while some have not released the payments. Revised prices for the implementation of the 2014 agreement were also stated to be not agreed by some CFSs so far. It was also narrated in the minutes of the meeting that "NACFS requested the TOA members that the matter would be discussed with the CFSs regarding the clearance of pending payment as well as implementation of price individually and in case if not cleared requested them to issue the details. On receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Informant for a particular period unless it is reviewed. The minutes of meeting dated 07.07.2010 are as follows:- ".......... * The CFS Operators can ply their vehicles to the maximum of 20. The CFS Operator should not increase existing fleet more than the existing fleet. * The existing fleet should continue till the next review meeting. The ceiling fixed per CFS vehicles shall include their/ their sister concern vehicles. * Any requirement over and above the 20 vehicles used by them should be given only to the members of any of the six TOAs. * The CFS operator can use any number of members of the six TOAs to ensure their work in time. * This resolution is applicable for the movement of containers to and from of Chennai Port Trust. .............." 31. The DG emphasised that the Chairman of Chennai Port Trust confirmed that the transport requirement of the CFSs and the EXIM Traders is met from the vehicle population available in the region. The Chennai Port issues passes for entry of the trailers and drivers, and these passes are issued only if endorsement is done by one of the trailer associations. Therefore, the possibility of hiring outside trailers is also min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rolling the provision of transportation services by the members of the Informant at Chennai Port. 35. Thus, the DG found contravention of the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act by OP-1 to OP-10. No contravention, however, was found against OP-11 and OP-12. 36. On 12.05.2021, the Commission considered the Investigation Reports of the DG in its ordinary meeting and decided to forward a copy of the non-confidential version of the Investigation Report in electronic mode to the Informant and OP-1 to OP-10, for filing their respective objections/suggestions thereto. Since no contravention was found by the DG against OP-11 and OP-12, the Commission decided not to send the Investigation Report to these parties at that stage. The hearing in the matter was scheduled on 14.07.2021. 37. Subsequently, OP-1 moved an application dated 18.06.2021 seeking extension of time by 6 weeks for filing its objections/suggestions to the Investigation Report on the ground that its general body meeting could not be conducted due to the COVID-19 situation for discussing the response to the Investigation Report. After considering the said application filed by OP-1, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 31.01.2022, the learned counsel for OP-1 again requested adjournment of the hearing scheduled on 02.02.2022, stating that the counsel for OP-1 as well as the staff have been affected with COVID-19 successively and were at home in quarantine. OP-1 also requested one last opportunity for filing its counter/objections to the Investigation Report, and consequently sought adjournment of the virtual hearing scheduled on 02.02.2022. The Commission considered the said request of OP-1 and allowed the same. The OPs were given time till 28.02.2022 to file their suggestions/objections to the Investigation Report and the Informant was given time to file its rejoinder to such response, if any, by 14.03.2022. The hearing in the matter was rescheduled on 30.03.2022. 41. On 30.03.2022, the Informant and OP-1 were represented by their respective legal representatives. The learned counsel for the Informant concluded its oral submissions on the Investigation Report and undertook to file the synopsis of the same within 2 weeks. The learned counsel for OP-1 requested that additional time be granted to OP-1 to file its written objections to the Investigation Report and also requested another opport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vers/ cleaners, repayment of loans from financial institutions, upkeep of the trailers etc. Therefore, CFS- members of NACFS are in a dominant position, and the members of OP-1 are in a subservient position (wanting to earn their livelihood and make both ends meet) and are being made to accept the terms and conditions thrust upon them by the members of NACFS. 46. OP-1 has not interfered with the commercial dealings of its individual members with any of the members of the NACFS. The Informant has not produced any evidence to substantiate their allegation that OP-1 had ever indulged in any of the commercial dealings of its individual members with any of the CFSs at any point of time. 47. On the issue of price fixing allegation under Section 3(3)(a) of the Act, OP-1 has stated that the meeting dated 09.08.2014 was held at Chennai Port Trust premises, chaired by then Chairman of Chennai Port Trust, Shri Atulya Mishra, I.A.S., to discuss the transportation of containers from/to Port of Chennai. The members of the Chennai Trade Coordination Committee (CTCC) and members of all trailer owners association were present. The Informant/ NACFS was also present, through its Chairman, Shri M.S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, as handling charges/PNR movement charges, in their respective bills raised in favour of importers/exporters or their agents, in addition to the handing charges levied separately by them for CFSs. Thus, the members of NACFS pay to the members of OP-1 a paltry sum pittance compared to what is being charged by members of NACFS. 51. OP-1 further alleged that the DG has not considered the cartelisation amongst the members of NACFS, whereby these members have been indulging in the reduction of fare/cost for the service of transportation availed by them from the transporters/trailers on the basis of their unilaterally fixed rates/tariffs. OP-1 has also submitted documents at the time of investigation, evidencing non-payment of the legally entitled dues of transportation charges (bill raised) from the different CFSs - members of NACFS, running to lakhs of rupees for more than two to three years, thereby crippling the trailer owners/transporters financially. 52. On the issue of restriction of trailers owned and operated by members of NACFS under Section 3(3)(b) of the Act, OP-1 has submitted that the CFSs came into existence around the year 1994 and initially did the business of loadi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating for several years and are very well aware that their actions of strikes and lockouts will result in complete stoppage of work at the port. Therefore, OP-11 and OP-12 cannot be ignored as some sort of fringe players. Moreover, the Informant argued that OP-11 and OP-12 are the associations of drivers which attended the meeting dated 09.08.2014. The Informant relied upon a European case law (Aalborg Portland and Ors. v. Commission, joined cases C-204/00 P), according to which it is sufficient to show that the undertaking concerned has participated in the meetings at which anti-competitive agreements were concluded to prove the requisite standard that such undertaking had participated in the cartel. Once such participation is shown, the burden shifts on such party to demonstrate that its intention in participating in such meetings was different than the other cartel members. The Informant also submitted that no analysis has been done by the DG to explain whether the members of OP-11 and OP-12 benefited from the decision of price increase by the alleged cartel of trailer owners, as the increase in price was by extension, also beneficial to the drivers. Finally, the Informant submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the illegal and anti-competitive practice of strikes and lockouts to collectively fix higher prices and restrict the competition and supply in the form of a cartel, and thereby act in violation of the provisions of Section 3 of the Act. 61. The Informant objected to OP-1's assertion that members of NACFS are in a dominant position and members of OP-1 are in a subservient position and are being made to accept the terms and conditions thrust upon them by the members of NACFS. Such averments are stated to be entirely contrary to the evidence before this Commission, which shows the movement of goods and containers from CFS to port substantially through trailers operated by the Opposite Parties. 62. The Informant further submitted that trailers are the only source of transportation for the movement of containers from the port to the CFS (except of CONCOR which moves a small quantity of containers by rail) and there is no other mode of transportation which can take care of such movement from the port to the CFS, and vice versa. Hence, the members of the Informant are heavily dependent on the OPs. 63. The Informant also objected to the averment of OP-1 that it has not interfered w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission decided to proceed ex-parte with regard to such OPs. 67. The Commission at the outset notes that there are two allegations raised against the OPs in the Information. The first one pertains to interference by the OPs in the fixation of tariffs for trailers and not allowing CFS operators to reduce the rate from what was decided by OPs, in contravention to the provisions of Section 3(3) (a) read with Section 3(1) of the Act. The second allegation is with regard to restriction imposed upon the members of the Informant/NACSF and their sister concerns by mandating them not to ply more than 20 trailers of their own for movement of containers, in contravention of the provisions of Section 3(3)(b) read with Section 3(1) of the Act. 68. Thus, the main issue before the Commission is whether there was any collusive/anti-competitive conduct on the part of the OPs on account of the aforesaid activities, which amounted to a contravention of the provisions of Section 3(3) read with Section 3(1) of the Act. On the basis of the observations recorded earlier, the DG has found OP-1 to OP-10 to be contravening the provisions of Section 3(3)(a) [price fixation] as well as 3(3)(b) [limiting/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fixation of price, is not under challenge. The DG has found enough evidence that the prices were increased and certain restrictions were imposed collectively by OP-1 to OP-10 through association meetings from 2014 till 2018. OP-1, the only OP that filed response to the Investigation Report, has admitted to these meetings. Rather, it has sought to justify its participation in such meetings by citing the prevailing circumstances at the time when such meetings took place and the mutual nature of such meetings where, admittedly, the members of the Informant also participated. Further, many such meetings were organised at the premises of the Chennai Port Trust and with its knowledge. Circulars were issued by these OPs after the said meetings, which have been received and responded to by the Informant. Thus, the Commission finds no purpose being fulfilled by reiterating the minutes of the meetings and the discussions that took place, which have been amply elucidated in the DG findings detailed supra. It suffices to say that the minutes of various meetings and various letters exchanged between the Informant and these OPs, relied upon by the DG, establish that the prices for container t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, etc. between 2010 and 2018, and on the other hand, it has brought forward the plight and financial distress of its members. The following submission by OP-1, made before the DG as well as before the Commission, demonstrates this plea: "The payment of Transportation Fare(s) by CFS - Members of NACFS (IP) - to Transporters (OPs) takes months together and in some cases years together. The payment is not made inspite of repeated requests by individual transporters to individual CFSs, thereby crippling the Transporters altogether and chasing them away from the business of transportation by compelling them to sell off their Trailer(s) to meet their financial needs. Whenever our individual members request for the long outstanding payments from the individual CFSs, our members are threatened with stoppage of further job work of transportation or they are sidelined by not giving transportation job work or no payment is made for years together and thereby make the business of our Members cripple. " 74. OP-2, though did not come before the Commission, had submitted before the DG during the investigation stage that "the Informant though received the payments for the trailer service charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r legal contours and facilitate collusive or collective decision making with the intention of limiting or controlling the production, distribution, sale or price of or trade in goods or provision of services as defined in section 2(c) of the Act, by its members, it will amount to violation of the provisions of the Act." 77. Guided by the aforesaid broad parameters, the Commission finds that, in the present matter, the thin line has been transgressed by OP-1 to OP-10. Fixing prices and restricting provision of services under the aegis of trade associations cannot be held as a legitimate activity under the Act. Moreover, these justifications cannot be used as a reason to decide and enforce a blanket increase in prices, collectively by the OPs. Decisions related to price fixing and output restriction amongst those engaged in similar trade are recognized as some of the most pernicious anti-competitive conduct. Apparently, owing to their pernicious nature, the Act raises a presumption of such conduct resulting into an AAEC. 78. While the Commission may tend to have a sympathetic inclination towards certain difficulties, which has been expressed by OP-1 that its members face and is cog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a practice of issuing passes for the entry of trailers and drivers only when such passes were endorsed by one of the trailer associations (OPs), members of the Informant had no option but to agree to the demands of the OPs. Further, the DG had observed that, though the Chairman of the Chennai Port Trust chaired the meeting dated 09.08.2014, his presence seems nothing more than an attempt to safeguard seamless movement of work without any disruption at the Chennai Port. 81. The Commission thus does not find any of the justifications offered by OP-1 to be sufficient to rebut the presumption and discharge the burden of proof that was on it considering the nature of its submissions and evidence in support thereof. In the event thereof, the Commission concludes that the conduct of OP-1 to OP-10 has led to a contravention of the provisions of Section 3(3)(a) and Section 3(3)(b) read with Section 3(1) of the Act. ORDER 82. In view of the foregoing, the Commission holds that the decisions taken by OP-1 to OP-10, for the reasons adumbrated in this order, are in contravention of the provisions of Section 3(3)(a) and Section 3(3)(b) read with Section 3(1) of the Act. Accordingly, the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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