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2026 (5) TMI 1307 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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Prima facie antitrust screening requires concrete evidence; regulated pricing and disclosed tender preferences did not establish abuse of dominance.
A prima facie case under section 26(2) of the Competition Act requires credible and concrete material; unsupported assertions, sample cost cards and general allegations of loss were insufficient to justify further inquiry. In a regulated liquor procurement framework, pricing linked to cost sheets, taxes, levies and policy considerations did not by itself show arbitrariness or abuse of dominance. Alleged preference for a state-owned brand was not shown to distort competition or consumer choice because it was disclosed in the tender upfront, and the differential cash-discount structure was commercially explained and unproven as harmful. On that basis, no prima facie contravention of section 4 was made out and closure of the information was justified.

Prima facie threshold under Section 26(2) - Closure of the information under section 26(2) - Abuse of dominant position - allegations of unilateral price fixation, unfair tender terms, cash discounts and losses to private manufacturers - Appreciable adverse effect on competition - violation of Section 4 of the Competition Act - Burden to furnish substantiating material - Preferential treatment and competitive harm. Prima facie threshold under Section 26(2) - HELD THAT: - The Tribunal held that, at the stage of Section 26, the Commission is required to form a prima facie opinion on the basis of material placed before it, and the informant must furnish complete and substantiating information. The material relied on by the appellants, including sample cost cards and general assertions regarding losses, increase in production costs and adverse market effects, did not provide actual data on cost sheets, margins, losses, price distortion, market exit, non-revision impact or decline in market share. The Commission was therefore entitled to conclude that the allegations remained general and unsubstantiated. The Tribunal also accepted the Commission's approach that, in a regulated sector such as alcoholic beverages, pricing is linked to taxes, levies and State policy considerations, and Clause 11(c) did not, on the material placed, prima facie disclose abusive conduct. Since the Commission had considered the material available, afforded opportunity to supplement the record, and found the evidentiary threshold unmet, no error was found in the order closing the case under Section 26(2). [Paras 73, 78, 79, 80, 81] The challenge to the Commission's refusal to direct investigation on the allegations of unfair pricing, tender terms, discounts and consequential losses was rejected. Preferential treatment and competitive harm - Public interest preference - Distortion of competition - HELD THAT: - The Tribunal held that, although preference to one brand over another may ex facie be discriminatory, the Commission had rightly considered that the preference in question was stated to flow from a policy declared upfront and tender clauses permitting such preference in public interest. The State-owned supplier was found to be supplying only a single brand, whereas numerous manufacturers were supplying multiple brands. In that background, the appellants failed to place any comparative market data or other material to show that the preference had distorted demand, impaired consumer choice or otherwise adversely affected competition in the market. The Tribunal also noted that despite being specifically afforded an opportunity, the appellants did not furnish supporting data regarding competing rum brands vis-a-vis the favoured product. On that evidentiary deficiency, the Commission's conclusion was upheld. [Paras 75, 76, 77, 84, 85] The allegation of abusive preferential treatment in favour of the State-owned supplier was held not to disclose a prima facie competition law violation. Final Conclusion: The Tribunal upheld the Commission's order closing the information under Section 26(2), holding that the appellants had failed to place concrete material sufficient to cross the prima facie threshold for investigation. The appeal was accordingly rejected.

2026 (5) TMI 378 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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Natural justice in competition proceedings requires notice before departing from the investigation report's findings.
A competition regulator must give notice and an opportunity of rebuttal before it relies on conclusions or directions that materially depart from the Director General's report. Where the Commission proposed disclosure of the discount policy and other directions inconsistent with the report's findings, the affected party was entitled to meet the proposed deviation. The absence of such notice and hearing caused prejudice and violated natural justice, rendering the order unsustainable. The matter was therefore remanded for fresh consideration after notice wherever the Commission differs from the Director General's findings.

Competition Commission - compliance with natural justice after investigation - Audi alteram partem - Validity of the Commission’s direction in (iv) and (v) - unreasonable - non-disclosure of pricing or discounting policy - Show-cause notice - Seek to impede the appellant’s legitimate entitlement to conduct its trade and business in a commercially reasonable manner and further these directions are contrary to the explicit findings contained in the investigation report of the Director General - guilty of contravention of provisions engrafted under Section 4(2)(a)(ii), 4(2)(d) read with Section 4(1). Principles of natural justice - Audi alteram partem - Disagreement with Director General's findings - Show-cause notice - HELD THAT: - The Appellant is the largest producer and seller of Viscose Staple Fibre (VSF). The DG and Commission have delineated the relevant market as “market of Viscose Staple Fibre (VSF)”. The allegation against the Appellant was abuse of its dominant position in the relevant market by following discriminatory pricing policy and imposing unfair conditions upon its customers whereby forcing its customers to disclose sale and production data and were refusing to sell to traders, thus not allowing competition in the market. The DG in its investigation report has given a finding that the Appellant is indulging in unfair and discriminatory pricing of VSF in the relevant market and has imposed supplementary obligations on Indian spinners, which are in violation of Section of Section 4(2)(a)(ii) and Section 4(2)(d) read with Section 4(1) of the Competition Act. The Tribunal confined itself to the procedural question and found that, while the Director General had treated non-disclosure of the pricing or discounting policy as not amounting in itself to a contravention, and had also held that the appellant was under no obligation to keep traders in business, the Commission nevertheless directed the appellant to publicise its policy and not impose end-use restrictions so as to permit trading by buyers. These directions were held to be in variance with the Director General's findings. Once the Commission proposed to differ from those findings, natural justice required an action-oriented notice disclosing the disagreement and a reasonable opportunity to rebut it. The omission to do so deprived the appellant of an effective opportunity to defend itself and vitiated the order to that extent, warranting remand without examination of the merits. [Paras 19, 22, 23] The impugned order was set aside and the matter remanded to the Commission to give the appellant an opportunity wherever it proposes to differ from the Director General's findings and then decide the case afresh uninfluenced by any observation on the merits. Final Conclusion: The appeal was allowed on the limited ground of breach of natural justice. Since the Commission had departed from parts of the Director General's findings without issuing notice of disagreement or granting an effective opportunity of hearing, the impugned order was set aside and the matter remanded for fresh decision after due notice.

2026 (4) TMI 801 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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Issues: (i) whether the Appellants participated in a bid-rigging cartel in contravention of Sections 3(3)(a), 3(3)(b), 3(3)(c) and 3(3)(d) read with Section 3(1) of the Competition Act, 2002 and whether such conduct attracted the statutory presumption of appreciable adverse effect on competition; (ii) whether proceedings and penalty against the partner under Section 48 of the Competition Act, 2002 were valid, including the objection that penalty could not be linked to individual income and that liability could arise only after firm-level contravention; (iii) whether the impugned orders were vitiated by alleged procedural defects, including absence of a judicial member, reliance on undisclosed material, and denial of cross-examination.

Issue (i): Whether the Appellants participated in a bid-rigging cartel in contravention of Sections 3(3)(a), 3(3)(b), 3(3)(c) and 3(3)(d) read with Section 3(1) of the Competition Act, 2002 and whether such conduct attracted the statutory presumption of appreciable adverse effect on competition;

Analysis: The evidentiary record was found to contain direct email communications, allocation of tenders and shares, revision of percentages, price coordination, and instructions to withdraw bids. The Appellants were shown to have received repeated cartel-related emails, did not deny receipt, and did not dissociate themselves from the communications. The Tribunal held that cartel formation may be proved by direct as well as circumstantial evidence and that receipt of repeated coordinating communications without protest supported an inference of tacit agreement and participation. Since the conduct fell within Section 3(3), the statutory presumption of appreciable adverse effect on competition applied, and the Appellants failed to rebut it.

Conclusion: The bid-rigging cartel and contravention under Section 3 stood established against the Appellants, and the presumption of appreciable adverse effect on competition was not displaced.

Issue (ii): Whether proceedings and penalty against the partner under Section 48 of the Competition Act, 2002 were valid, including the objection that penalty could not be linked to individual income and that liability could arise only after firm-level contravention;

Analysis: The Tribunal held that the firm had already been found guilty before the individual liability was examined, satisfying the statutory sequence under Section 48. It further held that the expression "punished accordingly" in Section 48 permitted imposition of an individual monetary consequence on the partner in the same proportion as the enterprise-level penalty under Section 27, and that use of average income for an individual, in place of turnover applicable to an enterprise, was a valid method. The challenge based on absence of the word "income" and reliance on the relevant-turnover principle was rejected as inapposite to individual liability under Section 48.

Conclusion: The finding of liability under Section 48 and the penalty imposed on the partner were upheld.

Issue (iii): Whether the impugned orders were vitiated by alleged procedural defects, including absence of a judicial member, reliance on undisclosed material, and denial of cross-examination.

Analysis: The Tribunal held that vacancy or defect in the constitution of the Commission did not invalidate its proceedings merely on that ground. It also found that the challenge based on undisclosed emails was not persuasive because the relevant emails and their contents were considered in the proceedings and no effective prejudice was shown. On cross-examination, the Tribunal noted that no request was made before the Commission, and in any event cross-examination under the Competition Act and the Regulations is discretionary rather than mandatory.

Conclusion: No procedural infirmity sufficient to invalidate the impugned orders was made out.

Final Conclusion: The Tribunal found no merit in either appeal and upheld the Commission's findings of cartel conduct, individual liability, and penalty, while rejecting the procedural challenges.

Ratio Decidendi: Repeated receipt of coordinating bid-allocation communications without dissociation can establish tacit cartel participation, and once enterprise contravention is found, Section 48 permits proportionate liability of the responsible individual notwithstanding the absence of an express reference to income.

Tacit cartel participation and partner liability upheld where repeated coordination emails, not dissociation, proved competition law breach.
Repeated receipt of bid-allocation, price-coordination and bid-withdrawal emails without dissociation supported an inference of tacit cartel participation, and the conduct attracted the statutory presumption of appreciable adverse effect on competition, which the appellants failed to rebut. The Tribunal also upheld individual liability of a partner under Section 48 after firm-level contravention was established, rejecting objections that the monetary consequence had to be tied to turnover or express reference to income. Procedural objections based on a tribunal vacancy, undisclosed material and denial of cross-examination were rejected because no material prejudice or mandatory entitlement was shown.

Bid rigging cartel - contravention of Section 3 of the Competition Act, 2002 - tacit acquiescence - Presumption of appreciable adverse effect on competition - liability of the partner under Section 48 of the Competition Act, 2002 and the penalty based on income - Preponderance of Probability - individual liability of person in charge - penalty on individual income - vacancy in adjudicatory composition - Denial of cross-examination under principles of natural justice. Bid rigging cartel - tacit acquiescence - concerted practice - HELD THAT: - The Tribunal found direct and circumstantial evidence of collusion in the form of repeated email communications showing allocation of shares, tender distribution, price discussions, revision of sharing patterns, induction of members, complaints of undercutting and directions to withdraw bids. The Appellants did not deny receipt of the emails and never protested or distanced themselves from the communications. Their continued receipt of confidential cartel communications without dissociation established knowledge of and assent to the arrangement. The Tribunal held that cartel conduct, by its nature, is often proved through such surrounding circumstances, and in the present case the emails themselves furnished direct evidence of coordinated bidding. [Paras 44, 52, 53, 57, 58] The finding of contravention under Sections 3(3)(a), (b), (c) and (d) read with Section 3(1) against the firm was affirmed. Presumption of appreciable adverse effect on competition - rebuttable presumption - distinction from circumstantial evidence cases - HELD THAT: - The Tribunal held that once an agreement of the kind covered by Section 3(3), including cartelisation, is established, a presumption of appreciable adverse effect on competition arises. That presumption is rebuttable, but the burden lies on the contravening parties. No material was shown to rebut it. The Tribunal further held that the decision in Rajasthan Cylinder [2018 (10) TMI 229 - SUPREME COURT] was inapplicable because that case turned on circumstantial evidence in a different market setting, whereas the present matter involved direct email evidence of coordination among a small number of approved vendors participating in multiple railway tenders. [Paras 45, 46, 47, 48, 54] The plea that no appreciable adverse effect on competition was shown failed, and the reliance on Rajasthan Cylinder was distinguished. Individual liability of person in charge - penalty on individual income - punished accordingly - HELD THAT: - The Tribunal accepted the Commission's reasoning that the firm had first been found guilty and only thereafter the liability of the partner was analysed. It held that the expression 'punished accordingly' in Section 48, as it stood prior to amendment, required that the individual found liable be visited with punishment or penalty on the same scale as the enterprise under Section 27. Since an individual does not have turnover in the sense applicable to an enterprise, applying the same percentage to the individual's average income was held to be legally proper. The objection founded on the distinction between 'punishment' and 'penalty' and on the absence of the word 'income' in Section 27 was rejected. [Paras 48, 49, 56] The liability of Keshav Bihani under Section 48 and the penalty computed on his average income at the same rate as that of the firm were upheld. Vacancy in adjudicatory composition - validity of proceedings despite vacancy - HELD THAT: - Relying on the Delhi High Court decision in Cadd Systems and Services Private Limited v. Competition Commission of India [2019 (7) TMI 1119 - DELHI HIGH COURT], the Tribunal held that though appointment of a judicial member had been held necessary, there was no direction restraining the Commission from functioning in such absence. It further held that Section 15 protects proceedings from invalidation merely on account of a vacancy or defect in constitution. The challenge to the orders on this ground alone was therefore not accepted. [Paras 59] The objection founded on the absence of a judicial member was rejected. Denial of natural justice on account of non-supply of material - HELD THAT: - The Tribunal found that the emails forming the basis of the finding were placed on record, that the Appellants did not deny receipt of the incriminating emails, and that no material was shown to establish dissociation from the cartel communications. As to cross-examination, the Tribunal held that no request had been made before the Commission. Under the statutory scheme, the Commission is guided by principles of natural justice and is not bound by the Code of Civil Procedure, while cross-examination under the Regulations is discretionary and not mandatory. In that background, the complaint of denial of cross-examination was held untenable. [Paras 55, 58, 60] The natural justice challenge was rejected. Final Conclusion: The Tribunal upheld the Commission's findings that the firm participated in a bid-rigging cartel and that its partner was rightly held liable under Section 48. The challenges based on absence of appreciable adverse effect on competition, invalidity of penalty on the individual, absence of a judicial member, and alleged breach of natural justice were rejected, and both appeals were dismissed.

2026 (2) TMI 846 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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Issues: (i) Whether the Competition Commission of India (CCI) erred in declining to order an inquiry under Section 19(1) of the Competition Act, 2002 into alleged abuse of dominance by the National Stock Exchange (NSE); (ii) Whether the CCI correctly addressed allegations that NSE's co-location facilities resulted in discriminatory or restrictive market access in violation of Section 4(2)(a)(i), 4(2)(b)(ii) and 4(2)(c) of the Competition Act, 2002; (iii) Whether absence of a load balancer and randomiser in NSE's earlier TCP/IP architecture established denial of equitable access; (iv) Whether the CCI was required to ignore or decline reliance on SEBI and related expert reports when forming its prima facie view.

Issue (i): Whether the CCI erred in declining the Appellant's request to direct an inquiry under Section 19(1) of the Competition Act, 2002.

Analysis: The statutory scheme permits the CCI to direct an investigation only upon forming an opinion that a prima facie case exists. The threshold for prima facie satisfaction requires adequate material on record to justify further probe, but does not mandate a full adjudicatory hearing at the prima facie stage. The CCI evaluated the information submitted by the informant, the responses and submissions of NSE, and relevant reports and orders from SEBI and SAT before forming its view.

Conclusion: The CCI did not err in declining to direct an inquiry under Section 19(1) because it lawfully formed the view that no prima facie case was made out.

Issue (ii): Whether the CCI correctly considered and decided the allegations that NSE's co-location facilities caused discriminatory or restrictive market access in violation of Section 4(2)(a)(i), 4(2)(b)(ii) and 4(2)(c).

Analysis: The assessment required identification of the relevant market, dominance, descriptive clause fit, and whether conduct produced or was likely to produce an appreciable adverse effect on competition (AAEC). Evidence on record, including SEBI, TAC, forensic reports and SAT findings, was considered for both technical and commercial effects. The materially contested points included whether co-location as offered was exclusionary, whether fees or first-come allocation amounted to discriminatory conditions, and whether any asserted preferential access produced demonstrable harm to competition or consumers.

Conclusion: The CCI's conclusion that the co-location facility, as offered, did not disclose a prima facie abuse of dominance under the cited clauses of Section 4 was correct; no AAEC was established at the prima facie stage.

Issue (iii): Whether, in the absence of a load balancer and randomiser, NSE failed to ensure free and equitable access to all trading members.

Analysis: Technical architectural choices were examined in context of contemporaneous market conditions, regulatory guidance, and subsequent migration to multicast. The record showed that TCP/IP was selected for reasons of accessibility and phased adoption and that SEBI and SAT findings identified procedural and monitoring deficiencies but did not establish deliberate preferential access or fraud that would, per se, satisfy the effects requirement under Section 4.

Conclusion: The absence of a load balancer and randomiser, on the material before the CCI, did not suffice to establish a prima facie denial of equitable access requiring a DG inquiry.

Issue (iv): Whether the CCI erred in relying on SEBI and other expert reports when forming its prima facie opinion.

Analysis: Sectoral regulator findings and expert reports bear directly on technical and factual questions that inform the competition assessment. Reliance on such material at the prima facie stage is permissible to the extent the material is relevant to the identification of market effects and dominance attributes; the CCI remained required to form its own prima facie view on competition law elements.

Conclusion: The CCI acted within lawful bounds in considering SEBI and related expert findings in forming its prima facie opinion.

Final Conclusion: Taken together, the pleaded materials and regulatory/expert findings did not establish, on the record before the CCI, a prima facie case of abuse of dominance by NSE under Section 4 of the Competition Act, 2002; the appellate challenge therefore fails and the impugned order declining a DG inquiry is sustained.

Ratio Decidendi: At the prima facie stage under Section 26/19 of the Competition Act, 2002, the Commission must form an opinion based on adequate material that the alleged conduct falls within the descriptive clauses of Section 4 and is likely to cause an appreciable adverse effect on competition (AAEC); absent such material showing effects or probable harm, reliance on regulatory and expert reports to test allegations does not require directing a Director General investigation.

Prima Facie Assessment: Regulatory and expert reports can inform but absence of AAEC bars a DG inquiry.
The article explains that at the prima facie stage the Competition Commission must form an opinion on market definition, dominance and whether conduct fits the descriptive clauses of Section 4 and is likely to cause an appreciable adverse effect on competition (AAEC); absent adequate material showing effects, a DG inquiry need not be directed. It notes that consideration of regulatory and expert reports is permissible to assess technical and factual points, but such reliance does not substitute for independent prima facie findings. On the facts reviewed, allegations about co location, first come fees and TCP/IP architecture, including absence of a load balancer, did not establish AAEC.

Abuse of dominant position by National Stock Exchange (NSE) - indulging in practice of granting preferential market access to select brokers on account of manipulation of Co-Location Facilities - prima-facie opinion - unfair advantages to selected brokers having Co- Location Facilities, restricting market access to others Trading Member - equal, fair and transparent access - load balancer and randomiser - rule of reason - violation of Section 4(2)(a)(i), 4(2)(b)(ii) and 4(2)(c)(iii) of the Competition Act - HELD THAT:- It is the case of the Appellant that the NSE deliberately created flawed architecture in order to favour select few brokers and further the NSE also allowed advantage to select few brokers by providing arbitrarily market access through use of its secondary server which was less crowded than the primary server. The Appellant also tried to impress us during hearing that selected few brokers had always access to secondary servers which was provided to them in connivance with the employees and management of the NSE and thus, the NSE was responsible for denying fair market access to large number of brokers and investors. Appellant filed an information under Section 19(1) of the Competition Act, but the CCI after examining the relevant facts and giving opportunity of being heard to the concerned parties as well as after examining the submissions made by the parties, the CCI formed an opinion that no prima-facie case existed and thus, passed the Impugned Order communicating to all parties including the Appellant. Prima-facie case does not mean a case proved to be to the finality but means a case which is set to be established if the evidence which is furnished by the informant like the Appellant herein lead to support the same. In such cases, a summary enquiry is done by the CCI by taking evident of the concerned stakeholders including written submission as deemed to be adequate for summary enquiry. We note that the CCI in the present case, based on the allegations of the Appellant, indeed called the NSE, who submitted all the required information to the CCI. We further take into consideration that the CCI, evaluated such evidence and the documents furnished by the NSE before concluding that prima-facie did not exist. It is the case of the NSE that to establish a Section 4 violation, the impugned conduct and the anti-competitive harm must emanate from an "overt act" by the dominant enterprise, the NSE herein and not by misconduct by a third-party like its employees, if at all Section 4(2)(a)(i) violation necessitates an element of compulsion by the dominant enterprise. It is also the case of the NSE that section 4 violation, even prima-facie, cannot be established without evidence of anti- competitive harm, and prior to directing an investigation and therefore, the CCI needs to ensure that all elements of a Section 3/4 violation have been satisfied. On this issue, it is the case of the Appellant that no overt act on the part of the NSE was needed. All evidence, documents, information submitted by the Appellant to the CCI, were more than adequate to form prima-facie opinion by the CCI for causing further investigation. We note that the Appellant could not make any concrete case as what harm Co-Location Facilities or even the access to secondary servers caused to the investors or consumers. At the cost of repetition, it may be reiterated that Co- Location Facilities was exclusively meant for Trading Members of the NSE and not for investors. Hence, we do not find in any merit in the Appellant’s argument that Co-Location Services harmed the interest of the consumers. The CCI correctly assumed the situation and passed reasoned the Impugned Order. We do not find any error in the Impugned Order. We hold that while the CCI and SEBI (‘act’) in their own domain, in accordance with the applicable laws to them i.e., Competition Act and SEBI Act, respectively, however, one cannot ignore the fact that SEBI is sectoral regulator with requisite expertise to look into such matter. The CCI therefore, was correct in taking help of SEBI order, to the extent needed, to form its prima-facie opinion. Hon’ble Supreme Court of India in the case of Competition Commission of India vs. Bharti Airtel Limited & Ors. [2018 (12) TMI 1683 - SUPREME COURT] found that the CCI was correct in placing reliance on the Sectoral Regulator’s factual and technical aspects while considering the Appellant’s Information. No error in the Impugned Order on this aspect especially since the CCI formed its opinion in accordance with Section 3, 4 and 19 of the Competition Act, albeit, taking into consideration various information, reports, documents including SEBI/SAT order. We find this was right approach adopted by the CCI in the present case especially keeping in view the ratio of Bharti Airtel, provided by the Hon’ble Supreme Court of India. Upon consideration of the record, we hold that the CCI was justified in passing the impugned order and in declining to direct an inquiry against the NSE under Section 19(1) of the Competition Act, 2002. The CCI rightly examined the issues relating to co-location facilities and correctly concluded that no case was made out by the Appellant regarding denial of market access or grant of preferential access to select trading members. The allegations concerning the absence of a load balancer and randomiser were also found to be not established. We hold that the CCI is not required to order an investigation by the Director General unless a prima facie case is made out. In the present case, the CCI formed its opinion after hearing the parties and considering the SEBI order and various expert reports, including those of SEBI TAC, Deloitte, Ernst & Young, and ISB. We do not find any error in the Impugned Order or approach of the CCI. Thus, we find that the impugned order warrants no interference. The appeal is devoid of merit and is dismissed.

2026 (1) TMI 1401 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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Issues: (i) Whether the relevant market should be defined as the provision of common user coal terminal services in and around Kamarajar Port excluding Krishnapatnam Port; (ii) Whether Chettinad International Coal Terminal Pvt. Ltd. (CICTPL) held a dominant position in the relevant market during the relevant period; (iii) Whether CICTPL abused its dominant position by imposing mandatory coordination and liaisoning charges through third-party entities.

Issue (i): Whether the relevant geographic market is confined to in and around Kamarajar Port or includes Krishnapatnam Port.

Analysis: Consideration was given to transport costs, plant proximity, consumer preferences of fixed-location thermal power producers, hinterland analysis (captive versus contestable), sample user data collected by the DG, and comparative port volumes. Evidence showed most affected power producers were located near Kamarajar Port, significant transport cost disadvantages existed for alternative ports, and the DG's supplementary analysis delineated a distinct hinterland for Kamarajar Port. The CCI's inclusion of Krishnapatnam rested on overlapping usage and larger aggregate volumes, but the DG's focused analysis on end-user locations and switching behaviour indicates limited practical substitutability for the fixed consumers at issue.

Conclusion: The relevant geographic market is confined to the provision of common user coal terminal services in and around Kamarajar Port; Krishnapatnam Port is excluded for the purpose of assessing market power as applied to the aggrieved users.

Issue (ii): Whether CICTPL was dominant in the defined relevant market during the relevant period.

Analysis: Market shares, number and strength of competitors within the defined geographic market, presence of only one common-user coal berth at Kamarajar Port, high entry barriers, user dependence due to transport economics, and growth of traffic at CICTPL despite tariff increases were examined. DG supplementary findings showed CICTPL was the sole common-user provider at the port and that sizable proportions of relevant users coal volumes were handled at CICTPL, supporting an ability to operate independently of competitive forces within the defined market.

Conclusion: CICTPL held a dominant position in the relevant market during the relevant period.

Issue (iii): Whether CICTPL abused its dominant position by imposing mandatory coordination and liaisoning charges through third-party entities.

Analysis: The findings reviewed include user responses to DG enquiries showing many importers treated the charges as mandatory, documentary evidence of links between the third-party entities and the Chettinad Group, the absence of transparent commercial justification for the services, and the fact that such charges were collected outside published tariffs thereby avoiding port revenue sharing. The DG and the CCI recorded that the charges were effectively mandatory; when combined with a finding of dominance, imposition of such mandatory, non-transparent third-party charges amounts to conduct that imposes unfair conditions and diverts commercial value from the competitive tariff framework.

Conclusion: CICTPL abused its dominant position by imposing mandatory coordination and liaisoning charges through related third-party entities, amounting to an appreciable adverse effect on competition.

Final Conclusion: The impugned order that excluded Krishnapatnam Port from the relevant market assessment and declined to treat CICTPL as dominant is set aside; the matter is remitted to the Commission for fresh consideration consistent with the corrected market definition, the finding of dominance, and examination of abuse and remedies after hearing the parties and considering further investigation if necessary.

Ratio Decidendi: For assessing dominance and abuse under Section 4, the relevant market must be defined with regard to end-use, transport costs, and consumer-specific substitutability; where a single common-user terminal services a distinct local hinterland and users are transport-cost constrained, that terminal can possess dominance, and imposition of mandatory, opaque third-party charges by related entities constitutes abuse.

Coal handling charges at port found imposed through mandatory coordination fees; impugned order set aside and remitted.
Increase in coal handling charges concerned definition of the relevant product and geographic market and whether the terminal was dominant and abused dominance by imposing mandatory coordination and liaisoning charges through three related entities; the tribunal treated the terminal as the sole-player dominant undertaking and accepted DG/CCI findings that the charges were mandatory and collected via entities controlled by the same group, constituting abusive conduct causing appreciable adverse effect on competition, set aside the impugned CCI order, allowed the appeal and remitted the matter to the authority for fresh adjudication after hearing parties.

Increase of coal handling charges by the PORT (CICTPL) - Relevant product market - relevant geographic market - market definition - substitutability - hinterland analysis - transport costs - abuse of dominant position - dominant position - appreciable adverse effect on competition - coordination and liaisoning charges - Competition Commission of India - Director General investigation - National Company Law Appellate Tribunal -whether the CICTPL was dominant in the relevant market in terms of Section 2(r) of the Act and if so whether the CICTPL has abused its position of dominance violating section 4 of the Act. - HELD THAT:- Since, the CICTPL is an only player, it automatically become dominant as stipulated under Section 2(r) of the Act. We have already analysed in great detail the reason for the same by treating relevant market only to CICTPL at Kamarajar Port and excluding Krishnapatnam Port. Therefore, we do not agree with the findings of the CCI on this aspect and concur with the finding of the DG in supplementary report holding the CICTPL to be dominant player. Once we have given our finding on the aspect of relevant market as well as the CICTPL, being the dominant player in the relevant market, we are left to decide only the final point i.e., whether the CICTPL was involved in abuse of its dominant position violating Section 4 of the Act, having AAEC on the Appellant. It is the case of the Appellant that coordination and liasoning charges were imposed by three entities, namely, (a) Breeze Enterprises Pvt. Ltd. (BEPL), (b) Original Innovative Logistics (India Pvt. Ltd.) (OIPL) and (c) Futuristic Handling Services Pvt. Ltd. (FSHPL) which were shadow entities of the CICTPL. We also note that it is the case of the Appellant that the CICTPL was required to give 52.33% of its gross revenue to the KPL/ Respondent No. 3 and to avoid such payments, the CICTPL created these entities. The CICTPL has further argued that no financial benefits have flown back to the CICTPL from any of these three entities which is undisputed facts. The CICTPL stated that there was no force or compulsion for the Appellant to use these services of three entities and these services were voluntary in nature. The CICTPL as further pleaded that no evidence has been shown by Appellant in this connection making the CICTPL responsible for making mandatory so-called mandatory co-ordination & Liasoning Charges. On this issue, we take into consideration that both the DG and the CCI have agreed that these charges were mandatory in nature. The CCI although did not agree to the Appellant contention that this was abusive practice violating Section 4 of the Act, but the CCI treated these Act as “Opportunistic” not falling in the definition of abuse of dominance position. The CICTPL was not found as dominant by the CCI in the Impugned Order in relevant market. The DG has taken into consideration the submissions made by the members of the Appellant and submission made by the CICTPL along with other stakeholders. The DG called them for interaction during its investigation. The DG noted that out of 9 power producers, 5 stated that coordination and liasoning charges were mandatory and they were made to pay the charge during relevant period. Similarly, out of non-IP producer entities like Zuari Cement also submitted to the DG that they were also made to such payments and they also treated such charges exclusive as mandatory. Similarly, five out of nine importers of non-IP trader’s category agreed to have mandatorily paid coordination and liasoning charges. These important included Adani Enterprises Limited and Sakthi Energy etc. The CCI prima-facie agreed to findings of the DG. The CCI in its analysis in para 110 of its report indicated that once the CICTPL has been found to be non-dominance in the relevant market, the examination of abusive conduct on point of the CICTPL was not required under the provision of the Act. However, the CCI indicated that for sake of completeness, the CCI has gone ahead to examine this aspect also. The CCI indicated that coordination and liasoning charges do not exists as of today. The CCI have noted the various finding on this issue given by the DG in main and supplementary investigation report (which we have already noted in our earlier preceding discussion). The CCI taken into consideration every deponent before the DG who confirmed during main as well as supplementary investigation by the DG that the coordination liasoning charges were mandatory during 2011-12 to 2014-15. The CCI found that coordination & liasoning charges were paid by Appellant members as well as by non-informant members through three entities and were mandatory in nature. The CCI stated that there seem to be no reason why user would pay additional charges to third party for availing services which ought to have been provided by the CICTPL. The CCI also noted that there was no economic sense for any importer to pay separate charge for coordination and liasoning charges to third party service provider and these charges were rather imposed upon users. The CCI also taken into consideration the DG’s finding regarding the relationship between these three entities with the Chettinad Group and held that the DG has successfully established the linkage even the no flow of funds from these companies to the CICTPL was found. The CCI also agreed that observation of the DG that these companies are not officially as part of Chettinad Group and however, the affairs and conduct of these three entities were manged and controlled by employees of the Chettinad Group. However, the CCI in para 128 of the Impugned Order treated conduct of the CICTPL as being “opportunistic” and not abusive since, the CICTPL was not held to be dominant in the Impugned Order by the CCI. It tantamount that had the CCI treated the CICTPL as the dominant player in the relevant market, then the said conduct of the CICTPL charging coordination and liasoning charges through three entities would have been treated as abusive. We tend to agree with the findings of the DG which has been concurred by the CCI that the coordination and liasoning charges was collected during relevant period through 2011-12 to 2014-15, relevant period by these three entities were mandatory in nature. We also concur with the finding of the DG and the CCI that the Chettinad Group and group were found to be in control in conduct of affairs of these three entities collecting Coordination & Liasoning charges. This tantamount to abuse of its dominant position by the CICTPL. Keeping all the facts into view and circumstances of this case and for the reason mentioned herein before, the Impugned Order passed by the CCI does not stand the test of law and is required to be set aside. We set-aside the Impugned Order accordingly. The appeal is hereby allowed and the matter is remanded back to the CCI for deciding it afresh in accordance with law after providing an opportunity of being heard to the parties including all fresh evidence. In view of our comprehensive finding as above, the Impugned Order is set aside.

2026 (1) TMI 1164 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH: NEW DELHILaw of Competition

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Issues: (i) Whether the allegation of cartelisation and anti-competitive agreement between the vendor entities was made out under Section 3 of the Competition Act, 2002. (ii) Whether prescribing IRC accreditation for inclusion in the identified vendors list amounted to abuse of dominant position under Section 4 of the Competition Act, 2002. (iii) Whether the Commission committed a procedural error in closing the matter without directing investigation by the Director General.

Issue (i): Whether the allegation of cartelisation and anti-competitive agreement between the vendor entities was made out under Section 3 of the Competition Act, 2002.

Analysis: The alleged arrangement was found to be unsupported by evidence. The relationship between the concerned entities was held to be vertical, not horizontal, and one of them and its upstream entity were treated as part of the same group. Section 3(3) applies to agreements between entities engaged in identical or similar trade, and the facts did not show competitors acting at the same level of the market.

Conclusion: The allegation under Section 3 was not made out and was rejected.

Issue (ii): Whether prescribing IRC accreditation for inclusion in the identified vendors list amounted to abuse of dominant position under Section 4 of the Competition Act, 2002.

Analysis: The relevant market was held to be procurement of crystalline durability admixture in heavy infrastructure projects in India. On that basis, the corporation fixing the eligibility condition was not shown to be dominant, and mere prescription of an eligibility requirement did not by itself establish unfair, discriminatory, or exclusionary conduct. In the absence of dominance, the question of abuse did not arise.

Conclusion: No contravention of Section 4 was established.

Issue (iii): Whether the Commission committed a procedural error in closing the matter without directing investigation by the Director General.

Analysis: A direction for investigation under Section 26(1) depends on the formation of a prima facie opinion. The record showed that the Commission assessed the information on the material before it and found no prima facie case. The mere calling for a reply did not compel a reference for investigation, and no prejudice was shown from the non-filing of a reply.

Conclusion: No procedural infirmity was found in closing the matter under Section 26(2).

Final Conclusion: The challenge to the Commission's closure order failed in full, and the appeal was not allowed.

Ratio Decidendi: A Section 3(3) contravention requires a horizontal arrangement between competitors, and a Section 4 challenge fails unless dominance in the correctly delineated relevant market is first established; absent a prima facie case, the Commission may close the information under Section 26(2) without directing investigation.

Competition law principles on cartelisation, dominance and prima facie closure in vendor procurement disputes
A competition-law challenge examined alleged cartelisation among vendor entities, but the stated facts did not support a Section 3 contravention because the relationship was vertical, not horizontal, and the entities were not shown to be competing at the same market level. The article also notes that prescribing IRC accreditation for inclusion in an identified vendors list did not establish abuse under Section 4, since dominance in the relevant market for crystalline durability admixture procurement in heavy infrastructure projects in India was not shown. It further records that closing the matter without a Director General investigation was procedurally unobjectionable because no prima facie case had been found.

Bid rigging and abuse of dominant position - violation of Section 4 of the Competition Act, 2002 - allegations of cartelisation under Section 3(1) read with Section 3(3)(a) and 3(3)(b) - HELD THAT:- The relevant product market as provided by the Appellant is “Use of Crystalline Durability Admixture (CDA) in Heavy Infrastructure Projects (HIPs)”. The CCI has agreed with this delineation of the product market in the impugned order. However Relevant geographic market as submitted by the Appellant is Maharashtra. The CCI has, however, delineated the whole of India as the relevant geographic market. Appellant in the Information filed has not even alleged, let alone support the contention that CDA is used only in Maharashtra. Therefore, the delineation of the relevant geographic market as Maharashtra is without any basis and has, hence, it is found that it has been correctly rejected by the Commission. The Appellant has not challenged the delineation of the relevant geographic market as the whole of India, rather it has submitted that the MSRDC is dominant in the whole of India. The Appellant has relied upon a list of road projects named as expressways and has stated that the requirement of CDA was very high in the Mumbai-Pune Expressway - the meagre data provided by the Appellant gives no basis to conclude that MSRDC’s requirement was so high that it could be treated as a dominant enterprise in the whole of India, especially when it was doing one road project. MSRDC is not a consumer of CDA but is a consumer of construction services and MSRDC has only fixed eligibility conditions for purchase of CDA by contractors. The Appellant states that the condition of IRC accreditation by MSRDC was unfair and discriminatory. This contention deserves to be rejected outright. As correctly held by the Commission, mere prescription of IRC accreditation as an eligibility criterion by MSRDC does not, by itself, amount to unfairness or discrimination under the Act - there are no infirmity in the conclusions of the Commission that MSRDC is not dominant in the relevant market and in the absence of dominance, the question of abuse of dominance under Section 4 does not arise. It is not found the conduct of Respondent No.2 – MSRDC which is found to be a non-dominant enterprise and therefore, there is no requirement for a reference by the Commission to another statutory authority. We do not find any infirmity in such a conclusion and the Commission could not have recommended to other such statutory authorities under Section 21A as it had not found any anti-competitive conduct by MSRDC as was found to be not a dominant enterprise under Competition Act, 2002 - there are no infirmity in the order of the Commission that the Commission has no jurisdiction over the unfair and discriminatory conduct of a non-dominant enterprise. The Appellant is always free to approach other statutory authorities for appropriate relief as per the applicable laws. Commission in its ordinary meeting could have sought a reply from the opposite party which in itself does not mean that the Commission found a prime facie case, for if the Commission had found a prima-facie case, it would have proceeded further in the matter. Furthermore, the Commission has power to conduct preliminary conference under Regulation No. 17 of the Competition Commission of India General Regulations, 2009 to invite the Information provider or any other person to form an opinion as to whether a prime facie case exists. No person can be condemned unheard. However, since the proceedings were closed, the non- receipt of reply was of no consequence, as the order has been passed on the basis of the material on record, which showed no prima facie case - there are no procedural lapse on the part of the Commission. The Commission was correct in its approach and decision in not directing for investigation by the DG before arriving at a decision to form a prima facie opinion. Further it is concluded that R4 has not entered into an agreement with R5 and R6 regarding provision of the product called CDA to R2 and limiting its supply, and there are no violation of Section 3(1) r/w Section 3(3) (a) and Section 3(3) (b) of the Act. It is also concluded that prescribing IRC accreditation by R2 as a condition for inclusion in the IVL does not violate provisions of Section 4(2)(a)(i) and 4(2)(c) of the Act. There are no infirmity in the orders of the Commission and accordingly the Appeal is dismissed.

2026 (1) TMI 1081 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCHLaw of Competition

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Natural justice challenge fails where Section 26(2) permits closure of competition information without prior notice to the informant.
Where the Competition Commission forms an opinion under Section 26(2) of the Competition Act that no prima facie case exists, it may close the information forthwith without issuing prior notice to the informant. Section 36(1) does not displace this specific statutory procedure, and Regulation 19 contemplates communication of the closure order after the opinion is formed. The closure order was treated as a speaking order based on examination of the merits, so the natural justice challenge failed and the closure was upheld as valid.

Abuse of dominance - prima facie case - closure of information under Section 26(2) - principles of natural justice - power of the Commission to regulate its procedure - Regulation 19 of the Competition Commission of India (General) Regulations, 2009 - relevant market delineation for non-coking coal - commercial dispute vs. competition concernPrinciples of natural justice - closure of information under Section 26(2) - power of the Commission to regulate its procedure - Regulation 19 of the Competition Commission of India (General) Regulations, 2009 - Whether the Commission violated principles of natural justice by closing the information without issuing notice or holding a hearing under Section 26(2) of the Competition Act, 2002. - HELD THAT: - The Tribunal examined Section 26(2) which mandates that where the Commission is of the opinion that no prima facie case exists, it shall close the matter forthwith and send a copy of its order to the parties concerned; no notice is envisaged at this stage. Regulation 19 of the Commission's General Regulations echoes subsection (2) and requires communication of the closure order to the parties. Section 36(1) requires the Commission to be guided by principles of natural justice and permits the Commission to regulate its own procedure, but neither the statutory provision nor the Regulations require issuance of notice to the informant before closure under Section 26(2). The impugned order went beyond mere closure by examining the merits, delineating the relevant market for noncoking coal, and recording reasons why the respondent was not dominant; thus the Commission issued a speaking order and balanced statutory requirements with reasoning. Consequently, the complaint that natural justice was denied was found untenable. [Paras 7, 9, 10, 13]No violation of principles of natural justice; Commission was not required to give notice before closure under Section 26(2) and the impugned speaking order complied with statutory provisions and Regulations.Relevant market delineation for non-coking coal - abuse of dominance - commercial dispute vs. competition concern - Whether the material before the Commission established dominance or an abuse by the respondent in the relevant market such that investigation should continue. - HELD THAT: - The Commission applied earlier coal precedents to delineate the relevant product and geographic market as production and sale of noncoking coal to thermal power generators in India, noting lack of substitutability of imported coal. It considered production shares and ownership structure, observed that the respondent's share in noncoking coal production was meagre and that it is not related to Coal India Limited (CIL), and concluded the respondent is a competitor to CIL and not dominant. The Commission therefore held that no case of contravention of Section 4 was made out and that the dispute appeared commercial in nature with remedies lying elsewhere. [Paras 8, 11, 12, 13]Commission concluded no prima facie case of dominance or abuse; information closed as a commercial dispute without competition concern.Final Conclusion: Appeal dismissed. The Tribunal upheld the Commission's closure of the information under Section 26(2) as lawful and not in breach of natural justice; the Commission's speaking order that no prima facie case of dominance or abuse existed was sustained and the appellant's remedy was held to lie before an appropriate forum other than the Commission.

2026 (1) TMI 393 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH: NEW DELHILaw of Competition

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ISSUES PRESENTED AND CONSIDERED

1) Whether the evidence on record established a horizontal anti-competitive agreement amounting to bid rigging/collusive bidding in relation to the impugned tender, attracting Section 3(3)(d) read with Section 3(1) of the Act.

2) Whether, upon establishing bid rigging under Section 3(3)(d), the statutory presumption of appreciable adverse effect on competition (AAEC) applied, and whether it stood rebutted on the evidence relied upon by the appellant.

3) Whether the penalty imposed under Section 27 was legally sustainable and proportionate, including whether it was computed on an appropriate "relevant turnover" basis and at an appropriate level.

ISSUE-WISE DETAILED ANALYSIS

1) Proof of bid rigging/collusive bidding under Section 3(3)(d) read with Section 3(1)

Legal framework: The Court proceeded on the basis that bid rigging/collusive bidding is covered under Section 3(3)(d) read with Section 3(1), and that an "agreement" (including inferred coordination) must be established on the evidence.

Interpretation and reasoning: The Court upheld the finding of collusion based on cumulative circumstantial and documentary evidence: (i) extreme proximity of bid prices among the three bidders (differences of only Rs. 11/-, Rs. 17/-, and Rs. 28/-), considered highly unlikely under normal competitive conditions without coordination, especially since no cost data or other evidence was produced to justify such minuscule variation; (ii) the filing of bids (including the commercial envelope) using the same IP address belonging to the appellant's cyber café, which the Court found improbable for independent competitors; (iii) the financial trail showing the appellant facilitated tender fee/EMD payments for the other two bidders and that refund of their EMD ultimately came back to the appellant, treated as strong evidence of coordinated participation and "cover bidding"; and (iv) call data records showing frequent and sustained communication between the bidders immediately before bid submission, treated as inconsistent with independent competitive conduct in the context of the other incriminating circumstances. The Court also agreed that direct evidence of cartel formation is rarely available and that collusion may legitimately be inferred from a coherent chain of circumstances.

Conclusions: The Court concluded that the evidence established a "meeting of minds" and coordination among the bidders, constituting bid rigging/collusive bidding in contravention of Section 3(3)(d) read with Section 3(1), and found no illegality in the Commission's finding of contravention and cease-and-desist direction.

2) Presumption of AAEC under Section 3(3) and rebuttal

Legal framework: The Court accepted that once an "agreement" falling within Section 3(3) is established, a presumption of AAEC follows, and the onus shifts to the contravening parties to rebut the presumption.

Interpretation and reasoning: The Court rejected the contention that AAEC was not shown, holding that the established bid rigging attracted the statutory presumption. It further held that the appellant's explanations-such as subsequent price reduction after bid opening, the claim of operating a tender-filling cyber café business, alleged familiarity among local bidders, and purported documentary material to show other clients-did not rebut the presumption, particularly because the asserted tender-filling justification was not substantiated by credible evidence and certain supporting documents were found infirm/liable to rejection. The later reduction of price was held not to negate prior collusive conduct established from the surrounding evidence.

Conclusions: The Court held that the presumption of AAEC validly arose and was not rebutted; the conduct was therefore treated as having AAEC for purposes of Section 3(3)(d).

3) Sustainability and proportionality of penalty under Section 27

Legal framework: The Court noted that the Commission applied the principle of proportionality and determined penalty with reference to "relevant turnover," treating revenue from the implicated product line (supply of sewing machines) during the relevant period as the appropriate base.

Interpretation and reasoning: The Court rejected the challenge that the Commission used overall turnover, finding instead that the Commission relied on product-specific revenue for the relevant period and then imposed a penalty amount that was substantially below 10% of that revenue. Given the gravity of cartelisation/bid rigging found proved, the Court held the quantum to be commensurate and proportionate.

Conclusions: The Court upheld the penalty amount as lawful and proportionate and found no ground to interfere with the Commission's penalty determination.

Bid rigging in public tender bids-common IPs, call records and shared EMD led to s.3(3) breach upheld.
The dominant issue was whether the appellant and other bidders engaged in bid rigging/collusive bidding contravening s.3(3) of the Competition Act in a public tender. The AT held that direct evidence of cartelisation is rarely available and may be inferred from surrounding circumstances; here, common IP address usage for bid submissions, close telephonic association supported by CDRs, and the appellant arranging EMD for other bidders established coordination and absence of genuine competition. Once an "agreement" under s.2(b) was proved within s.3(3), an AAEC presumption arose and was not rebutted. The finding of contravention and the s.27(a) directions, including proportionate penalty, were upheld; the appeal was dismissed.

Cartelisation and bid rigging/collusive bidding in Tender floated by the Pune Zilla Parishad for supply of Picofall-cum-Sewing Machine - contravention of the provisions of Section 3 of the Competition Act, 2002 - persons/officers in charge of and responsible for the conduct of the business of the OPs concerned at the time of the said contravention - HELD THAT:- The allegations in the complaint/information were pertaining to the rigging in bids invited by Respondent No. 5 from eligible vendors for the purpose of procurement of Picofall-cum-sewing machine with ISI mark for distribution amongst certain classes of persons living in the rural area under some scheme of the State Govt. It is found that in order to arrive at a finding that the Appellant and other two Respondents were indulged in bid rigging / collusive bidding in respect of the impugned tender floated by Respondent No. 5 the Commission considered price parallelism and examined the rates quoted by the bidders and in para 40 of the impugned order has provided the rates quoted by bidders including the Appellant and the difference in rates quoted by them - The main argument which has been taken by the Appellant is with regard to the lowering of bid price by him, from Rs. 12,621/- to Rs. 12,521/- and further reduction of same to Rs. 12,250/- and also that had there been a cartelization or bid rigging there was no occasion for him to reduce quoted price any further. The NCLAT is agreed with the observations made by the Commission that the direct evidence of formation of any cartelization or bid rigging is seldom available. The conspiracies with regard to the such illegal acts are hatched in isolation and executed with precision and therefore it would only the circumstances by which the formation of cartelization or bid rigging may be inferred. The strong evidence of the close association of the Appellant with Respondent No. 3 and 4 and submission of the bids by using the same IP address of the Appellant and their close association on phone calls as well as through the CDR records and the fact that the EMD of the Respondent No.3 and 4 was managed by the appellant, clearly establishes that they were not fairly competitive with each other and rather they have formed a cartelization in order to bid rigging. It is also found that once an agreement as defined in Section 2(b) of the Act is established and found to be established in respect of the specified clauses of Section 3(3) of the Act then a presumption may be safely drawn with regard to the fact that such an agreement was having an AAEC and the onus in such scenario is shifted to the other party to rebut this presumption, once the burden has been discharged by the reliable evidence collected by the DG. Thus, keeping in view all the evidence and material which is available on record before the Commission, there are no illegality so far as the holding of the Appellant guilty in terms of Section 27(a) of the Act and the directions issued by the Commission therein, is concerned - having regard to the formation of illegal cartelization and gravity of the illegal act, commensurate and proportionate penalty has been awarded by the Commission - there are no good ground to interfere in the impugned judgment passed by the Commission and resultantly the appeal filed by the Appellant is hereby dismissed and the impugned order passed by the Commission is hereby affirmed. Appeal dismissed.

2025 (12) TMI 1317 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH: NEW DELHILaw of Competition

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether the Tribunal had jurisdiction to entertain the application seeking "clarification", including where the relief may amount to reviewing or correcting its earlier decision.

(ii) Whether there existed a mismatch/ambiguity between the Tribunal's findings (reasoning) and the operative conclusions regarding the applicability of remedial directions to advertising-related data sharing, warranting correction/clarification.

(iii) Whether, on a proper alignment of findings and operative directions, the remedial directions requiring user choice/optionality and transparency (paras 247.2.1 to 247.2.4) apply to all non-WhatsApp purposes, including advertising; and whether time should be granted for compliance.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Jurisdiction/maintainability to entertain clarification (including review power)

Legal framework: The Tribunal considered that the Competition Act expressly confers power on the Appellate Tribunal to review its decisions (Section 53-O(2)(f)).

Interpretation and reasoning: The Tribunal rejected the objection that it lacked jurisdiction to revisit its own decision. It held that authorities relied upon to deny such power were from a different statutory context and were not determinative for proceedings under the Competition Act. Given the express statutory power to review, the Tribunal held it was not precluded from examining whether the "clarification" request was, in substance, seeking a review, and could proceed if required to advance the ends of justice.

Conclusion: The Tribunal held it had jurisdiction to entertain the application and was not barred from reviewing/correcting its decision under the Competition Act where warranted.

Issue (ii): Existence of mismatch between findings and operative portion warranting clarification/correction

Interpretation and reasoning: The Tribunal examined its earlier findings emphasizing the "core principle" that exploitation is removed by restoring user choice, and that "any non-essential collection or cross-use (like advertising etc.)" may occur only with the user's "express and revocable consent," coupled with transparency and purpose limitation. It contrasted these findings with the operative conclusion which had set aside the direction in para 247.1 "in entirety," thereby also setting aside wording that excluded the application of para 247.2.1 to advertising-related sharing. The Tribunal found this produced an inconsistency: the operative wording could be read as granting an unintended exception for advertising-related sharing from the transparency/explanation obligation, which would not align with the repeatedly affirmed core principle applicable to non-essential cross-use including advertising.

Conclusion: The Tribunal held there was a mismatch between the findings and the operative portion due to an inadvertent inclusion that misaligned the operative directions with the intended reasoning, justifying clarification/correction.

Issue (iii): Scope of remedial directions after clarification; applicability to advertising; compliance time

Interpretation and reasoning: The Tribunal reasoned that its setting aside of the five-year ban was based on lack of rationale for the duration and because restoring effective opt-in/opt-out, transparency, and purpose limitation makes an absolute, time-bound prohibition redundant. The Tribunal held that its reasoning did not carve out any exception for advertising-related data sharing; rather, advertising was repeatedly treated as an example of "non-essential" cross-use requiring express and revocable consent. It therefore clarified that deleting the words "except 247.2.1" from the operative conclusion was necessary to align the operative part with the findings. The Tribunal rejected the contention that this clarification imposed "additional remedies," holding it merely brought the operative portion into sync with the already-decided core principle and upheld remedial framework. The Tribunal also held that even where advertising-related sharing arises through optional features, user rights require an ability to opt out at any stage; the Tribunal focused on protecting user choice and preventing unilateral/open-ended assertion over user data. Finally, the Tribunal granted time to implement necessary changes.

Conclusions: (a) The remedial directions in paras 247.2.1 to 247.2.4 apply to WhatsApp user data collection and sharing for all non-WhatsApp purposes, including non-advertising and advertising purposes. (b) The operative conclusion is corrected by deleting the words "except 247.2.1". (c) Three months' time is granted to comply with the clarified directions.

WhatsApp user data sharing for advertising and other non-essential purposes-clarification allowed requiring express, revocable opt-in/opt-out consent
The dominant issue was whether the regulator's application sought a permissible clarification of the appellate judgment or an impermissible review/re-litigation. The Tribunal held that, to advance the ends of justice, it could consider the application where the requested "clarification" concerned the scope of operative remedial directions and did not amount to reopening merits, applying the core principle that user data use beyond essential WhatsApp functions requires express, revocable consent and must preserve opt-in/opt-out choice with purpose limitation. It rejected the contention that optional-feature, limited advertising-related sharing rendered the application infructuous, since users must be able to opt out at any stage. The clarification was allowed, and the remedial directions were held applicable to all non-WhatsApp purposes, including both advertising and non-advertising uses.

Seeking clarification in the conclusion drawn in paragraph 264(c) of this Appellate Tribunal's judgment - obligating Appellants to provide WhatsApp users with an opt-out of data sharing for non-WhatsApp purposes - HELD THAT:- Meta and WhatsApp rely upon Punjab National Bank Vs. Ashish Chhawchharira & Ors. [2023 (5) TMI 16 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI] wherein it was held that in the absence of any ambiguity, explaining that “while exercising [its] jurisdiction under Rule 11, [the Hon’ble Tribunal is] not empowered to modify [its] direction as there is no ambiguity or confusion.” And since there is no ambiguity, no clarification application is maintainable and the Appellate Tribunal is prohibited from reviewing the judgment which is in the guise of clarification - the judgmens relate to matters of Insolvency and Bankruptcy Code, 2016, which may not be relevant for a matter relating to Competition Act. Therefore, the judgment is of no assistance to Meta and WhatsApp. Whether in the facts and circumstances of the case, the Applicant is seeking clarification on the judgment or in the guise of clarification it is a review and relitigating the case? - HELD THAT:- The core principle is to remove exploitation by restoring user choice. Users must retain the right to decide what data is collected, for which purposes, and for how long. Any non-essential collection or cross-use (like advertising etc) can occur only with the concerned user's express and revocable consent. The Appellant cannot assert unilateral or open-ended rights over user data. This takes care of the abuse found in 2021 Policy i.e., coercive, take-it-or leave-it consent by re-establishing opt-in/opt-out which will be with desired transparency, and purpose limitation, while still allowing lawful, user- approved uses. Then there is no requirement of these exclusive directions. Section 53(O)(2(f) does not prohibit to consider even review, in a case the clarification goes beyond the limits of clarification and falls within review. Accordingly, to advance the ends of justice, we proceed to consider this application of the Commission for issuing clarification - it is observed that the remedies were classified into two categories, one for sharing of data for advertisement purposes for which 5 years’ ban has been imposed and the other for sharing of data for other than advertising purposes. Both Meta & WhatsApp claim that WhatsApp currently shares user data with Meta from optional features on the WhatsApp service for advertising purposes in limited scenarios and for this reason CCI Application is infructuous. Even in limited scenario that WhatsApp currently shares user data with Meta for advertising purposes – such as CTWA – users are not obliged to use such features - As a consequence of the core principle, if users accept to share data for using optional features, they should also be having option to opt out of data sharing at any stage and in that case they will not be able to use the optional features and this very well aligns with the core principle of data sharing. Thus, it is clarified that “remedial directions contained in Paras 247.2.1 to Paras 247.2.4 of the Applicant's impugned order dated 18.11.2024 will apply to WhatsApp user data collection and sharing for all non-WhatsApp purposes, including non-advertising and advertising purposes” - the application of the Commission allowed.

2025 (11) TMI 1281 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH: NEW DELHILaw of Competition

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ISSUES PRESENTED AND CONSIDERED

1. Whether the Appellate Tribunal may entertain appeals against the Competition Commission's final order under Section 27 and related provisions, given concurrent proceedings before other courts and data-protection regulators.

2. Whether competition law (Competition Act) may validly examine data-protection and privacy-related practices of firms, and the scope of CCI's jurisdiction vis-à-vis sectoral/data-protection regimes (SPDI Rules, DPDP Act).

3. Whether privacy and data-related practices constitute relevant non-price parameters of competition in zero-price digital markets and may be treated as service quality for dominance/abuse analysis.

4. Whether the Commission was required to defer to other judicial/regulatory proceedings or to await data-protection determinations before a competition inquiry.

5. Whether the Commission's market-definition exercises - (a) Market 1: OTT messaging apps through smartphones in India; and (b) Market 2: Online display advertising in India - were correctly delineated.

6. Whether the Commission correctly found dominance in Market 1 and a leading position (or dominance) in Market 2.

7. Whether the 2021 privacy policy update constituted imposition of an unfair condition in breach of Section 4(2)(a)(i) (validity of consent under competitive coercion).

8. Whether cross-platform data-sharing produced denial of market access under Section 4(2)(c) and/or leveraging under Section 4(2)(e) (use of dominance in one market to affect another).

9. Whether the Commission's effects analysis (qualitative vs quantitative; actual vs potential harm) was adequate to sustain findings of abuse.

10. Whether the remedies and penalty imposed were lawful, proportionate, and within CCI's remit (including whether parent and subsidiary turnover may be aggregated for penalty).

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Maintainability / Jurisdiction to Proceed

Legal framework: CCI exercises powers under Sections 19, 26, 27 and related provisions to investigate and order relief for contraventions of the Competition Act; judicial review available in higher courts.

Precedent treatment: Higher courts (Delhi High Court and Supreme Court) refused to restrain CCI from investigating, noting CCI "should not be restrained from proceeding" though findings must be decided on merits.

Interpretation & reasoning: The Tribunal holds that CCI legitimately initiated and completed investigation; parallel proceedings do not oust CCI jurisdiction where competition issues are implicated. Competition law is an independent regime and overlap with privacy law does not automatically displace CCI's remit.

Ratio vs. Obiter: Ratio - CCI may proceed notwithstanding parallel privacy litigation; overlap does not render CCI proceedings non-maintainable. (This is treated as binding in this judgment.)

Conclusion: Appeals on maintainability grounds dismissed; CCI's inquiry and final order maintainable and reviewable on merits.

Issue 2 - Interplay of Competition Law and Data-Protection Law; Limits of CCI's Competence

Legal framework: Competition Act targets appreciable adverse effect on competition; SPDI Rules/DPDP Act govern data-protection standards.

Precedent treatment: International authorities and CJEU jurisprudence permit competition authorities to consider privacy as a competition parameter, often urging coordination with data protection authorities.

Interpretation & reasoning: The Tribunal finds the frameworks complementary - privacy law assesses lawfulness of processing/consent, while competition law examines whether data practices distort competitive dynamics (e.g., coercive consent, foreclosure). CCI's focus was on competitive impact, not on substituting privacy regulators.

Ratio vs. Obiter: Ratio - CCI may assess competitive harm arising from data practices even if overlap with privacy regulation exists; it must, however, confine itself to competition questions.

Conclusion: No repugnancy; CCI entitled to adjudicate competition harm arising from data practices; findings on privacy-law compliance remain within specialist authorities' competence but do not preclude competition assessment.

Issue 3 - Zero-Price Markets and Privacy as Non-Price Parameter

Legal framework: Section 2(o) (price includes every valuable consideration); Section 4(2)(a) (unfair conditions) and Section 19(4) (factors for dominance).

Precedent treatment: Prior Tribunal decisions recognize data as central in digital markets; international regulators treat privacy/quality as non-price competition dimensions.

Interpretation & reasoning: Tribunal accepts that "zero-priced" services involve payment by data; privacy constitutes service quality and a non-price parameter. Excluding non-price factors from competition analysis would leave digital platforms outside regulatory scrutiny.

Ratio vs. Obiter: Ratio - privacy and data practices may be treated as non-price parameters relevant to dominance/abuse analysis in zero-price digital markets.

Conclusion: Tribunal affirms CCI's conceptual approach to treat privacy/data as competition parameters in digital markets.

Issue 4 - Effects Analysis: Actual vs. Potential Harm and Evidential Burden

Legal framework: Section 4 requires abuse of dominant position; jurisprudence requires effects analysis to establish anti-competitive effect.

Precedent treatment: Tribunal and COMPAT decisions emphasize effects-based assessment; however, authorities recognize preventive intervention in fast-moving digital markets where harm may be irreversible.

Interpretation & reasoning: Tribunal accepts that effects analysis may be qualitative and may rely on market structure, conduct, and third-party evidence rather than compulsory large-scale user surveys in digital dominance contexts. The DG/CCI conducted qualitative effects analysis including competitor and advertiser submissions indicating foreclosure potential; the Tribunal finds this sufficient to support findings of imposition and denial of access.

Ratio vs. Obiter: Ratio - an effects-based approach is required, but qualitative evidence from market structure, conduct, and credible third-party statements can suffice where quantitative proof is infeasible and potential harm risks irreversible foreclosure.

Conclusion: CCI's qualitative effects analysis was adequate to sustain findings on Sections 4(2)(a)(i) and 4(2)(c); shortcomings in proof of leveraging under Section 4(2)(e) led to reversal on that count.

Issue 5 - Relevant Market Delineation (Market 1 and Market 2)

Legal framework: Sections 2(t), 2(r), 2(s) and Section 19(7) on market definition parameters (interchangeability/substitutability); geographic market determined by homogeneous competition conditions.

Precedent treatment: Digital market analyses require careful functional and device-based assessment; multi-homing and user attention arguments considered but not determinative.

Interpretation & reasoning: The Tribunal upholds CCI's delineation of Market 1 as OTT messaging apps through smartphones in India - rejects unduly broad "user attention" market and distinguishes other communication/video/email services on functional grounds and device linkages. Market 2 (online display advertising in India) was held correctly defined given advertiser behaviour, ad impressions, and revenue metrics with a national geographic scope reflecting homogenous competitive conditions.

Ratio vs. Obiter: Ratio - both relevant markets as defined by CCI are upheld as reasoned and grounded in facts.

Conclusion: Market definitions sustained.

Issue 6 - Dominance in Market 1 and Position in Market 2

Legal framework: Section 4 (dominance definition) and Section 19(4) factors.

Precedent treatment: Dominance assessment requires cumulative consideration of Section 19(4) factors (Supreme Court authority).

Interpretation & reasoning: Tribunal finds CCI applied Section 19(4) factors (market share via DAU/MAU, network effects, consumer dependence, size/resources, ecosystem effects) and rightly concluded dominance in Market 1. In Market 2 CCI found a leading position (high impressions and revenue) but not dominance; Tribunal agrees on leading position and accepts CCI's metrics for relative market power.

Ratio vs. Obiter: Ratio - dominance in Market 1 upheld; no dominance finding in Market 2 but leading position acknowledged.

Conclusion: Dominance in OTT messaging sustained; Market 2 leadership acknowledged but not dominance.

Issue 7 - Imposition of Unfair Condition (Section 4(2)(a)(i)) - Validity of Consent

Legal framework: Section 4(2)(a)(i) prohibits imposition of unfair conditions; consent doctrine under data regimes relevant but competition test focuses on coercion and competitive imbalance.

Precedent treatment: Prior dismissal of alleged abuse in 2016 turned on opt-out provision then; absence of opt-out in 2021 materially distinguished.

Interpretation & reasoning: Tribunal accepts CCI's finding that the 2021 policy, its rollout (take-it-or-leave-it, prompts, perceived mandatory acceptance), removal of an earlier opt-out, and dominance/network effects produced coercive consent and an unfair condition degrading privacy (service quality). Vague, open-ended data sharing broadened exploitative potential and undermined informed choice.

Ratio vs. Obiter: Ratio - 2021 Policy constituted imposition of unfair condition under Section 4(2)(a)(i); consent obtained in the relevant period was vitiated by competitive coercion.

Conclusion: Violation of Section 4(2)(a)(i) by the operator of Market 1 upheld.

Issue 8 - Denial of Market Access (Section 4(2)(c)) and Leveraging (Section 4(2)(e))

Legal framework: Section 4(2)(c) proscribes practices resulting in denial of market access; Section 4(2)(e) proscribes use of dominance in one market to affect another.

Precedent treatment: Courts allow broad interpretation of "denial of market access"; leveraging requires proof of two distinct markets and causal use of dominance.

Interpretation & reasoning: Tribunal upholds CCI's finding that cross-platform data-sharing created entry barriers and effectively denied market access in online display advertising (Section 4(2)(c)), supported by advertiser and competitor evidence and ad-impression/revenue data. However, Section 4(2)(e) was not sustained: the causal leveraging element could not be established sufficiently, and separate-entity legal distinctions precluded robust leveraging finding despite ecosystem concerns. Special corporate-group features were noted but insufficient to sustain Section 4(2)(e).

Ratio vs. Obiter: Ratio - Section 4(2)(c) breach upheld; Section 4(2)(e) not sustained.

Conclusion: Denial of market access proven; leveraging not established.

Issue 9 - Remedies and Penalty: Proportionality and Entity Against Whom Relief May Run

Legal framework: Sections 27-28 empower CCI to impose remedies and penalties; amendment to penalty provisions and guidelines applied by CCI.

Precedent treatment: Penalty calculation should be proportionate and normally based on relevant turnover of offending entity; veil-piercing requires high threshold.

Interpretation & reasoning: Tribunal finds several remedial directions (opt-out, transparency, in-app controls, future-update compliance) fall within competition relief and are upheld. The specific five-year ban on sharing for advertising (247.1) was set aside as disproportionate and unjustified. Penalty of Rs. 213.14 crore imposed on group upheld after CCI's methodology (average relevant turnover, mitigation) reviewed; Tribunal accepts CCI's reasoning to include both entities' relevant turnovers given practical control and ecosystem effects while noting corporate-entity distinctions limit some findings. Application of amended penalty provisions was sustained by Tribunal on interpretive grounds.

Ratio vs. Obiter: Ratio - most remedial measures addressing competitive exploitation and user choice upheld; the five-year advertising ban set aside; monetary penalty upheld as proportionate under CCI's methodology.

Conclusion: Directions enhancing opt-out/transparency and prohibiting making non-service data-sharing a condition are upheld; absolute time-bound advertising ban removed; penalty affirmed.

Tribunal upholds competition probe into data abuses, confirms privacy as non-price factor, sustains penalty under Sections 4(2)(a)(i) and 4(2)(c)
The appellate tribunal held that competition law and data protection law operate complementarily and upheld the competition authority's jurisdiction to examine data-related abuses of dominance. It approved the definition of relevant markets and confirmed that privacy is a non-price factor in competition analysis. It found abuse of dominance under Sections 4(2)(a)(i) and 4(2)(c) by the messaging platform and its parent group through coercive 2021 policy terms and unfair data sharing, but found no violation of Section 4(2)(e) as dominance in the online display advertising market was not established. The cease-and-desist direction was set aside, other directions were sustained, and a penalty of Rs. 213.14 crore on the parent company alone was upheld. The appeal was allowed in part.

Abuse of dominant position - using a 2021 privacy policy to impose unfair conditions on users leverage dominance in OTT messaging Apps through smartphone - coercing WhatsApp users to accept allegedly expanded user data collection and sharing with the “Meta group” without an opt-out under the 2021 Update (violating Section 4(2)(a)(i) of the Competition Act, 2002) - sharing WhatsApp user data with Meta companies for purposes other than providing the WhatsApp service, resulting in the denial of access to the alleged market for “online display advertisements in India” (violating Section 4(2)(c) of the Competition Act) - leveraging its alleged dominance in the alleged market for “OTT messaging apps through smartphones in India” to protect its position in the online display advertising market (violating Section 4(2)(e) of the Competition Act). Maintainability of the Appeal - HELD THAT:- Competition law and data protection law operate as complementary, not exclusive, frameworks. While data protection laws like the SPDI Rules and the DPDP Act focus on safeguarding individuals’ personal data and consent, competition law addresses how dominant firms may misuse personal or non-personal data to distort markets, limit consumer choice, or engage in exploitative or exclusionary conduct. We note that both frameworks can apply simultaneously since they answer different questions—privacy law asks whether consent was valid, while competition law asks whether market power was abused through coercive or anti-competitive data practices. The mere overlap in subject matter may not exclude CCI’s jurisdiction, and furthermore, the Hon’ble Supreme Court and Hon’ble Delhi High Court, have already affirmed that CCI can examine competition harms even when privacy issues are also involved - the questions about the maintainability cannot be raised by the Appellant again and again. Privacy as a competition concern||Interplay of competition law with data-protection law (DPDP Act / SPDI Rules) || exclusivity or complementarity-Jurisdiction of CCI - HELD THAT:- There are no conflict between CCI’s jurisdiction under the Competition Act and the authority of data protection regulators under the IT Act or privacy laws. It is also found that CCI is not examining whether WhatsApp’s policy violates privacy statutes but whether WhatsApp’s conduct of requiring users to share data with Meta amounts to an abuse of dominance under Section 4 of the Competition Act - the Commission's jurisdiction encompasses not just overtly anti-competitive economic practices but also extends to unfair data practices that may affect competition dynamics, consumer choice, and market fairness. The DPDP Act’s existence does not make the CCI redundant; rather, both frameworks operate complementarily, where competition regulation addresses practices influencing market power, irrespective of overlap with privacy laws. Moreover, each new policy or conduct (such as the much broader 2021 WhatsApp policy) can merit fresh investigation notwithstanding prior decisions or regulatory action, as markets and business conduct evolve rapidly. Zero-price market economics and appropriate analytical approach - Competition in zero-priced digital products - Privacy of data - as a non-price factor - HELD THAT:- The Competition Commission’s authority extends to digital markets where services are provided at zero price, as the real value lies in the data collected from users. The Commission’s scrutiny is not limited to price-based competition but includes non-price factors such as privacy, quality, and innovation, which are critical in digital markets. The scalable and reusable nature of data allows dominant platforms to reinforce their market position, create entry barriers, and distort fair competition, making it imperative for the Commission to intervene - the legislative framework, including Section 4(2)(a)(i) and Section 4(2)(a)(ii) of the Competition Act, is deliberately broad to capture all forms of abusive conduct, including those involving non-price factors. The Competition Law Review Committee’s findings further support the Commission’s approach, affirming that the Act’s definitions are inclusive enough to encompass data and network effects without requiring amendment. Excluding non-price factors from competition analysis would undermine the Act’s purpose and leave digital markets unregulated, contrary to global regulatory consensus. Therefore, the Competition Commission’s actions in zero- price markets are fully justified and in line with the Act’s spirit and international best practices. Distinctions & overlaps between competition law and data privacy laws - Can CCI decide “privacy” issues? - HELD THAT:- The data-related practices may breach both data privacy and competition law. Data privacy law focuses on personal data processing, safeguarding individual rights and building consumer trust and on the other hand Competition law addresses misuse of both personal and non-personal data, competition-sensitive data, preventing data-driven market dominance, ensuring fair pricing, innovation, and consumer choice. Since 'user data' also includes anonymised and aggregated data, a broader view is essential for assessing competition issues in digital markets. Seen as such, data protection and competition law address data concerns through distinct but complementary tools - there are no repugnancy between the Competition Act and the DPDPA/IT Rules. The regimes address different questions i.e., CCI targets anti- competitive conduct (unfair terms, leveraging, foreclosure), while data protection laws govern privacy compliance and thus, the two laws can operate in parallel. Mere commonality of subject matter does not oust a statutory regulator’s remit. Indian courts including the Hon’ble Supreme Court and the Hon’ble Delhi High Court in this matter itself have affirmed CCI’s jurisdiction to examine competition harms even where privacy/fundamental right issues are also implicated. Validity of consent/ informed consent under competitive coercion - HELD THAT:- The WhatsApp 2021 Policy, unlike its predecessor of 2016, fundamentally undermined user choice and permitted data sharing far exceeding legitimate requirements of WhatsApp, leveraging WhatsApp’s dominance and network effects for exploitative abuse of users The overwhelming evidence shows that WhatsApp's 2021 Policy update imposed an expanded scope of data collection and sharing on users without meaningful choice or ability to opt out, leveraging its dominant market position. Consent was not freely given—users were coerced into a binary choice of accepting invasive terms or forfeiting a vital communication tool. Such conduct constitutes exploitative abuse and undermines competition by giving the dominant platform data and insights inaccessible to rivals, while eroding service quality through forced privacy loss. The Competition Commission is fully justified in its scrutiny and intervention, protecting consumer interests, service quality, and competitive fairness in the digital marketplace. Does Indian Legislative framework include both unfair price and unfair conditions? - HELD THAT:- Section 4 capture all possible forms of abusive conduct -Section 4(2)(a) has two sub-sections, namely, Section 4(2)(a)(ii) dealing with unfair price and Section 4(2)(a)(i) dealing with unfair condition, which indicates the legislative intendment to consider both price and non-price factors - it is unnecessary to amend the Competition Act to specifically include ‘data’ or ‘network effects’ as they same are included within the wide sweep of Sections 2(o) and 19(4), respectively. The CLRC's observation mirrors findings in the impugned order. International jurisprudence - is data privacy a competition concern or not? - HELD THAT:- There are no arguments convincing that the CCI has substituted users' views with its own and the same does not meet the requisite legal standard of effects analysis required to be conducted by the CCI prior to arriving at a finding that Appellants' conduct amounted to imposition of an unfair condition under Section 4(2)(a)(i) of the Competition Act. The Commission has done a detailed qualitative analysis to determine effects caused by conduct of the Appellant as has been noted herein. The Appellants have provided the numbers of users who have joined the 2021 WhatsApp policy over a period of time between its announcement on 4 January 2021 and user information notice for effective date of 7 May 2021 and claims that as of 28th March 2023, 15% users have still not accepted the Update and claims that this belies any argument that the 2021 Update was imposed. On the contrary Commission claims that the mere fact that many users had accepted by 7 May demonstrates abuse and effect. It is noted that the exact numbers are not important in the above noted. It is found Commission’s argument to be convincing. And with respect to growth of Meta's ads revenue it is strong case of the Commission that effects may take place in the future. Relevant markets delineation? - HELD THAT:- The CCI’s delineation respects legislative standards and precedents by focusing on platforms that provide similar services within comparable technological frameworks and user devices, with due consideration of consumer use patterns and competitive constraints. The geographic market was appropriately confined to India, reflecting regulatory jurisdiction and consumer base specifics, aligned with competition law principles regarding geographic market definition. The Commission's approach recognizes network effects, multi-homing behavior, and related digital market dynamics consistent with established competition law methodology for market definition in digital sectors - The delineation facilitates a nuanced abuse of dominance assessment by appropriately segmenting messaging app services from broader digital content markets, ensuring targeted and relevant regulatory scrutiny. Thus, the Competition Commission’s market delineation for OTT messaging apps and online display advertising in India stands as a reasoned, legally sound, and empirically supported foundation for its abuse of dominance analysis. Relevant Market 1 - OTT messaging apps on smartphones in India ||Was it correctly identified? - HELD THAT:- The argument of the Commission is found to be convincing that market cannot be defined as "the market for consumer communication services", as such definition of the market is very broad and specific targeted product cannot be made for this market and the buyer’s requirements can also be not satisfied by a single product. It is noted note that Meta argued that the geographical market must be global and not limited to India. Appellants' stance is that Competitive and dynamic realities of the market support a global definition of the market. Players typically operate globally, and functionalities of services rarely differ from country-to-country. WhatsApp's product decisions are typically are made on a global basis to offer a consistent user experience across the globe. [Para 47.9 of the Impugned Order]. Rebutting these arguments CCI's Position is that India has unique regulatory environment that significantly impacts the operation of OTT messaging services. Regulatory policies, data privacy laws, and requirements for data localization can differ substantially from those in other countries, affecting how these services are provided and accessed in India. Further, it would be erroneous to include competitors not operating in India in the relevant market based on a global geographic definition. Relevant Market 2 - Market for Online Display Advertising in India || Was it correctly identified? - HELD THAT:- Conditions of competition in the online display advertisement market are homogeneous within India, and thus the relevant market should be defined nationally, not globally. India has a unique regulatory environment that significantly impacts the operation of advertisement industry - No concrete evidence that conditions of competition in the online display advertisement market are homogeneous across the globe has been provided - Providing similar services across the globe or making of product decisions on a global basis, does not mean that competitive constraints are homogenous across the globe - Therefore, the relevant market was finally defined as the 'market for online display advertising in India and we also don’t find any infirmity in such delineation of the relevant market. Dominance in the OTT messaging market - Assessed or not in the relevant market? - HELD THAT:- The Commission has failed to determine that Meta is dominant in the market for “Online Display Advertising in India”. Violation of Section 4(2)(a)(i) - Abuse of Dominance by Appellants – issue of imposition of unfair conditions on users - HELD THAT:- It is inclined to agree with the conclusions of CCI regarding the 2021 Policy that data privacy is a non-price factor in competition analysis as reduced privacy degrades service quality and creates competitive disadvantage for competitors. User consent is not free or voluntary due to lack of choice – a “take-it-or-leave-it” imposition harms both consumers and competition. Despite assurances to the contrary, more than 84% of users had accepted the update by 28.03.2024 due to frequent prompts for acceptance. Purpose of expanded collection and sharing of user data with other Meta companies is not limited to improving WhatsApp’s internal services / functioning, goes beyond what is necessary and gives Appellants insights which smaller competitors cannot replicate. Users expect data not to be shared unnecessarily for not WhatsApp purposes and the 2021 Policy breaches that reasonable expectation. WhatsApp has retained flexibility to unilaterally expand data sharing at its discretion, creating the potential for exploitation without user recourse Resultantly, collection and sharing of user data for non-WhatsApp purposes fulfil the second element of Section 4(2)(a)(i), i.e. imposition of unfair terms. Violation of Sections 4(2)(c) and 4(2)(e) - Denial of market access and leveraging dominance in Market 1 to enter and protect position in Market 2 - HELD THAT:- The Appellants' ability to gather and utilise extensive user data through WhatsApp for digital advertising enables advertisers to create detailed profiles of potential customers and deliver targeted advertisements that align with users' preferences and interests. With access to detailed user profiles and data from multiple platforms, the Appellant (Meta) can promise advertisers the best returns in terms of clicks, engagement, and conversions per dollar spent. This advantage makes Meta the preferred advertising partner for sellers, thereby leveraging its dominance in the OTT app market to reinforce its leading position in digital advertising market. There are no infirmity in the above analysis for advertising and marketing strategy and it is convincing - there cannot be a question of abuse of its dominance in this market. Conclusions on Abuse - HELD THAT:- There is a violation Sections 4(2)(a)(i), 4(2)(c) but not Section 4(2)(e) and by WhatsApp as an enterprise and Meta as a group. Penalty imposed by CCI - HELD THAT:- The Commission imposes a penalty based on the relevant turnover of both Meta and WhatsApp because Meta allegedly enjoys full control over the activities and operations of WhatsApp. The law is clear that this alter ego theory must satisfy a heightened threshold and be supported by evidence that the parent company dominates the subsidiary so fully that they are essentially the same company. Such a determination requires: (i) fraudulent intention; and (ii) complete domination of the affairs of the subsidiary by the parent - The penalty imposed of ₹ 213.14 crore only upon Meta is upheld. The Commission’s order holding breach of Section 4(2)(a)(i) and 4(2)(c) are upheld - The Commission’s order holding breach of Section 4(2)(e) is not sustainable - The directions issued by the Commission to cease and desist is not sustainable and is set aside, the rest of directions are upheld - The penalty imposed of ₹ 213.14 crore only upon Meta is upheld. Appeal allowed in part.

2025 (12) TMI 106 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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Patent rights and competition law: NCLAT treated the Patents Act as the governing special regime for licensing disputes.
NCLAT considered whether the Competition Commission could examine licensing and exploitation issues relating to a patented pharmaceutical product. It treated disputes arising from the exercise of patent rights, including the reasonableness of licensing conditions, as governed by the special regime of the Patents Act, 1970. The Tribunal also relied on Section 3(5) of the Competition Act, 2002, which protects reasonable conditions necessary to protect patent rights, and noted that the patent had expired and the subject matter had entered the public domain. On that basis, it found the patent-law framework prevailed over the general competition-law framework and that the Commission lacked jurisdiction on the facts presented.

2025 (10) TMI 275 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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ISSUES PRESENTED AND CONSIDERED

1. Whether a notification by the Government bringing beach sand minerals (BSMs) exports under a State Trading Enterprise (STE) and designating a canalising agent constitutes conduct amenable to inquiry under Section 4 (abuse of dominant position) of the Competition Act.

2. Whether a Government department/agency designated to implement export policy in respect of atomic/strategic minerals falls within the statutory definition of "enterprise" under Section 2(h) of the Competition Act, 2002, thereby attracting Section 4 scrutiny.

3. Whether the Competition Commission has jurisdiction to examine or quash policy formulations or notifications issued under the Foreign Trade (Development & Regulation) Act, 1992, and allied policy instruments.

4. Whether the impugned notification prevents private parties from exporting BSMs directly or otherwise effects a complete prohibition on trade by non-designated entities.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Amenability of STE designation and canalisation policy to Section 4 scrutiny

Legal framework: Section 4(1) prohibits abuse of dominant position by an "enterprise or group." The impugned action arises from a notification under Section 3 of the Foreign Trade (Development & Regulation) Act and the Foreign Trade Policy (FTP), which placed export of BSMs under an STE and designated a canalising agent.

Precedent Treatment: The Tribunal follows the principle that pure policy formulations and governmental decisions pursuant to statutory foreign trade powers are not ordinarily susceptible to competition-law adjudication under Section 4 where they constitute exercise of sovereign or sectoral regulatory functions.

Interpretation and reasoning: The Court examined the nature of the impugned allegations and the source of the impugned action - a policy notification by the appropriate trade authority - and held that the change in export policy and its implementation are governmental/administrative acts. Such acts, being policy decisions made pursuant to statutory powers in relation to items of strategic importance (atomic/defence/space), are not examinable under Section 4's prohibition on abuse by enterprises.

Ratio vs. Obiter: Ratio - A notification designating exports of strategic/atomic minerals to be channelised through an STE, issued as an exercise of statutory policy-making powers, is not, by itself, amenable to inquiry under Section 4 for abuse of dominant position.

Conclusions: The Commission rightly treated the allegations as arising from policy formulation and implementation and therefore outside the scope of a Section 4 inquiry; no contravention of the Act was made out on that basis.

Issue 2 - Whether a Government activity regarding atomic/strategic minerals falls within "enterprise" under Section 2(h)

Legal framework: Section 2(h) defines "enterprise" and expressly excludes "any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space."

Precedent Treatment: The Court applied the explicit statutory exclusion in Section 2(h) to activities relatable to atomic energy and other sovereign domains; prior authorities recognising that governmental sovereign functions are not enterprises for competition law purposes inform the approach.

Interpretation and reasoning: Given that BSMs are specified as Atomic Minerals under the MMDR Act and as Prescribed Substances under the Atomic Energy Act, activities relating to their export regulation were held to be connected to atomic/sovereign functions. Consequently, the entity implementing the policy in that domain cannot be treated as an "enterprise" for purposes of Section 4.

Ratio vs. Obiter: Ratio - Activities of Government relatable to atomic energy (and similar sovereign functions) are excluded from the definition of "enterprise"; therefore Section 4's prohibition cannot be invoked against such activities.

Conclusions: The notification and implementation by the designated Government entity fall within the statutory exclusion; Section 4 is inapplicable to such conduct.

Issue 3 - Jurisdiction of the Competition Commission to examine/ quash policy decisions/notifications

Legal framework: The Commission's mandate is to inquire into anti-competitive agreements, abuse of dominant position and combinations as per the Competition Act; it does not have jurisdiction to review or quash executive or policy decisions made under other statutes (FTDR Act/FTP).

Precedent Treatment: The Court endorsed the principle that competition authorities are not the appropriate forum for judicial review or quashing of policy instruments; remedies against policy or notification must be sought in appropriate forums (administrative law/other courts).

Interpretation and reasoning: The impugned allegations derive from a notification constituting a policy instrument. The Court found that challenging the validity of such a notification qua its quashing is not within the competence of the Competition Commission under Section 4; the remedy for aggrieved parties lies in other fora empowered to adjudicate on policy validity.

Ratio vs. Obiter: Ratio - The Competition Commission cannot be used as a substitute forum for quashing governmental notifications or policy decisions; matters of validity of such instruments must be pursued through appropriate judicial/administrative remedies.

Conclusions: The Commission acted within jurisdictional limits in closing the information; the Tribunal declines to interfere with the Commission's order on this ground.

Issue 4 - Effect of the notification on ability of private parties to trade (interpretation of regulatory scope)

Legal framework: The notification channelises exports through the designated STE/ canalising agent; analysis requires construction of the notification's effect on trade rights.

Precedent Treatment: The Court considered the text and practical effect of the notification rather than inferring an absolute prohibition.

Interpretation and reasoning: The Tribunal observed that the notification does not prevent appellants or other private parties from doing business with foreign buyers; it requires that exports be channelised through the designated canalising agent. Thus, the measure regulates the mode of export rather than imposing a blanket ban on trade by private entities.

Ratio vs. Obiter: Obiter with instructive value - The notification regulates export channelisation and does not amount to a complete prohibition on commercial dealings with foreign buyers by private traders.

Conclusions: The notification's effect is regulatory/administrative channelisation; it does not extinguish private parties' ability to engage in export trade per se.

Overall Conclusion

The Commission correctly declined to proceed under Section 4: (a) the impugned action was a policy formulation implemented pursuant to statutory powers and not amenable to Section 4 scrutiny; (b) activities relating to atomic minerals are within the statutory exclusion for sovereign functions in Section 2(h) and therefore not "enterprise" conduct under the Competition Act; (c) the Competition Commission is not the forum to seek quashing of governmental notifications; and (d) the notification channelises exports but does not prohibit private trade. The Tribunal dismissed the appeal and declined to interfere with the Commission's closure of the matter.

Notification channelising beach sand exports via designated agent not a trade ban; Section 4 inapplicable, Section 26(2) closure upheld
NCLAT held the government notification channeling beach sand mineral exports through a designated canalising agent did not bar foreign trade but required routing via the agent; it ruled Section 4 (abuse of dominant position) inapplicable and that "enterprise" excludes sovereign government activities such as atomic energy. The Tribunal upheld CCI's closure of the information under Section 26(2) as the notification raised policy issues outside CCI's remit, dismissed the appeals, and noted the appellants may seek remedy through appropriate fora.

Abuse of dominant position - definition of enterprise excluding sovereign functions - activities relating to atomic energy as sovereign function - state trading enterprise designation and policy decisions not amenable to Section 4 scrutiny - closure of information under Section 26(2)State trading enterprise designation and policy decisions not amenable to Section 4 scrutiny - abuse of dominant position - Whether the change in export policy designating Indian Rare Earths Ltd. as a canalising State Trading Enterprise for beach sand minerals gives rise to a cause of action under Section 4 of the Competition Act (abuse of dominant position). - HELD THAT: - The Tribunal accepted the view recorded by the Competition Commission that the allegations arose from a policy formulation by the Directorate General of Foreign Trade and its implementation by Indian Rare Earths Ltd. The impugned notification channels exports through a designated agency in pursuance of statutory export policy and related sectoral regulation. Such change in export policy and its implementation are policy decisions which do not fall within the scope of examination under Section 4 of the Act, and therefore do not prima facie constitute an abuse of dominant position amenable to adjudication by the Commission. The Tribunal held that the notification does not prohibit commercial dealings with foreign buyers but mandates channelisation of exports through the designated agency in view of the material being linked to statutory schedules and prescribed substances. [Paras 4, 14, 15, 16]Allegations based on the notification and its implementation do not disclose a case under Section 4 and are not amenable to CCI scrutiny; the Commission's closure was proper.Definition of enterprise excluding sovereign functions - activities relating to atomic energy as sovereign function - Whether the respondents (DGFT/OP-1 and Indian Rare Earths Ltd./OP-3) fall within the definition of 'enterprise' under Section 2(h) of the Competition Act so as to attract Section 4. - HELD THAT: - Section 2(h) of the Act excludes 'any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy'. The Tribunal noted that activities connected to atomic energy are treated as sovereign functions and therefore do not fall within the statutory definition of an 'enterprise' for the purposes of Section 4. Given that the subject-matter (certain beach sand minerals) is specified as Atomic Minerals/Prescribed Substances and connected with atomic energy, the statutory exclusion applies and the respondents' actions in relation to the notification cannot be treated as actions of an 'enterprise' under Section 4. [Paras 5, 6]Respondents' activities in the subject area are excluded from the definition of 'enterprise' as sovereign functions related to atomic energy and thus Section 4 is not applicable.Closure of information under Section 26(2) - Whether the Competition Commission's order closing the information under Section 26(2) was correct and whether the Tribunal should interfere. - HELD THAT: - The Commission, having formed the view that the allegations pertained to policy formulation and implementation not amenable to Section 4, ordered closure under Section 26(2). The Tribunal endorsed that conclusion, observing that the appellants' proper remedy, if any, is to seek quashing of the notification before an appropriate forum rather than by proceedings under the Competition Act. As the matter involved policy issues beyond the remit of the Commission, there was no ground for this Tribunal to interfere with the closure. [Paras 7, 16]Closure of the information under Section 26(2) was justified; the Tribunal dismissed the appeal and declined to interfere.Final Conclusion: The Tribunal upheld the Competition Commission's closure of the information: the impugned notification and its implementation are policy decisions not examinable under Section 4; activities relating to atomic energy fall within the sovereign functions exclusion in the definition of 'enterprise'; consequently, the Commission rightly closed the matter under Section 26(2) and the appeal is dismissed.

2025 (10) TMI 274 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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ISSUES PRESENTED AND CONSIDERED

1. Whether the participating bidders directly or indirectly rigged/manipulated government soil-testing tenders by indulging in bid rigging, collusive bidding, cover bidding and geographic market allocation, thereby contravening Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of the Competition Act.

2. If contravention under Section 3 is established, whether identified individuals are persons in charge and responsible for the conduct of business under Section 48 of the Act and liable for directions under Section 27(a) and monetary penalty under Section 27(b).

3. Whether the monetary penalty under Section 27(b) must be calculated on the "relevant turnover" relating to the specific product/tender (as contended by appellants relying on Excel Crop Care) or may be calculated on the average total turnover where relevant turnover is nil or would lead to no penalty.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Existence of bid-rigging, collusion, cover bidding and geographic allocation (Sections 3(3)(c), 3(3)(d) r/w 3(1))

Legal framework: Section 3(1) prohibits agreements in appreciable adverse effect on competition; Sections 3(3)(c) and 3(3)(d) identify cartel practices including cover bids, bid rotation and market allocation. Proof may be inferential; direct evidence of a formal agreement is not necessary where circumstantial evidence establishes practical cooperation substituting competition.

Precedent treatment: The Tribunal applies the principle that cartel existence can be inferred from circumstantial evidence and conduct, citing the Supreme Court's approach (Rajasthan Cylinders) that a probabilistic standard of proof suffices where direct evidence is unlikely. Appellants' reliance on precedents treating related entities as a single economic entity (Shamsher Kataria; Exclusive Motors) is considered and distinguished on facts.

Interpretation and reasoning: The Tribunal examined documentary evidence, DG investigation findings and witness statements to identify patterns: common addresses/registrations, inter-se shareholding and cross-directorships, preparation of demand drafts/EMDs by persons connected to rival bidders, submission of bids by related concerns lacking requisite experience, issuance of experience certificates and MOUs suggesting subcontracting and control, and strategic non-participation/high-priced bids consistent with cover bids. The Tribunal found that (a) relatedness plus unexplained financial/documentary interchanges and (b) evasive/unjustified conduct by key persons together establish concerted action to create a façade of competition and ensure award to a designated bidder. The Tribunal rejected the contention that familial/related status converts the entities into a single economic entity for Section 3, observing that distinct legal personalities, separate commercial interests and independent participation in tenders preserve the risk of anti-competitive concertation; relatedness therefore corroborates collusion rather than negates it in the tendering context.

Ratio vs. Obiter: Ratio - cartel can be inferred from circumstantial indicators (shared addresses, cross-deposited EMDs, shared personnel and fabricated documentation) and strategic bidding conduct (high bids, non-participation) in public procurement; related-party status does not automatically immunize conduct from Section 3 where entities act as distinct bidders and create a façade of competition. Obiter - illustrative commentary on the dangers of allowing a narrow "relevant turnover" interpretation to enable impunity (addressed more fully under Issue 3).

Conclusions: The Tribunal upheld the finding of contravention of Sections 3(3)(c) and 3(3)(d) read with Section 3(1), concluding that the evidence and statements (including admissions and evasive answers) establish concerted action comprising cover bids, subcontracting to create eligibility, cross-deposit of EMDs and geographic allocation to manipulate tender outcomes.

Issue 2 - Identification and liability of persons-in-charge under Section 48; cease-and-desist and penalty under Section 27

Legal framework: Section 48 fixes liability on persons who were in charge of and responsible for conduct of the business at the time of contravention; Section 27(a) empowers cessation and desist directions; Section 27(b) empowers imposition of monetary penalty up to ten percent of average turnover for preceding three financial years.

Precedent treatment: The Tribunal follows established practice of attaching individual liability where evidence shows active participation, direction or culpable knowledge; it treats evasive and unrefuted admissions as supporting individual attribution. Prior Tribunal decisions arising from the same impugned order (other co-ordinate appeals) are relied upon to the extent they sustain factual linkages and findings of active orchestration.

Interpretation and reasoning: The Tribunal parsed witness admissions and documentary record to identify individuals who managed business decisions, authorized or acquiesced in the conduct (e.g., directing bid submissions, executing MOUs, issuing experience certificates, permitting EMDs by related parties). Evasive answers and failure to explain unusual transactions (EMDs issued from rival accounts; bids signed/submitted by proprietors of related concerns; subcontracting to ineligible entities with fabricated supporting documents) were treated as corroborative of culpability. The Tribunal concluded that several named individuals bore responsibility under Section 48 for perpetuating and overseeing the anti-competitive scheme and thus were amenable to Section 27 directions and monetary penalty.

Ratio vs. Obiter: Ratio - where individuals are shown by record and statements to have managed, controlled or actively participated in the anti-competitive conduct, they can be held liable under Section 48 and subjected to cease-and-desist directions and monetary penalties under Section 27. Obiter - specific factual observations about the interplay between subcontracting and issuance of experience certificates to create cover bidders.

Conclusions: The Tribunal affirmed the Commission's directions under Section 27(a) to cease-and-desist and upheld individual liability under Section 48 for specified officers whose roles and conduct could not be satisfactorily explained.

Issue 3 - Quantum of penalty and the "relevant turnover" question (application of Excel Crop Care)

Legal framework: Section 27(b) prescribes monetary penalty up to ten percent of average turnover for the preceding three financial years; Excel Crop Care is authority discussing "relevant turnover" concept and proportionality.

Precedent treatment: Appellants invoke Excel Crop Care to argue that penalty must be based on turnover relevant to the specific product/tender. The Tribunal examined Excel Crop Care facts and distinguished them: there the infringing parties had longstanding, segmentable turnover from the same product line, enabling a proportionate "relevant turnover" calculation. The Tribunal also referred to its own prior reasoning (Suo Motu case) and other Tribunal decisions which warned against a pedantic narrowness that would enable cartelists who refrained from participating or had nil turnover in the tender to escape penalty.

Interpretation and reasoning: The Tribunal reasoned that adopting a narrow "relevant turnover" approach in cases where the bidders were first-time entrants to the product/service and had nil or negligible turnover in that specific line would yield zero penalty and defeat the statutory deterrent. The statutory object of deterrence and proportionality requires holistic appraisal: where relevant turnover cannot realistically be isolated or would lead to impunity, total or average turnover is a permissible and reasonable base for penalty, subject to consideration of mitigating and aggravating factors. The Tribunal applied this reasoning to uphold the Commission's choice of average turnover and its 5% imposition (mid-range, below statutory maximum) as consistent with gravity, evidence and mitigating factors (e.g., MSME submissions considered but not determinative).

Ratio vs. Obiter: Ratio - where factual matrix shows first-time bidders, nil relevant turnover in the contested activity or inability to segregate relevant turnover without frustrating deterrence, the Commission may base penalty on average turnover; Excel Crop Care is distinguished where its facts permit segmentation. Obiter - cautionary statements on avoiding regulatory arbitrage if relevant-turnover is applied mechanistically.

Conclusions: The Tribunal upheld the penalty computation methodology and quantum (5% of average turnover for specified years), finding it proportionate given the evidence of organized cartel conduct, the role of the appellants, and the need for deterrence; the Tribunal rejected appellants' contention that Excel Crop Care mandates a narrow product-specific turnover approach in all circumstances.

Overall conclusions

The Tribunal affirmed the Commission's findings of contravention of Sections 3(3)(c) and 3(3)(d) read with Section 3(1), upheld individual liability under Section 48 for persons who managed and actively participated in the anti-competitive conduct, sustained the cease-and-desist directions under Section 27(a), and validated the penalty imposition methodology and the specific 5% quantum under Section 27(b) after holistic consideration of facts, admissions, circumstantial indicators and applicable precedents (distinguishing those relied on by appellants where factually inapposite).

Competition authority upholds bid-rigging finding in soil-testing tenders; penalties affirmed under Sections 3(3)(c), 3(3)(d) read with 3(1)
NCLAT upholds Commission's finding of bid-rigging in soil-testing tenders, concluding anti-competitive conduct under Sections 3(3)(c), 3(3)(d) read with Section 3(1) of the Act based on documentary and circumstantial evidence. Appellants were directed to cease and desist and found liable for penalties; NCLAT affirms the Commission's use of total turnover for penalty computation given zero relevant turnover for first-time bidders. All three appeals are dismissed and the Commission's order is held legally sound.

Anti-competitive practices/Cartelization - manipulation of process of bidding in the soil testing tenders in state of UP by indulging in bid-rigging - contravention of Sections 3(3)(c) and 3(3)(d) r/w Section 3(1) of Competition Act, 2002 - rejection of bid submitted at the technical stage due to non- submission of the last three years’ balance sheets, income tax returns, absence of a lab in-charge with requisite experience, and non-availability of an ICP machine - HELD THAT:- It is well established principle that in cases of alleged cartelization or anti-competitive practices, direct evidence of an agreement between parties is not required. Instead, a probabilistic standard of proof is sufficient, meaning that the existence of a cartel can be inferred from circumstantial evidence or behaviours. The said principle was reiterated by Hon’ble Supreme Court in the case of Rajasthan Cylinders and Containers Ltd. Vs. Union of India and Others, [2018 (10) TMI 229 - SUPREME COURT]. The Hon’ble Supreme Court held that 'Even in the absence of proof of concluded formal agreement, when there are indicators that there was practical cooperation between the parties which knowingly substitute the risk of competition, that would amount to anti- competitive practices.' In the present case the evidence is very direct and is proven from documents on record and conduct of the individuals involved making it a clear case of anti-competitive practices. Based on the material on record; evidence of OPs; and judicial precedent Rajasthan Cylinders [2018 (10) TMI 229 - SUPREME COURT], it is opined that Commission has correctly and legally held the appellants responsible for violation of Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act and there is no error in respect of order passed under Section 27(a) whereby the appellant was directed to cease and desist from such act, from indulging in the practices which were found in contravention of the provisions contained in Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act. In view of peculiar facts and circumstances of the present case, where all the bidders for soil testing are first time bidders and relevant turnover of firms from the aforesaid business is NIL, the concept of relevant turnover in such cases would not be correct, as it would lead to NIL penalty and allow the parties involved to go scot-free. Hence, it is agreed with the Commission’s approach of taking the total turnover for computation and imposition of penalty. There are no infirmity in the order of Commission. All three Appeals are dismissed.

2025 (9) TMI 1090 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI (LB)Law of Competition

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1. ISSUES PRESENTED AND CONSIDERED

* Whether the conduct of certain bidders in relation to soil-testing tenders constituted cartelisation / bid-rigging in contravention of Section 3(1) read with Sections 3(3)(c) and 3(3)(d) of the Act (cover bids, bid rotation, collusive bidding, manufacture/submission of fabricated documents to establish technical eligibility).

* Whether particular individuals (proprietors/directors) are "persons in charge of and responsible for the conduct of the business" and hence liable under Section 48 for the anti-competitive conduct attributed to their enterprises.

* The correct legal approach to imposition and computation of monetary penalty under Section 27(b) in cartel/bid-rigging cases: whether "relevant turnover" (turnover attributable to the product/service at issue) or broader/total turnover should be used; and what quantum of penalty is appropriate given the role (principal vs cover bidder) and mitigating/aggravating factors.

2. ISSUE-WISE DETAILED ANALYSIS

Issue A: Whether the conduct amounted to cartelisation / bid-rigging under Section 3(1) read with Sections 3(3)(c) & (d).

Legal framework: Section 3(1) prohibits agreements that cause appreciable adverse effect on competition; Sections 3(3)(c) and (d) expressly proscribe cover-bidding, bid-rotation and collusive submission of bids in procurement processes.

Precedent treatment: The Tribunal relied on the established principle that cartelisation may be inferred from circumstantial evidence and a probabilistic standard (as reiterated in Rajasthan Cylinders). Direct proof of a formal agreement is not necessary; practical cooperation substituting competition suffices.

Interpretation and reasoning: The Commission's and DG's findings relied on multiple strands of evidence: admissions by key individuals, common IP addresses and login IDs for e-bids, employees of one bidder submitting bids for rival bidders, identical/altered invoices and fake experience/work-order certificates, blacklisting by the procurer, and employees' testimony that bids were submitted at directions of a principal bidder. The conduct was analysed holistically and grouped to show concerted patterns. The Tribunal accepted that these factual indicia, taken together, permit an inference of collusion and cover-bidding aimed at manipulating procurement outcomes.

Ratio vs. Obiter: Ratio - a cartel can be inferred from consistent and converging circumstantial indicators (common IP/login, fabrication of documents, employees submitting rival bids, admissions of submitting cover bids), sufficient to establish contravention of Sections 3(1), 3(3)(c) and 3(3)(d). Obiter - none material beyond contextual reliance on general anti-cartel principles.

Conclusions: The Court upheld the finding of contravention: the evidence established that the concerned enterprises acted in concert to submit cover bids and fabricate eligibility to support the winning bidder, thereby violating Sections 3(3)(c) and 3(3)(d) read with Section 3(1).

Issue B: Liability of individuals under Section 48 (persons in charge of and responsible for the conduct of the business).

Legal framework: Section 48 renders persons in charge of and responsible for the conduct of the business of an enterprise liable for offences under the Act; liability attaches where individuals exercised control/decision-making leading to contravention.

Precedent treatment: The Commission and Tribunal applied standard of responsibility and control over business decisions; admissions and documentary corroboration may suffice to fix individual liability.

Interpretation and reasoning: The DG's investigation and recorded statements showed that a proprietor exercised complete control over two related enterprises, admitted bidding to create an appearance of competition, admitted use/submission of fabricated documents (and inability/evasion to explain same), and coordinated with employees/other bidders. The proprietor's admissions (including that he managed both firms and took the decisions) and corroborative evidence (CDRs, employee statements, common documentation) established personal culpability. The Tribunal emphasised that evasive answers and failure to rebut the DG findings bolstered attribution of liability.

Ratio vs. Obiter: Ratio - where an individual admits control/decision-making and evidence links that conduct to anti-competitive acts, that person is liable under Section 48. Obiter - remarks on general evasiveness of witnesses as a common indicator.

Conclusions: The Tribunal affirmed individual liability under Section 48 for the proprietor who controlled both firms and actively participated in or facilitated the anti-competitive conduct.

Issue C: Imposition and computation of penalty under Section 27(b) - relevant turnover v. total turnover; quantum/percentage applicable.

Legal framework: Section 27(b) empowers imposition of penalty up to 10% of the average turnover for the preceding three financial years (with relevant statutory scheme and proportionality considerations). Earlier jurisprudence (Excel Crop Care) discusses "relevant turnover" concept where turnover can be segregated by product/segment.

Precedent treatment (followed/distinguished): The appellants sought limitation of penalty to "relevant turnover" (turnover attributable to soil-testing activity) relying on Excel Crop Care. The Commission rejected a narrow reading, relying on its suo motu decision and policy considerations. The Tribunal examined Excel Crop Care, distinguished it on facts - there the parties were established manufacturers in the relevant product with segment-wise reporting enabling segregation of relevant turnover; here the alleged activity yielded nil/zero relevant turnover because concerned entities had no prior soil-testing business.

Interpretation and reasoning: The Tribunal reasoned that applying Excel's "relevant turnover" formula mechanically where relevant turnover is nil would frustrate deterrence and allow cartelists to escape monetary sanction by structuring or lacking segmental activity. The Court recognised proportionality but held that where the unlawful conduct relates to a procurement/service in which parties reported no segmental turnover, total/aggregate turnover may be used to ensure effective deterrence. The Tribunal also considered precedent within its benches where cover-bidders received a reduced percentage due to secondary/supporting role (Toyfort matter), and therefore treated role differentiation as a mitigating factor in quantum.

Ratio vs. Obiter: Ratio - Excel Crop Care's "relevant turnover" principle applies where the relevant business segment is identifiable and turnover can be segregated; it is inapplicable where the alleged infringing activity yields nil relevant turnover and using it would nullify penalties. Ratio - Penalty computation in cartel cases may, in such circumstances, permissibly use broader turnover to effect deterrence, subject to proportionality and role-based mitigation. Obiter - discussion of policy dangers if "relevant turnover" is given a pedantic application in all cases.

Conclusions: The Tribunal upheld the Commission's use of broader turnover for penalty computation in this factual matrix but reduced the quantum imposed by the Commission (from 5% to 3% of average annual turnover for three years) on account of the appellants' supporting/cover-bidder role and other mitigating considerations, while maintaining the principle that cover bidders cannot escape all monetary sanction by showing nil income from the specific activity.

Ancillary procedural and evidentiary points considered

* Standard of proof: The Tribunal reaffirmed that cartel inference may be drawn from converging circumstantial evidence under a probabilistic standard; direct proof is not necessary (citing Rajasthan Cylinders principle).

* Natural justice/cross-examination contention: The appellants' complaint about inability to cross-examine certain individuals was considered but the Tribunal found the DG's investigation and evidence (documents, admissions, CDRs, vendor replies) sufficient; lack of cross-examination did not vitiate the findings in view of the weight of documentary and testimonial evidence.

* Mitigation and proportionality: The Tribunal balanced deterrence and proportionality - while declining a nil/zero penalty approach based on narrow "relevant turnover", it accepted reduction of percentage for cover-bidders, reflecting lesser culpability than main conspirators.

Final consolidated conclusions

* The anti-competitive conduct alleged (cover bids, submission of fabricated documents, collusion) was established on a holistic appraisal of direct admissions and corroborative documentary and electronic evidence and amounted to contravention of Section 3(1) read with Sections 3(3)(c) and 3(3)(d).

* Individuals exercising control over the enterprises and participating in or facilitating the misconduct were properly held liable under Section 48.

* Excel Crop Care's relevant-turnover principle remains good law where turnover is segment-reportable and attributable; however, where relevant turnover is nil and using it would nullify deterrence, broader turnover may be employed for penalty computation, subject to proportionality and role-based mitigation. Applying those principles, the penalty was reduced from 5% to 3% of average annual turnover for the preceding three years for the appellants in their role as cover bidders.

Appellants found cartelised and bid-rigged soil testing tenders; breaches of ss.3(1), 3(3)(c),(d); s.27(a) upheld, s.27(b) penalty cut to 3%
NCLAT upheld findings that the appellants engaged in cartelisation and bid-rigging in tenders for soil testing, violating ss.3(1), 3(3)(c) and 3(3)(d) of the Competition Act; the cease-and-desist direction under s.27(a) was affirmed. The Tribunal accepted the Commission's use of total turnover for penalty computation given negligible relevant turnover and first-time bidders, but applied proportionality by reducing the s.27(b) penalty from 5% to 3% of the average annual turnover for the last three years, noting the appellants played a supporting/cover-bid role. Application disposed.

Anti-competitive practices - Cartelisation/bid-rigging - contravention of Sections 3(3)(c) and 3(3)(d) r/w Section 3(1) of Competition Act, 2002 - bid-rigging in the tenders invited by the Department of Agriculture, Government of Uttar Pradesh for soil sample testing - levy of penalty u/s 27(b) of the Act - Quantum of punishment - applicability of doctrine of proportionality - HELD THAT:- It is absolutely clear from the findings based on the evidence tendered by Appellants and documents on record that Mr. Satish Kumar Agarwal, was solely responsible for decisions of both his firms (M/s Satish Kumar and M/s Siddhi Vinayak), he had admitted to submitting bids on behalf of both entities despite lacking infrastructure or experience; solely to create a false appearance of competition and support Yash Solutions. The DG’s investigation, corroborated by admissions and evidence such as common IP usage; use of fake and fabricated documents; prove bid rigging in collusion with Yash Solutions and submission of cover bids to support the bid of Yash Solutions. Based on the overwhelming evidence against the appellants the Commission found them violative of Section 3(1) read with Sections 3(3)(c) and 3(3)(d) of the Competition Act. It is well established principle that in cases of alleged cartelization or anti-competitive practices, direct evidence of an agreement between parties is not required. Instead, a probabilistic standard of proof is sufficient, meaning that the existence of a cartel can be inferred from circumstantial evidence or behaviours. The Commission has correctly and legally held the appellants responsible for violation of Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act and there is no error in respect of order passed under Section 27(a) whereby the appellant was directed to cease and desist from such act, from indulging in the practices which were found in contravention of the provisions contained in Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act. Quantum of punishment - applicability of doctrine of proportionality - HELD THAT:- It can be seen that the all the four companies referred to in the Excel Crop Care [2017 (5) TMI 542 - SUPREME COURT] were in the same business since 2002, and their balance sheets had segment wise reporting, which made it possible to segregate the turnover from the APT business for each year of operation. In such cases, the ratio laid down by Hon’ble SC regarding imposition of penalty on the basis of relevant turnover is a very logical and correct way of calculating the penalty, as it brings in the doctrine of proportionality to the penalty for the offences under the Act. In the present case, the appellants were acting as a member of the cartel and were providing cover bid for the successful bidder Yash Solutions. In view of peculiar facts and circumstances of the present case, where almost all bidders for soil testing are first time bidders and relevant turnover of firms from the aforesaid business is NIL, the concept of relevant turnover in such cases would not be correct, as it would lead to NIL penalty and allow the parties involved to go scot-free in spite of clear-cut case of cartel and bid rigging in violation of the Act. Hence, the Commission’s approach of taking the total turnover for computation and imposition of penalty, is agreed upon. At the same time considering the fact that the Appellant was in a supporting role in this cartel, by providing the cover bids, the penalty in such cases should be less than for those in the main role. The order of the Commission in respect of holding the appellant guilty under Section 3(3)(c) and 3(3)(d) read with section 3(1) and order passed under Section 27(a) regarding cease-and-desist order are upheld - The penalty under Section 27(b) is reduced to 3% of average annual turnover for last 3 years, instead of 5% as imposed by the commission. Application disposed off.

2025 (9) TMI 680 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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ISSUES PRESENTED AND CONSIDERED

1. Whether an application under Rule 11 to implead two companies as parties in an ongoing appeal is maintainable where those entities were not parties before the primary adjudicatory authority and one such entity had earlier been deleted from the array of parties by the appellant.

2. Whether an application under Rule 11 seeking permission to place additional grounds on record is permissible when the additional ground concerns parties which are not before the Court (and whose impleadment has been refused).

3. Whether seeking imposition of penalty upon companies that were not parties before the Commission, and are not impleaded in the appeal, can be entertained in the appeal against the quantum of penalty imposed upon individual respondents and an association.

4. Whether the conduct of making repeated or belated attempts to implead previously deleted parties amounts to abuse of process of court and attracts costs.

5. Whether a party can, during the pendency of an appeal, raise a new issue of law (of general applicability) concerning non-parties so as to obtain relief against them without impleading them.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Maintainability of impleadment application under Rule 11 for entities not before the Commission (and previously deleted): Legal framework

The applicable procedural provision is Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 which governs impleadment and amendment of parties in appeals. The Tribunal must consider whether the proposed parties were before the original forum and whether impleadment is necessary for effective adjudication.

Precedent Treatment

The Tribunal relied on its prior order directing deletion of the same entity and treated that prior order as binding on the appellant in the absence of any challenge to recall or review.

Interpretation and reasoning

The Court held that the applicant-appellant had earlier caused deletion of one of the companies from the array of parties by an express statement; having not sought to challenge that order, the current attempt to re-implead the same company is inconsistent and untenable. For the other company, the Court noted it was not a party before the Commission; by parity, such non-party status disentitles impleadment at the instance of the appellant. The Tribunal characterized the renewed application as misconceived because it sought to reintroduce parties not before the Commission and, in one instance, previously and voluntarily deleted by the appellant.

Ratio vs. Obiter

Ratio: Where a party was not a party before the original adjudicatory authority, and where an appellant has previously procured deletion of an entity from the appeal and has not sought recall, an application to re-implead the same entity under Rule 11 is not maintainable.

Conclusions

The application to implead the two companies was dismissed as not maintainable.

Issue 2 - Permissibility of placing additional grounds when those grounds concern non-parties (Legal framework)

Rule 11 permits amendments and additional grounds, subject to relevancy and presence of necessary parties to contest relief. Amendments that depend on the presence of new parties require those parties to be before the Court.

Precedent Treatment

The Tribunal applied the same reasoning as for impleadment: because impleadment was refused, the additional grounds referable solely to the non-impleaded companies became inconsequential.

Interpretation and reasoning

The Tribunal observed that an amendment or additional ground that seeks to attribute liability or secure relief against entities not party to the appeal cannot be fruitfully adjudicated. Since the attempt to bring those companies into the appeal failed, the related additional ground lacked efficacy and could not be entertained.

Ratio vs. Obiter

Ratio: Permission to place on record additional grounds is subject to the presence of parties necessary to contest the relief; where necessary parties are not impleaded, the additional ground is inconsequential and may be refused.

Conclusions

The application to place additional grounds was dismissed as rendered infructuous by the refusal to implead the companies.

Issue 3 - Competence to impose penalty on non-parties and necessity of impleadment (Legal framework)

Principles of adjudication require that a juristic person liable to be affected by an order be given opportunity to be heard; relief by way of penalty against a company requires it to be a party so it may defend itself. The Competition Act regime contemplates identification of parties before the Commission for imposition of penalties.

Precedent Treatment

The Tribunal relied on the settled procedural principle that companies not before the Court cannot be subjected to orders by the Court in that appeal; it also relied on the appellant's earlier voluntary deletion to preclude belated efforts to subject those companies to penalty in the same appeal.

Interpretation and reasoning

The Court reasoned that penal consequences against companies not made parties before the Commission and not impleaded in the appeal cannot be judicially imposed in the absence of their being before the Court. The appellant's prior conduct in deleting a company from the array disentitled it to seek penalty against that company later in the same appeal. The Tribunal therefore rejected the appellant's plea for imposition of penalty on the two companies.

Ratio vs. Obiter

Ratio: A Court will not impose penal liability on entities that were not parties before the original adjudicatory body and are not impleaded in the appeal; impleadment is a prerequisite to seeking penalties against such entities.

Conclusions

The request to impose penalty upon the two companies not before the Commission and not impleaded in the appeal was refused as impermissible.

Issue 4 - Abuse of process and costs for repeated or inconsistent attempts to implead (Legal framework)

Court's inherent power and procedural rules permit imposition of costs where litigative conduct is found to be frivolous, vexatious, or amounts to abuse of process.

Precedent Treatment

The Tribunal characterized the application as an abuse of process and imposed costs; that order was later affirmed by the Supreme Court which required suspension of payment of the cost subject to final outcome of the main appeal.

Interpretation and reasoning

The Court found that reattempting to implead a party previously deleted by the appellant, without recall of the deletion or explanation for the volte-face, and seeking to convert non-party status into liability, represented misuse of judicial process and waste of court time. This conduct justified dismissal with costs (to be deposited in public fund). The Supreme Court later declined interference with that decision, subjecting payment of costs to the outcome of the main appeal.

Ratio vs. Obiter

Ratio: Repeated or inconsistent litigative maneuvers to implead previously deleted parties, without challenge to the earlier deletion, can amount to abuse of process and attract punitive costs.

Conclusions

The Tribunal dismissed the impleadment application as an abuse of process and imposed costs; the order on costs was upheld in substance by the Supreme Court (subject to the main appeal's outcome).

Issue 5 - Raising new issues of law during appeal to affect non-parties (Legal framework)

General principle: A party may raise issues of law during an appeal that are permissible under law, but relief affecting non-parties requires their presence; reliance on precedents permitting new legal points does not override the requirement that affected parties be impleaded when relief is sought against them.

Precedent Treatment

The appellant relied on an old Supreme Court decision authorizing raising new issues of law during proceedings. The Tribunal distinguished that precept on facts: raising a legal issue of general application is permissible, but it cannot be used as a conduit to secure penal relief against entities not before the Court.

Interpretation and reasoning

The Tribunal accepted that new legal points may be raised, but emphasized that the specific relief sought (penalty on companies) required those companies to be parties. The Court declined to permit the appellant to circumvent the impleadment requirement by couching the plea as an issue of law.

Ratio vs. Obiter

Ratio: The permissibility of raising new legal issues in an appeal does not permit obtaining adverse orders against non-parties; impleadment remains necessary where the relief directly affects those entities.

Conclusions

The Tribunal refused to entertain the appellant's attempt to raise the non-party penalty issue under the guise of a new point of law and dismissed the appeal on that ground; no costs were awarded on the final dismissal of the appeal.

Appeal dismissed as plea to impose penalties on two companies deemed unsustainable and inconsistent, lacking any merit
NCLAT dismissed the appeal, finding the appellant's plea to impose penalties on two companies (one already deleted from the proceedings) unsustainable. The bench noted the inconsistency of seeking deletion of a company while urging penalty imposition against it, and held there was no merit in imposing any penalty on companies not before the court. No other issues were considered.

2025 (5) TMI 1762 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this matter are:

Whether the Fixed Deposit Receipts (FDRs) deposited by the appellants as security against the penalty imposed by the Competition Commission of India (CCI) should be released pending the reconsideration of penalty quantum by the CCI.
Whether the CCI exercised its discretionary power reasonably and in accordance with law while imposing the maximum penalty of 10% of turnover under Section 27(b) of the Competition Act.
Whether the appellants were afforded a fair opportunity to be heard regarding the imposition of the maximum penalty.
The procedural propriety and legal correctness of remitting the matter back to the CCI for reconsideration of the penalty quantum.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Release of Fixed Deposit Receipts (FDRs) deposited as security pending penalty reconsideration

Relevant legal framework and precedents: The deposit of FDRs was pursuant to the Tribunal's interim order dated 06.08.2018, which stayed the operation of the penalty order upon deposit of the penalty amount in the form of FDRs. The principle underlying such deposits is to secure the amount in dispute during the pendency of appeal proceedings.

Court's interpretation and reasoning: The Tribunal noted that since the CCI is reconsidering the quantum of penalty afresh after remand, the purpose of retaining the FDRs as security has diminished. The CCI itself did not oppose the release of the FDRs.

Key evidence and findings: The appellants deposited amounts of Rs. 9,06,388/- and Rs. 1,38,570/- as FDRs along with accrued interest. The CCI's appeal against the remand order was dismissed by the Supreme Court, confirming the remand and fresh consideration by CCI.

Application of law to facts: Given the dismissal of CCI's appeal and ongoing reconsideration, the Tribunal found it appropriate to release the FDRs with interest to the appellants.

Treatment of competing arguments: The CCI raised no objection to the release, and the appellants sought release on the ground that penalty quantum is yet to be decided.

Conclusions: The Tribunal allowed the application and directed release of the FDRs along with interest in favour of the appellants.

Issue 2: Reasonableness and legality of imposition of maximum penalty (10% of turnover) by CCI under Section 27(b) of the Competition Act

Relevant legal framework and precedents: Section 27(b) of the Competition Act empowers the CCI to impose penalties up to 10% of the turnover of the enterprise for contraventions. The exercise of discretion in imposing penalty must be reasonable, not arbitrary or indiscreet, and the affected parties must be given an opportunity to be heard especially when maximum penalty is considered.

Court's interpretation and reasoning: The Tribunal observed that while the CCI has the power to impose up to 10% penalty, it must provide detailed reasons for choosing the maximum penalty and afford the parties an opportunity to address this aspect. The impugned order lacked any indication that the appellants were heard on the question of exemplary penalty or that detailed reasons were assigned for the maximum penalty.

Key evidence and findings: The Tribunal scrutinized the impugned order of the CCI and found absence of any recorded reasons or hearing on the quantum of penalty, especially regarding imposition of the maximum 10% penalty.

Application of law to facts: The Tribunal held that discretion vested in CCI must not be exercised in an indiscreet manner. The failure to provide opportunity and reasons rendered the penalty imposition procedurally unfair and legally unsustainable.

Treatment of competing arguments: The CCI contended that the discretion was lawfully exercised. However, the Tribunal emphasized settled legal principles requiring reasoned orders and fair hearing on penalty quantum.

Conclusions: The Tribunal remanded the matter to the CCI for reconsideration of penalty quantum, directing CCI to afford full opportunity to the appellants and pass a reasoned order in accordance with law.

Issue 3: Procedural propriety of remanding the matter to CCI for reconsideration of penalty quantum

Relevant legal framework and precedents: The appellate jurisdiction of the Tribunal includes the power to remit matters back to the CCI for fresh consideration if the original order is found deficient in procedure or reasoning.

Court's interpretation and reasoning: The Tribunal found that the absence of reasons and opportunity on the maximum penalty issue constituted a procedural infirmity warranting remand.

Key evidence and findings: The Tribunal relied on the impugned order's silence on the issue of hearing and reasoning for maximum penalty.

Application of law to facts: The Tribunal applied the principle that discretion must be exercised reasonably and with due procedure and that failure to do so vitiates the order.

Treatment of competing arguments: The CCI's appeal to the Supreme Court against remand was dismissed, reinforcing the Tribunal's view.

Conclusions: The remand was upheld as proper and necessary to ensure fair adjudication.

3. SIGNIFICANT HOLDINGS

"Though CCI is empowered to take turnover up to 10% but while taking up such percentage i.e. maximum as prescribed in the Act it was required for the CCI to elaborately assign reason for coming to the conclusion for maximum penalty."

"It may not be held that CCI in no case can impose higher penalty up to 10% but in such situation it would be required for the CCI to afford full opportunity to the concerned party to address the CCI as to why such higher penalty may not be imposed."

"Discretion may not be exercised in an indiscreet manner."

"In view of facts and circumstances particularly the fact that discretion by the CCI in the present case has not been exercised in a reasonable manner it would be a fit case for remanding back the matter to CCI to examine the issue to afford opportunity to the appellants to address on the point as to whether instead of exemplary penalty i.e. upper limit of 10%, the appellants are entitled to get the said percentage reduced or not."

"The Ld. Registrar, NCLAT may release the FDR along with interest accrued thereon in favour of the Appellant."

Core principles established include the necessity for reasoned orders when imposing maximum penalties under the Competition Act, the requirement of affording an opportunity to the

Tribunal Strikes Down CCI Penalty Order, Demands Transparent Reasoning and Fair Hearing for Appellants
The National Company Law Appellate Tribunal (NCLAT) reviewed a Competition Commission of India (CCI) penalty order. The Tribunal found procedural deficiencies in the CCI's penalty imposition, specifically the lack of detailed reasoning for the maximum 10% penalty and failure to provide a fair hearing. Consequently, the Tribunal remanded the matter back to CCI for reconsideration, directing a reasoned order and full opportunity for the appellants to address the penalty quantum. The Tribunal also ordered the release of Fixed Deposit Receipts with accrued interest.

2025 (5) TMI 1138 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHILaw of Competition

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ISSUES PRESENTED AND CONSIDERED

1. Whether the Fixed Deposit Receipts (FDRs) deposited pursuant to an interim order should be released where the adjudicating authority (Competition Commission) is remitted to reconsider quantum of penalty afresh.

2. Whether the remand to the adjudicating authority for fresh consideration of penalty under the discretionary power to impose up to 10% of turnover required the appellants to be afforded opportunity specifically on the question of imposing the maximum penalty.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Release of FDRs deposited pursuant to interim order pending fresh consideration of penalty

Legal framework: Deposit of penalty amounts by way of FDRs pursuant to an interim stay order operates as security while an appeal remains pending; release of such security is within the appellate Tribunal's discretion when the underlying proceedings are no longer served by the initial purpose of the deposit.

Interpretation and reasoning: The Tribunal noted that the appeals were remitted to the Competition Commission for fresh consideration of penalty and that the Commission's further proceedings (including challenge to remand) were finally concluded. In that context the Court accepted the submission that the Commission was to decide quantum afresh and that the original purpose of maintaining the FDRs as security for the appeal had been superseded by the remand and subsequent procedural developments. The Commission raised no objection to release.

Ratio vs. Obiter: Ratio - where deposited FDRs were made pursuant to an interim order staying operation of penalty so that appeals could be heard, and the matter is remitted back for fresh determination by the adjudicating authority (with no objection from that authority), the appellate forum may direct release of such FDRs along with accrued interest. Obiter - procedural discretion to release may depend on case-specific factors such as pending proceedings or objections by the Commission.

Conclusion: The Tribunal exercised its discretion to allow release of the FDRs with interest in favour of the depositors, directing the Registrar to effect release.

Issue 2 - Requirement of specific opportunity before imposing maximum penalty under discretionary power

Legal framework: Under the statutory scheme conferring discretion to impose penalty up to a prescribed maximum (here, up to 10% of turnover), the adjudicating authority must exercise discretion reasonably, and principles of natural justice require that a party be given opportunity to address aggravating quantum where imposition of the maximum penalty is contemplated.

Precedent Treatment: The Tribunal applied settled principles limiting unbridled exercise of discretionary penalty powers and required disclosure of reasons when maximum penalty is imposed. The decision followed and applied established tenets that discretion must not be exercised indiscreetly; no precedent was expressly overruled or distinguished in the text.

Interpretation and reasoning: The Tribunal examined the impugned order and found absence of indication that the appellants were specifically asked to address the question of exemplary/maximum penalty or that detailed reasons were recorded for imposing the upper limit. The Tribunal held that although the adjudicating authority may lawfully impose up to the maximum, doing so without adequate reasons and without affording the affected party a focused opportunity to address the severity of penalty is unreasonable.

Ratio vs. Obiter: Ratio - when an adjudicating authority intends to impose the maximum permissible penalty, it must assign detailed reasons for choosing the upper limit and must afford the affected party an opportunity to be heard specifically on that question; failure to do so renders exercise of discretion susceptible to remand. Obiter - the authority may, in appropriate circumstances, impose higher penalties but must do so with reasoned explanation commensurate with the severity.

Conclusion: The Tribunal remitted the matter to the adjudicating authority to reconsider the quantum of penalty after giving full opportunity to the appellants to address the point of penalty, without adjudicating on the merits of the underlying finding.

Cross-References and Interaction of Issues

The release of the FDRs (Issue 1) was ordered in light of the remand directing fresh consideration of penalty (Issue 2) and the absence of objection from the adjudicating authority; the remand formed the operative basis for concluding that the original interim security could be returned pending the fresh determination.

Competition Regulator Penalty Order Struck Down: Tribunal Demands Comprehensive Reasoning and Fair Hearing for Appellants
SC/NCLAT remanded a CCI penalty case back to the competition regulator for reconsideration. The tribunal found the maximum 10% penalty order procedurally defective, lacking detailed reasoning and failing to provide the appellants an opportunity to be heard. The court ordered release of deposited fixed deposit receipts and directed CCI to reassess the penalty quantum after giving full hearing to the parties, emphasizing the need for judicious exercise of discretionary powers.

2025 (5) TMI 577 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHILaw of Competition

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1. ISSUES PRESENTED and CONSIDERED

The Tribunal considered the following core legal questions:

(1) Whether the Competition Commission of India (CCI) correctly identified the relevant market, specifically the market for apps facilitating payment through Unified Payment Interface (UPI) in India, and whether all digital modes of payment such as wallets, UPI, net banking, credit and debit cards are substitutable from consumer and market perspectives;

(2) The legal standards applicable for effect-based analysis in abuse of dominance cases, including whether such analysis requires proof of actual harm or also includes conduct capable of causing harm;

(3) Whether the CCI conducted an effect-based analysis in its decision;

(4) Whether the mandatory use of Google Play Billing System (GPBS) by app developers constitutes imposition of unfair or discriminatory conditions in violation of Section 4(2)(a)(i) of the Competition Act, 2002;

(5) Whether differential commission fees charged by Google (15-30%) from app developers, contrasted with lower fees paid for Google's own YouTube app (approximately 2.3%), constitute discriminatory pricing violating Section 4(2)(a)(ii);

(6) Whether mandatory use of GPBS limits technical or scientific development and innovation by third-party payment processors and app developers, violating Section 4(2)(b)(ii);

(7) Whether Google abused its dominant position in the app store market by practices resulting in denial of market access, in violation of Section 4(2)(c);

(8) Whether Google leveraged its dominance in the markets for licensable mobile operating systems and Android app stores to protect or enter downstream markets, violating Section 4(2)(e);

(9) Whether the CCI found charging of commission/service fees from 15% to 30% discriminatory;

(10) Whether directions issued by the CCI under paragraphs 395.2 to 395.8 of the impugned order constitute impermissible ex-ante regulation of undefined "gatekeepers" beyond the powers of the CCI under Sections 4 and 27;

(11) Whether the directions issued are ultra vires, overbroad, or disproportionate;

(12) Whether the penalty imposed by the CCI on Google's entire turnover is sustainable or should be limited to relevant turnover attributable to Google Play;

(13) The relief, if any, to which the Appellant is entitled.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Relevant Market Definition and Substitutability of Payment Modes

The CCI identified three relevant markets: (a) market for licensable OS for smart mobile devices in India; (b) market for app store for Android smart mobile OS in India; and (c) market for apps facilitating payment through UPI in India. The Appellant challenged the narrow definition of the third market, arguing that all digital payment modes (wallets, UPI, net banking, credit/debit cards) are substitutable.

The Tribunal referred to the statutory definitions in Section 2(r), (s), and (t) of the Competition Act and the Supreme Court's guidance that market definition is a tool to identify competitive constraints based on interchangeability or substitutability by consumers. The CCI's detailed analysis, including DG's report and evidence from market participants such as Amazon Pay, Paytm, PhonePe, and Xiaomi, found no substitutability between UPI-enabled apps and other payment systems like wallets, cards, or net banking, due to distinct features and consumer preferences.

The Tribunal upheld the CCI's market delineation, finding the product market for UPI-enabled digital payment apps to be correctly determined as distinct and non-substitutable with other digital payment modes.

Issue 2: Legal Standards for Effect-Based Analysis

The Appellant contended that effect-based analysis requires proof of actual harm to competition before finding abuse of dominance. The Commission argued that effect analysis includes both actual harm and conduct capable of causing harm, consistent with the Act's objectives to prevent anti-competitive practices before market distortion occurs.

The Tribunal examined the 1st Google Case judgment by the same Tribunal, which held that effect analysis is necessary to establish abuse under Section 4, with the test focusing on whether conduct is anti-competitive. The Tribunal also considered international jurisprudence, including EU Court of Justice rulings and Singapore Competition Appeal Board decisions, which clarify that abuse can be found where conduct has actual or likely exclusionary effects, and that per se illegality is disfavored.

The Tribunal concluded that effect analysis encompasses conduct causing actual harm as well as conduct capable or likely to cause anti-competitive effects, provided the conduct has already occurred. Hypothetical or future conduct not yet manifested cannot form the basis of contravention.

Issue 3: Whether the Commission Conducted Effect Analysis

The Appellant alleged the Commission failed to conduct effect analysis and relied solely on dominance to establish contravention. The Commission pointed to detailed findings based on DG's report, responses, and evidence.

The Tribunal interpreted the Commission's observations in paragraph 347 as requiring proof of both dominance and conduct constituting abuse. The Tribunal found that the Commission did conduct effect analysis by examining the nature of conduct, its impact on competition, and evidence on record, rejecting the Appellant's contention of absence of such analysis.

Issue 4: Mandatory Use of GPBS and Discriminatory Conditions (Section 4(2)(a)(i))

The Commission found that Google made GPBS mandatory and exclusive for processing payments for paid apps and in-app purchases, and that non-compliance led to denial of access to the Play Store, constituting imposition of unfair and discriminatory conditions. The Appellant argued the policy was justified for security and efficiency.

The Tribunal noted that app developers must enter into Developer Distribution Agreements mandating GPBS use, restricting freedom to choose payment processors. The explanation to Section 4(2)(a)(i) excludes discriminatory conditions adopted to meet competition, but Google failed to prove such necessity.

The Tribunal upheld the Commission's finding that mandatory GPBS use constitutes imposition of unfair and discriminatory conditions in violation of Section 4(2)(a)(i).

Issue 5: Differential Commission Fees and Discriminatory Pricing (Section 4(2)(a)(ii))

The Commission found that Google's own app YouTube paid a significantly lower fee (about 2.3%) compared to 15-30% charged to other app developers, amounting to discriminatory pricing. The Appellant contended that YouTube is not comparable as it is Google's own app, not subject to sale or purchase conditions applicable to third-party developers.

The Tribunal agreed with the Appellant, holding that the differential fee structure does not constitute discriminatory pricing under Section 4(2)(a)(ii) because no sale or purchase transaction occurs between Google and YouTube as internal entities. The Commission's finding on this issue was set aside.

Issue 6: Effect of GPBS on Innovation and Technical Development (Section 4(2)(b)(ii))

The Commission held that mandatory GPBS use limits innovation by third-party payment processors and app developers. The Appellant submitted extensive evidence of market growth and innovation, showing increased competition and no impediment due to GPBS.

The Tribunal found no credible evidence that GPBS restricted technical or scientific development to consumers' prejudice. The relevant market for payment processors was not determined, and payments via GPBS constituted less than 1% of total UPI transactions. The Commission's finding of violation under Section 4(2)(b)(ii) was reversed.

Issue 7: Denial of Market Access (Section 4(2)(c))

The Commission found Google's practices resulted in denial of market access to payment processors and app developers. The Appellant argued Google is not active in payment processing and facilitates market access by subcontracting payment processors.

The Tribunal noted that denial of market access under Section 4(2)(c) is broadly construed, but found that Google did not deny access to payment processors as the vast majority of digital payments occur outside Google Play. The Commission failed to identify the market where denial allegedly occurred or prove anti-competitive effects. The finding of violation under Section 4(2)(c) was set aside.

Issue 8: Leveraging Dominance to Protect or Enter Other Markets (Section 4(2)(e))

The Commission held that Google leveraged dominance in licensable mobile OS and Android app store markets to protect its position in downstream markets for UPI-enabled payment apps. The Appellant contended that no downstream market was defined or linked to anti-competitive conduct.

The Tribunal reviewed statutory provisions and precedent requiring two distinct relevant markets and a causal link between dominance and anti-competitive conduct. The Commission identified the downstream market for UPI apps and found Google's imposition of technology and payment system requirements favored Google Pay, disadvantaging competitors.

The Tribunal upheld the Commission's finding of violation under Section 4(2)(e), concluding Google leveraged its dominant position to protect and promote its UPI app market position.

Issue 9: Discriminatory Charging of Commission/Service Fee

The Commission's DG report found fees of 15-30% excessive and unfair, but the Commission ultimately did not make a conclusive finding on this issue. The Tribunal noted the Commission's position and held that no violation under Section 4(2)(a)(ii) was established based on fee levels.

Issue 10: Directions Amounting to Ex-Ante Regulation of Gatekeepers

The Commission termed Google a "gatekeeper" with special responsibilities and issued directions beyond findings of contravention under Section 4, including transparency, data sharing, and non-discrimination obligations. The Appellant argued that such ex-ante regulation exceeds the CCI's powers under the Competition Act, which is designed for ex-post enforcement.

The Tribunal referred to the Competition Law Review Committee Report acknowledging the need for ex-ante regulation but noting it is not yet part of law. The Tribunal held that while the Commission may recognize gatekeeper status, directions must be grounded in proven contraventions under Section 4. The Commission's ex-ante style directions without corresponding findings were held ultra vires and unsustainable.

Issue 11: Ultra Vires, Overbroad, and Disproportionate Directions

The Tribunal analyzed each direction issued under paragraphs 395.1 to 395.8. Directions related to mandatory GPBS use, anti-steering provisions, user access, and non-discrimination (395.1, 395.2, 395.3, 395.8) were upheld consistent with findings of violation.

Directions concerning data transparency and sharing (395.4, 395.5) and general fairness and pricing transparency (395.6, 395.7) were set aside due to absence of findings of contravention or disproportionality.

Issue 12: Penalty Imposed on Entire Turnover vs. Relevant Turnover

The Commission imposed a penalty of Rs. 936.44 crores calculated at 7% of Google's average turnover for the last three financial years, based on total turnover of Google's entire India operations. The Appellant argued that penalty must be limited to relevant turnover attributable to Google Play and related services, citing the Supreme Court's judgment in Excel Crop Care Ltd., which mandates penalty be imposed on relevant turnover linked to the product or service involved in contravention.

The Tribunal agreed that imposing penalty on total turnover was legally untenable. It held that penalty must be calculated on relevant turnover, including revenue streams related to Google Play, paid apps, in-app purchases, developer fees, and advertising linked to the Play Store ecosystem.

The Tribunal recalculated penalty at 7% of the relevant turnover based on data submitted by Google, resulting in a modified penalty of approximately Rs. 216.69 crores (USD 29.89 million). The penalty imposed by the Commission was modified accordingly.

Issue 13: Relief to the Appellant

The Tribunal partly allowed the appeal as follows:

(i) Upheld the Commission's findings of violation of Section 4(2)(a)(i) (imposition of unfair conditions) and Section 4(2)(e) (leveraging dominance);

(ii) Set aside findings of violation under Section 4(2)(a)(ii) (discriminatory pricing), Section 4(2)(b)(ii) (limiting technical development), and Section 4(2)(c) (denial of market access);

(iii) Upheld directions in paragraphs 395.1, 395.2, 395.3, and 395.8, and set aside directions in 395.4, 395.5, 395.6, and 395.7;

(iv) Modified the penalty to be based on relevant turnover as detailed above, allowing the Appellant to deposit the balance amount within 30 days.

3. SIGNIFICANT HOLDINGS

"87. Market definition is a tool to identify and define the boundaries of competition between firms. It serves to establish the framework within which the competition policy is applied by the Commission. The main purpose of market definition is to identify in a systematic way the competitive constraints that the undertakings involved face."

"65. For finding of abuse under Section 4 relating to the dominant position, it has to be held that the conduct is anti-competitive. We, thus, accept the submission of the learned Counsel for the Appellant that statutory scheme of the Competition Act delineated by Section 4 and Section 18, indicate that conduct of a dominant enterprise or group, which is held to be abusive has to be anti-competitive conduct and there has to be effect analysis on the above point."

"66. We, thus, answer Issue No.1 in following words: For proving abuse of dominance under Section 4, effect analysis is required to be done and the test to be employed in the effect analysis is whether the abusive conduct is anti-competitive or not."

"312. The Commission is of the view that the conduct of Google constitutes an imposition of unfair condition on app developers. It has also been found during investigation that Google is following discriminatory practices by not using GPBS for its own applications i.e., YouTube. Therefore, the Commission concurs with the finding of the DG that Google has imposed unfair and discriminatory conditions in violation of the provisions of Section 4(2)(a)(i) of the Act. This also amount to imposition of discriminatory pricing as Google's own apps i.e., YouTube is not paying the service fee as being imposed on other apps covered in the GPBS requirements. Thus, the Commission is of the view that Google has violated Section 4(2)(a)(ii) of the Act."

"357. Further, being the gateway to Android smartphones due to dominance in the markets for licensable mobile OS and app stores for Android OS, Google is uniquely placed to (and is) leveraging this dominance in favour of Google Pay. These markets are closely related to each other as UPI is used as a method of payment (both for paid apps as well as IAPs on the Play Store). Accordingly, Google's imposition of collect flow technology on other UPI apps, while only allowing Google Pay to use intent flow technology for payments on the Play Store, amounts to leveraging of its position in the markets for the licensable of mobile OS and app stores for Android mobile to protect and promote its position in the market for UPI enabled digital payment apps."

"416. On a holistic appreciation of the facts and circumstances of the case and the mitigating factors put forth by the OPs, the Commission is of the view that the ends of justice would be met if a penalty of 7 % of the relevant turnover."

"83. In the absence of specific provision as to whether such turnover has to be product specific or entire turnover of the offending company, we find that adopting the criteria of "relevant turnover" for the purpose of imposition of penalty will be more in tune with ethos of the Act and the legal principles which surround matters pertaining to imposition of penalties."

"84. Under Section 27(b) of the Act, penalty can be imposed under two contingencies, namely, where an agreement referred to in Section 3 is anti-competitive or where an enterprise which enjoys a dominant position misuses the said dominant position thereby contravening the provisions of Section 4."

"97. Thus, we do not find any error in the approach of the order of Compat interpreting Section 27(b)."

The Tribunal's final determinations were that Google violated Section 4(2)(a)(i) and 4(2)(e) of the Competition Act, 2002, but not Sections 4(2)(a)(ii), 4(2)(b)(ii), or 4(2)(c). The directions and penalty were accordingly modified to reflect these findings, with penalty recalculated on relevant turnover rather than total turnover.

NCLAT partially upholds anti-competitive ruling against Google, reduces penalty to INR 2,166.9 crores under Section 4(2)
The NCLAT partially upheld CCI's decision against Google for anti-competitive practices. The tribunal confirmed violations of Section 4(2)(a)(i) for imposing discriminatory conditions requiring mandatory use of Google Play Billing System, and Section 4(2)(e) for leveraging dominance across markets. However, it overturned findings on discriminatory pricing (Section 4(2)(a)(ii)), restriction of technical development (Section 4(2)(b)(ii)), and denial of market access (Section 4(2)(c)). The penalty was reduced from entire turnover to relevant turnover of Play Store operations, calculated at 7% of average turnover for three preceding years, totaling INR 2,166.9 crores. Several remedial directions were set aside while others were upheld.

Relevant market - effect analysis - abuse of dominant position - unfair or discriminatory condition - denial of market access - leveraging dominance - relevant turnover for penalty - gatekeeper obligations / exante regulationRelevant market - Validity of the Commission's product market identification of 'market for Apps facilitating payment through UPI in India'. - HELD THAT: - The Tribunal examined the Commission's market delineation against the statutory definition of 'relevant product market' and the material on substitutability. The Commission and DG had analysed consumer and industry evidence (including submissions from Paytm, PhonePe, Amazon, Xiaomi and others) and recorded reasons why UPIenabled payment apps are distinct in characteristics and use from wallets, card payments and netbanking. Having reviewed those findings and the statutory tests, the Tribunal held that the Commission correctly determined the product market as market for apps facilitating payments through UPI in India and that the market so defined is not interchangeable with wallets, cards or netbanking.The Commission's determination of the product market for UPIfacilitating apps is upheld.Effect analysis - Legal standard for effect analysis under Section 4 and whether it includes likely or only actual effects. - HELD THAT: - The Tribunal considered its earlier decision in the 1st Google Case and international authorities. It held that effect analysis is required to establish abuse under Section 4 and that such analysis must assess whether the conduct is anticompetitive. Effect analysis must consider both conduct that has produced actual anticompetitive harm and conduct that is capable or likely to produce such harm; however, the conduct under review must have occurred (the Tribunal cautioned that hypothetical or purely prospective conduct cannot by itself establish contravention).Effect analysis is required and includes assessment of actual anticompetitive effects and likely/capable effects arising from conduct that has taken place.Effect analysis - Whether the Commission carried out an effect analysis in its decision. - HELD THAT: - The Tribunal reviewed the impugned order and the DG report and rejected the appellants' submission that the Commission treated dominance as ipso facto determinative. The Tribunal found that the Commission conducted an effectoriented inquiry-considering DG findings, responses of parties and evidence-and therefore did undertake effect analysis in relation to the contested conduct.The Commission did conduct an effect analysis in its inquiry.Abuse of dominant position - unfair or discriminatory condition - Whether mandatory and exclusive imposition of Google Play Billing System (GPBS) on app developers amounted to imposition of an unfair or discriminatory condition in violation of Section 4(2)(a)(i). - HELD THAT: - The Tribunal examined the GPBS requirement, the Developer Distribution Agreement, the change in policy and the absence of a defence showing the condition was adopted to meet competition. The Tribunal agreed with the Commission and DG that conditioning access to the Play Store on mandatory use of GPBS deprived developers of the inherent choice to use thirdparty payment processors and thus constituted an unfair condition. The Tribunal applied the statutory explanation that discriminatory conditions are excepted only when adopted to meet competition and found no such justification on record.The finding that mandatory use of GPBS violated Section 4(2)(a)(i) is upheld.Abuse of dominant position - Whether differential treatment of YouTube (Google's own app) with respect to service fee establishes discriminatory pricing under Section 4(2)(a)(ii). - HELD THAT: - The Tribunal analysed the Commission's conclusion that Google charged service fees of 15-30% from other apps but not from YouTube (for which Google engaged a payment processor at a lower rate). The Tribunal held that the comparison was flawed because YouTube's revenue is Google's own internal revenue stream and not comparable to thirdparty developers' sale of goods or services; the element of a price in purchase or sale between distinct market parties was not established. The Commission had not addressed the material distinction relied on by the appellants.The Commission's finding of violation of Section 4(2)(a)(ii) is set aside.Abuse of dominant position - Whether mandatory GPBS significantly limited technical or scientific development to the prejudice of consumers in violation of Section 4(2)(b)(ii). - HELD THAT: - The Tribunal considered evidence of growth and innovation in the payment processor market and the fact that transactions routed through GPBS on Play represented a very small share (under 1%) of UPI transactions. The Commission had not established that GPBS materially impeded technical development or innovation by payment processors; the market for payment processors/aggregators was not even defined as a relevant market in the investigation. On these bases the Tribunal found insufficient evidence to sustain a finding under Section 4(2)(b)(ii).No violation of Section 4(2)(b)(ii) is established; the Commission's finding on this head is set aside.Denial of market access - Whether Google's practices resulted in denial of market access to payment processors or app developers in violation of Section 4(2)(c). - HELD THAT: - The Tribunal reviewed the Commission's reliance on the width of 'in any manner' in Section 4(2)(c) but found that Google did not deny access to the payment processor market as payments through GPBS on Play constituted a minuscule portion of the wider UPI ecosystem; payment processors continued to operate and the wider market was not foreclosed. The Commission also failed to identify the precise market where denial was alleged. Given these factors, the Tribunal concluded that reduction in a small market share could not be equated with denial of access.The Commission's finding of denial of market access under Section 4(2)(c) is not sustained.Leveraging dominance - abuse of dominant position - Whether Google leveraged dominance in licensable mobile OS and app store markets to protect or promote its position in downstream markets in breach of Section 4(2)(e). - HELD THAT: - The Tribunal reviewed the threemarket framework and the evidence considered by the Commission and DG, including the mandatory GPBS requirement, the difference in integration methodologies (intent vs collect flow) advantaging Google Pay, and data and settlement practices. The Tribunal concluded that Google's dominance in the licensable OS and Play Store markets was used to promote and protect its position in the market for UPIenabled payment apps and that a causal leveraging link had been established on the record.Violation of Section 4(2)(e) is established and the Commission's finding on this head is upheld.Gatekeeper obligations / exante regulation - orders under Section 27 - Validity and scope of remedial directions (paragraphs 395.1-395.8) and whether some directions constituted impermissible exante regulation or were disproportionate. - HELD THAT: - The Tribunal held that remedies under Section 27 must flow from proven contraventions under Section 4. It reviewed each direction against the violations sustained and those set aside. Directions tied to the established breaches (mandatory GPBS and leveraging dominance) were sustained where they remedied the proven abuses (395.1, 395.2, 395.3 and 395.8). Directions that rested on findings the Tribunal set aside, or which imposed broad or novel obligations resembling exante regulation beyond the Commission's established remedial powers, were quashed (395.4, 395.5, 395.6, 395.7 were set aside to the extent not supported by the sustained findings). The Tribunal emphasised that labeling an entity a 'gatekeeper' or referencing policy reports cannot, by itself, expand CCI's statutory remedial ambit under Sections 4 and 27.Remedial directions 395.1, 395.2, 395.3 and 395.8 are upheld; directions 395.4, 395.5, 395.6 and 395.7 are set aside to the extent unsupported by proven contraventions.Relevant turnover for penalty - Whether the quantum of penalty imposed by the Commission should be based on the entire corporate turnover or on the relevant turnover attributable to the infringing product/activities. - HELD THAT: - Applying the Supreme Court's decision in Excel Crop Care and the statutory scheme, the Tribunal held that penalty under Section 27(b) should be linked to 'relevant turnover' rather than the enterprise's entire turnover where appropriate. Although the Commission found violations on specific heads (Section 4(2)(a)(i) and 4(2)(e)), it had imposed penalty on Google's total turnover. The Tribunal modified the penalty computation and substituted the Commission's global turnoverbased quantum with a penalty computed at 7% of the relevant turnover derived from the revenue components identified and submitted by Google for the three preceding financial years.Penalty is modified and substituted to 7% of the relevant turnover (as derived from the revenue tables submitted for FY 201819, 201920 and 202021); the Commission's totalturnover based penalty is set aside and replaced accordingly.Final Conclusion: The appeal is partly allowed: the Tribunal upholds the Commission's findings of abuse under Section 4(2)(a)(i) (mandatory GPBS) and Section 4(2)(e) (leveraging dominance), sets aside findings under Sections 4(2)(a)(ii), 4(2)(b)(ii) and 4(2)(c), sustains limited remedial directions (395.1, 395.2, 395.3, 395.8) and strikes down others, and modifies the penalty by directing imposition at 7% of the relevant turnover for FY 2018-19, 2019-20 and 2020-21 in place of the Commission's totalturnover based computation; parties to bear their own costs.

2025 (3) TMI 906 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHILaw of Competition

AI TextQuick Glance (AI)Headnote

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the downgrading of the Appellant's retailing tier by Respondent No. 2 constituted an abuse of dominant position under Sections 3(4) and 4 of the Competition Act, 2002.
Whether the Appellant's failure to disclose the restoration of its retailing tier status prior to filing the information constituted a lack of clean hands, impacting the validity of the appeal.
Whether the process followed by the Competition Commission of India (CCI) and the Director General (DG) in investigating the allegations was fair and provided adequate opportunity for the Appellant to present evidence.

2. ISSUE-WISE DETAILED ANALYSIS

Abuse of Dominant Position

Relevant Legal Framework and Precedents: The analysis focused on Sections 3(4) and 4 of the Competition Act, which address anti-competitive agreements and abuse of dominant position. The Tribunal examined whether the downgrading of the Appellant's retailing tier was an attempt to foreclose competition.
Court's Interpretation and Reasoning: The Tribunal agreed with the CCI's finding that the downgrade was justified based on the Appellant's reduced offtake from Respondent No. 2, rather than an anti-competitive motive related to the Appellant's dealings with a competing brand.
Key Evidence and Findings: Evidence showed the Appellant's reduced purchases from Respondent No. 2 over a 10-month period. The retailing tier was restored before the information was filed, undermining the Appellant's claim of ongoing harm.
Application of Law to Facts: The Tribunal found no contravention of Sections 3(4) or 4, as the downgrade was based on business performance criteria, not an intent to exclude competition.
Treatment of Competing Arguments: The Appellant's argument that the downgrade was retaliatory was dismissed due to lack of evidence. The Tribunal noted that other dealers dealing with the competing brand did not experience similar downgrades.
Conclusions: The Tribunal concluded that the downgrading was not an abuse of dominant position and upheld the CCI's decision to dismiss the information.

Disclosure and Clean Hands

Relevant Legal Framework and Precedents: The principle that parties must approach the court with clean hands was emphasized, referencing precedents such as S.P. Chengalvaraya Naidu v. Jagannath.
Court's Interpretation and Reasoning: The Tribunal found that the Appellant failed to disclose the restoration of its CR status before filing the information, which was a material fact affecting the case's merits.
Key Evidence and Findings: The Appellant's CR status was restored on 23.06.2021, yet this was not disclosed in the information filed on 01.07.2021.
Application of Law to Facts: The Tribunal determined that the non-disclosure of the restoration constituted a lack of clean hands, warranting dismissal of the appeal.
Treatment of Competing Arguments: The Appellant's argument that the proceedings were in rem and not affected by personal grievances was rejected as the case was based on personal injury, which had been redressed.
Conclusions: The Tribunal dismissed the appeal due to the Appellant's failure to disclose material facts, aligning with the principle that parties must come to court with clean hands.

Fairness of the Investigation Process

Relevant Legal Framework and Precedents: The Tribunal considered whether the CCI and DG provided a fair opportunity for the Appellant to present its case.
Court's Interpretation and Reasoning: The Tribunal found that the Appellant had ample opportunity to present evidence during the investigation process, which spanned several months.
Key Evidence and Findings: The DG provided opportunities for objections and oral hearings, and the Appellant failed to present additional evidence within the given timeframe.
Application of Law to Facts: The Tribunal held that the investigation process was fair and adequate, dismissing claims of procedural unfairness.
Treatment of Competing Arguments: The Appellant's claim of insufficient time was rejected, as the record showed multiple opportunities to submit evidence.
Conclusions: The Tribunal concluded that the investigation process was fair, and the Appellant's procedural complaints lacked merit.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands."
Core principles established: The necessity for parties to disclose all material facts when approaching judicial bodies; the importance of fair investigation processes; and the application of competition law principles to business practices.
Final determinations on each issue: The appeal was dismissed due to lack of merit in the abuse of dominant position claim and the Appellant's failure to disclose material facts, with the investigation process deemed fair.

NCLAT dismisses competition appeal for lack of clean hands after appellant concealed restored retailer status
The NCLAT dismissed an appeal alleging abuse of dominant position under Sections 3(4) and 4 of the Competition Act, 2002. The appellant failed to disclose that its retailer tier status had been restored on 23.06.2021 before filing the information on 01.07.2021, constituting lack of clean hands. The appellant's prayer for reinstatement was based on false information since the status was already restored. The court noted consistent reduction in appellant's offtake from October 2020 to March 2021, indicating the tier change was due to reduced performance rather than punishment for dealing with another party. The appeal was dismissed for lack of merit.

Abuse of dominant position under Sections 3(4) and 4 of the Competition Act, 2002 - Appellant's failure to disclose the restoration of its retailing tier status prior to filing the information constituted a lack of clean hands - adequate opportunity of hearing provided or not - HELD THAT:- The Information under Section 19(1)(a) was filed on 01.07.2021 but before the said date the retailer tier revoked on 20.04.2021 was restored on 23.06.2021 but this fact was not made part of the information. In the information, the Appellant mainly pray for clubbing the information filed by it with case no. 36 of 2019 and made the interim prayer to direct the R2 to immediately reinstate the CR states of the Appellant and restart the CR products. In support of the information, an affidavit has also filed by the Appellant in which it had specifically averred that “and 47 of information are based on my personal knowledge which means that the prayer made in para 47 (a) for immediately reinstatement of CR status of the Appellant was also based upon the information of the Appellant to be correct whereas the CR status of the Appellant had already been restored on 23.06.2021 much before the information was filed on 01.07.2021 and false affidavit was filed in support of it. Besides this fact that the Appellant did not disclose the fact in the information that the issue of downgrade of CR status, which is the bedrock of the information, has already been restored and as far as the Appellant is concerned, the personal injury caused to it has been redressed, it not only filed the information but also continued with it before the R1 and disclosed the same very late. The Hon’ble Supreme Court in the case of S.P. Chengalvaraya Naidu [1993 (10) TMI 315 - SUPREME COURT] has held that “the courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank-loan- dodgers and other unscrupulous persons from all walks of life find the court- process a convenient lever to retain the illegal-gains indefinitely. There are no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation.” The Commission has therefore observed that the allegation made by the Appellant that the sudden revocation of the CR status without prior intimation was to punish him for dealing with R3 is misplaced. It has also been brought on record that from Oct, 2020 to March, 2021 there has been consistent reduction in the offtake by the Appellant, in this regard a chart has been given in the earlier part of this order from which it can be assumed that change of the retailing tier of the Appellant was not because of its new dealership taken by the Appellant but because of the reducing offtake. Conclusion - The appeal was dismissed due to lack of merit in the abuse of dominant position claim and the Appellant's failure to disclose material facts, with the investigation process deemed fair. There are no merit in the present appeal for the purpose of interference and the same is hereby dismissed.

2025 (2) TMI 76 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHILaw of Competition

AI TextQuick Glance (AI)Headnote

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the Competition Commission of India (CCI) had jurisdiction to initiate suo moto proceedings against WhatsApp LLC and Meta Platforms for the 2021 update of WhatsApp's Privacy Policy under the Competition Act, 2002.
Whether the CCI's findings of a breach of Section 4 of the Competition Act, 2002, were justified, particularly concerning the anti-competitive effects of the 2021 update.
Whether the directions and penalties imposed by the CCI, including a five-year ban on sharing user data for advertising purposes and a monetary penalty, were appropriate and within the CCI's jurisdiction.
Whether the interim relief sought by WhatsApp LLC and Meta Platforms should be granted, particularly concerning the stay of the CCI's directions and penalties.
The impact of the Digital Personal Data Protection Act 2023 on the proceedings and whether it should influence the interim relief granted.

2. ISSUE-WISE DETAILED ANALYSIS

Jurisdiction of the CCI:

Relevant Legal Framework and Precedents: The CCI is empowered under the Competition Act, 2002, to investigate anti-competitive practices. The Supreme Court has affirmed the CCI's jurisdiction to proceed with investigations where there is a prima facie case of violation.
Court's Interpretation and Reasoning: The Court noted that the Supreme Court had previously upheld the CCI's jurisdiction to investigate potential violations of the Competition Act, 2002, including the suo moto proceedings against WhatsApp LLC and Meta Platforms.
Conclusions: The Tribunal concluded that the CCI had jurisdiction to initiate and proceed with the investigation against WhatsApp LLC and Meta Platforms.

Findings of Breach of Section 4 of the Competition Act, 2002:

Relevant Legal Framework and Precedents: Section 4 of the Competition Act, 2002, deals with the abuse of dominant position. The CCI found that WhatsApp's 2021 update potentially abused its dominant position by imposing unfair conditions on users.
Court's Interpretation and Reasoning: The Tribunal considered the CCI's findings that the 2021 update had potential anti-competitive effects. However, the appellants argued that the CCI failed to demonstrate actual anti-competitive effects, which is a prerequisite for a Section 4 violation.
Application of Law to Facts: The Tribunal noted that the CCI's findings were based on potential effects rather than actual anti-competitive effects, which the appellants contended was insufficient to establish a violation.
Conclusions: The Tribunal did not explicitly conclude on the merits of the CCI's findings but focused on the appropriateness of interim relief.

Appropriateness of CCI's Directions and Penalties:

Relevant Legal Framework and Precedents: The CCI has the authority under Section 27 of the Competition Act, 2002, to impose penalties and directions for violations of the Act.
Key Evidence and Findings: The CCI imposed a five-year ban on sharing user data for advertising purposes and a monetary penalty of Rs. 213.14 Crores on Meta Platforms.
Court's Interpretation and Reasoning: The Tribunal considered the potential impact of the five-year ban on WhatsApp's business model and the fact that the Supreme Court had not stayed the 2021 privacy policy.
Application of Law to Facts: The Tribunal found that the five-year ban could lead to the collapse of WhatsApp's business model and noted that WhatsApp provides free services to users.
Conclusions: The Tribunal granted interim relief by staying the five-year ban but upheld the other directions and imposed penalties, subject to certain conditions.

Interim Relief and Impact of Digital Personal Data Protection Act 2023:

Relevant Legal Framework and Precedents: The Digital Personal Data Protection Act 2023, although not yet enforced, could potentially impact the proceedings and the CCI's jurisdiction over data protection issues.
Court's Interpretation and Reasoning: The Tribunal considered the potential impact of the upcoming data protection legislation and the fact that the Supreme Court had not granted interim relief against the 2021 privacy policy.
Conclusions: The Tribunal granted interim relief by staying the five-year ban but required compliance with other directions. The Tribunal also allowed for modification of the order if the Digital Personal Data Protection Act 2023 is enforced.

3. SIGNIFICANT HOLDINGS

Core Principles Established: The Tribunal affirmed the CCI's jurisdiction to investigate potential anti-competitive practices, even in the context of data protection issues, pending the enforcement of specific data protection legislation.
Final Determinations on Each Issue: The Tribunal stayed the five-year ban on sharing user data for advertising purposes, subject to conditions, but upheld other directions and penalties imposed by the CCI, with the possibility of modification upon enforcement of the Digital Personal Data Protection Act 2023.

NCLAT stays CCI's five-year ban on WhatsApp Meta data sharing for advertising, upholds other directions
The NCLAT stayed the CCI's five-year ban on WhatsApp and Meta from sharing user data for advertising purposes, finding it could collapse their business model. The tribunal noted WhatsApp provides free services and has shared data for advertising since 2016. However, other CCI directions regarding data sharing for non-advertising purposes were upheld and must be complied with. The penalty was stayed subject to depositing 50% of the amount (considering 25% already deposited) within two weeks. The NCLAT emphasized that while the SC supported CCI's suo moto jurisdiction, the final order must be tested on its merits.

Prayer for stay of effect and operation of the impugned order - jurisdiction of Competition Commission of India (CCI) to initiate suo moto proceedings against WhatsApp LLC and Meta Platforms for the 2021 update of WhatsApp's Privacy Policy under the Competition Act, 2002 - breach of Section 4 of the Competition Act, 2002 - HELD THAT:- The decision of Supreme Court [2022 (10) TMI 1269 - SUPREME COURT] clearly supports the submissions of the CCI that suo moto proceeding initiated by the CCI was not to be interfered with. However, the Hon’ble Supreme Court has observed that the proceedings shall be decided and disposed of in accordance with law and on its own merits. The initiation of proceeding was thus, not interfered but the ultimate order passed by the Commission has to be tested on its own merits. The directions which have been issued in paragraph 247.1 and 247.2 are with respect to “for advertising purposes” and “for purpose other than advertising”. Insofar as sharing of user data for advertising purposes, the said is going on from 2016 when 2016 privacy policy was enforced. The ban of five years which was imposed in paragraph 247.1 may lead to the collapse of business model which has been followed by WhatsApp LLC. It is also relevant to notice that WhatsApp is providing WhatsApp services to its user free of cost - the ban of five years imposed in paragraph 247.1 need to be stayed. We, however, are of the view that the directions issued by the CCI under paragraph 247.2 and 247.3 need not be stayed and they need to be complied with. The only limited interim order which we are inclined to grant is to stay the direction in paragraph 247.1 by which five years’ ban has been imposed. The direction in paragraph 247.1 are stayed. Penalty - It is submitted by Appellant that 25% penalty has already been deposited - HELD THAT:- Subject to deposit of 50% of penalty (after taking into consideration 25% already deposited), the direction in paragraph 263 need to be stayed. The Appellant is directed to deposit 50% of penalty as indicated above within two weeks from today. Conclusion - The five-year ban on sharing user data for advertising purposes stayed, subject to conditions imposed. The other directions and penalties imposed by the CCI upheld. Application disposed off.

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