2013 (10) TMI 48 - AT - Indian Laws

Government's Right to Choose Service Providers Upheld

Travel Agents Association of India Versus Balmer Lawrie & Co.

The Tribunal upheld the CCI's order, dismissing the appeal. It confirmed that the Government of India, as a consumer, has the right to choose its service ... Doctrine of legitimate expectation - direction of purchase the air tickets from specified airlines only - Abuse of dominant position - it was averred that the Government had position of dominance and the same was being used only in favour of Balmer Lawrie & Co. and M/s. Ashok Travels & Tours Ltd. thereby depriving the other travel agents who were members of the informant/appellant's business. It was pointed out that because of the aforementioned office memorandum the Government officials would be compelled to purchase the tickets only through the aforementioned agencies and thereby there would be creation of monopoly in favour of these two agencies and thus the competition in that behalf would be adversely affected. Held that:- Insofar as the contention that the Government Memorandum was in the nature of anti-competitive agreement, the finding of the CCI is correct that the said Government Memorandum does not amount to an agreement. It is an internal administrative decision to deal with a particular agency in the matter of securing air tickets. In our opinion, it cannot come within the mischief of any of the sub-section of Section 3 of the Act. In fact no particular ticketing agency could claim any right in the matter of dealing with the Government. The Government like any other consumer has a right to deal with the agency that it likes. An administrative decision to avail of the services of Respondent Nos. 1 and 2 in the first place is not an agreement with Respondent Nos. 1 and 2 and secondly it is not a trading activity. It is also not distributing state largesse. At any rate, our task in this Tribunal would only be limited to decide as to whether the action on the part of the Government in passing the Government Memorandum is in contravention of any of the provisions of the Act. - decided against the appellants. Issues Involved:1. Whether the Government of India can be considered a 'consumer' under the Competition Act, 2002.2. Whether the Government's Office Memorandum dated 24.3.2006 constitutes an abuse of dominant position under Section 4 of the Act.3. Whether the Office Memorandum amounts to an anti-competitive agreement under Section 3 of the Act.4. Whether the Government's action contravenes Article 14 of the Constitution of India.5. Applicability of the doctrine of legitimate expectation.Issue-wise Detailed Analysis:1. Government as a Consumer:The appellant argued that the Government of India could not be considered a 'consumer' under Section 2(f) of the Competition Act, 2002, asserting that the Government is not a 'person' who can buy goods or services for consideration. The CCI and the Tribunal, however, held that the Government could indeed be a consumer. The definition of 'person' in Section 2(l) is inclusive and broad, encompassing entities like local authorities and artificial juridical persons, thus including the Government. The Tribunal affirmed that the Government, in seeking air ticketing services, acts as a consumer and has the right to choose service providers.2. Abuse of Dominant Position:The appellant claimed that the Government's directive to purchase tickets exclusively from M/s. Balmer Lawrie & Co. Ltd. and M/s. Ashok Travels & Tours Ltd. constituted an abuse of its dominant position, thereby violating Section 4 of the Act. The Tribunal, however, concluded that the Government, as a consumer, cannot be considered a dominant enterprise in the relevant market. The Office Memorandum aimed to ensure economy in air travel expenses and did not restrict competition unfairly. The Tribunal found no evidence of dominance or abuse thereof, as the Government was simply exercising its consumer choice.3. Anti-competitive Agreement:The appellant alleged that the Office Memorandum amounted to an anti-competitive agreement under Section 3 of the Act. The Tribunal disagreed, stating that the Memorandum was an internal administrative decision and not a formal agreement. It did not fall within the scope of Section 3, which addresses agreements that appreciably affect competition. The Tribunal held that the Memorandum did not constitute a horizontal or vertical restraint on trade, as it was not an agreement but a choice exercised by the Government as a consumer.4. Contravention of Article 14:The appellant argued that the Government's action was arbitrary and violated Article 14 of the Constitution, which guarantees equality before the law. The Tribunal found no merit in this argument, noting that the Government's decision to deal with specific travel agencies was an administrative choice aimed at cost efficiency and convenience. The Tribunal emphasized that the Government, like any other consumer, has the right to select its service providers, and this choice does not contravene Article 14.5. Doctrine of Legitimate Expectation:The appellant invoked the doctrine of legitimate expectation, arguing that the Government's action denied fair opportunities to all travel agents. The Tribunal rejected this claim, stating that no specific travel agency could claim a legitimate expectation to deal with the Government. The doctrine requires a factual foundation, which was not established in this case. The Tribunal referenced the ruling in Union of India v. International Trading Co. [2003] 5 SCC 437, which emphasized that legitimate expectation must be based on established practice or an express promise, neither of which was present here.Conclusion:The Tribunal upheld the CCI's order, dismissing the appeal. It confirmed that the Government of India, as a consumer, has the right to choose its service providers and that the Office Memorandum did not violate Sections 3 or 4 of the Competition Act, 2002. The Tribunal also found no contravention of Article 14 of the Constitution and no basis for invoking the doctrine of legitimate expectation. The appeal was dismissed without any order as to costs.