2019 (7) TMI 2006 - AT - Law of Competition

NCLAT dismisses appeal challenging merger approval citing lack of standing under Section 53B Competition Act

The NCLAT dismissed an appeal challenging a combination approval, holding the appellant lacked locus standi as a person aggrieved under Section 53B of the ... Maintainability of appeal under Section 53B of the Competition Act, 2002 - Anti-Competition - abuse of dominant position - Proposal for combination - Jurisdiction to order such proposal - Appellant failed to establish locus standi as a person aggrieved by the 'Commission' to prefer the appeal under Section 53B - HELD THAT:- For forming prima facie opinion as to whether the combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India, the Commission is required only to go through the information given under sub-section (2) of Section 6 therein including the details of combination. For forming such opinion, the Commission is not required to follow the procedure as laid down under Section 29 or Section 30 of the Act. The violation of Section 4 (i.e. Abuse of dominant position) is completely different than the violation of Section 6(1) (i.e. combination is likely to cause or has caused an appreciable adverse effect on competition), therefore, while passing order under sub-section (2) of Section 6, the Commission cannot hold abuse of dominant position, though it may hold that the combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India and thereby void in terms of Section 6(1) - In the present case, the Appellant alleges violation of Section 4 and not challenged the order dated 17th September, 2015 passed by the Commission under Section 31 of the Act. Further, as the question of abuse of dominant position will arise only after combination comes into effect in terms of sub-section (2) of Section 6 read with Section 31, the allegation of abuse of dominant position cannot be looked at the stage of approval of combination under Section 31. The intimation given by the 'Commission' by letter dated 3rd November, 2015 to the Appellant is also not under challenge. The Appellant has also suppressed the aforesaid fact. It is the second time when such intimation given by letter dated 16th June, 2016, the present appeal has been preferred - The intimation given to the Appellant do not fall under any provisions as stipulated under clause (a) of Section 53A, therefore, the appeal under Section 53B preferred by the Appellant is not maintainable. This Appellate Tribunal can hear and dispose of appeals against any direction issued or decision made or order passed by the 'Commission' under sub-sections (2) and (6) of Section 26, Sections 27, 28, 31, 32, 33, 38, 39, 43, 43A, 44, 45 or Section 46 of the Act - thus, no case has been made out by the Appellant to hold that the combination has appreciable adverse effect on competition in relevant market. In absence of any merit, the appeal is dismissed. Issues Involved:1. Locus standi of the Appellant.2. Maintainability of the appeal under Section 53B of the Competition Act, 2002.3. Assessment of appreciable adverse effect on competition.4. Alleged failure to disclose relevant markets.5. Procedure for investigation of combinations.6. Approval of the combination under Section 31 of the Act.7. Allegations of abuse of dominant position under Section 4 of the Act.Issue-wise Detailed Analysis:1. Locus Standi of the Appellant:The learned counsel for the Respondents questioned the locus standi of the Appellant, asserting that the Appellant failed to establish himself as a 'person aggrieved' by the Commission's decision, thus challenging his right to prefer the appeal under Section 53B of the Act.2. Maintainability of the Appeal under Section 53B of the Act:The appeal's maintainability was contested on the grounds that the Appellant's information submissions were not considered relevant by the Commission, and the approval had already been granted. The Appellant argued that the appeal is maintainable as per Section 53A(1)(a) and Section 53B(1) of the Act, claiming to be a 'person aggrieved' under the Act.3. Assessment of Appreciable Adverse Effect on Competition:The Commission had previously determined that the combination of 'BG Group Plc' by 'Royal Dutch Shell Plc' did not have an appreciable adverse effect on competition within the relevant market in India. This decision was conveyed to the Appellant on 3rd November 2015 and reiterated on 16th June 2016.4. Alleged Failure to Disclose Relevant Markets:The Appellant contended that the Shell-BG combination failed to identify and disclose relevant markets, specifically LNG supply into India, LNG regasification capacity, and the marketing of 'Regasified LNG' within India. The Appellant emphasized the critical nature of these markets due to India's increasing reliance on LNG.5. Procedure for Investigation of Combinations:The Commission is required to follow a specific procedure under Section 29 if a prima facie case of appreciable adverse effect on competition is established. This includes issuing a show-cause notice, calling for a report from the Director General, and inviting public objections. However, if no prima facie case is found, the Commission can directly approve the combination under Section 31.6. Approval of the Combination under Section 31 of the Act:The Commission approved the combination on 17th September 2015 under Section 31 of the Act, determining that it did not have an appreciable adverse effect on competition. The Appellant's subsequent information submissions did not alter this decision, and the Commission's approval remained valid.7. Allegations of Abuse of Dominant Position under Section 4 of the Act:The Appellant's allegations of abuse of dominant position were deemed irrelevant at the stage of combination approval. The Commission's mandate under Section 31 is to assess the combination's impact on competition, not to address potential abuse of dominance, which is governed by Section 4 of the Act and requires a different procedure.Conclusion:The Tribunal concluded that the appeal was not maintainable under Section 53B, as the intimation given to the Appellant did not fall under any provisions stipulated under clause (a) of Section 53A. Additionally, no case was made out to show that the combination had an appreciable adverse effect on competition. Consequently, the appeal was dismissed with no costs.