Penalty Overturned: Transactions Exempt from Notification under De Minimis Rule, Tribunal Rules.

The Tribunal set aside the penalty imposed by the Competition Commission of India (CCI) on the Appellant for failing to notify the transactions under Section 6(2) of the Competition Act, 2002. It concluded that the transactions were exempt under the De Minimis Notification, as the total turnover of the acquired trademarks was below the threshold limit. The Tribunal also held that the clarificatory notification applied retrospectively, thereby exempting the transactions from the notification requirement. The appeal was allowed concerning the penalty issue, with no order as to costs, while other issues related to the combination were left undecided.

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Issues Involved:
1. Violation of Section 6(2) of the Competition Act, 2002
2. Applicability of De Minimis Exemption Notification
3. Retrospective Application of Clarificatory Notification
4. Imposition of Penalty under Section 43A of the Act

Summary:

1. Violation of Section 6(2) of the Competition Act, 2002:
The Appellant, a public limited company, entered into two brand purchase agreements on 12.2.2015 for the trademarks "Savlon" and "Shower to Shower." The Competition Commission of India (CCI) imposed a penalty of Rs. Five Lakhs on the Appellant for failing to notify these transactions under Section 6(2) of the Competition Act, 2002, as they were considered combinations under Section 5 of the Act.

2. Applicability of De Minimis Exemption Notification:
The Appellant argued that the transactions were exempt under the De Minimis Notification dated 4.3.2016, which exempted transactions below certain asset and turnover thresholds. The Appellant claimed that the acquired trademarks did not constitute an enterprise, and thus, did not meet the threshold for notification.

3. Retrospective Application of Clarificatory Notification:
The Appellant contended that the clarificatory notification dated 27.3.2017, which specified that only the assets and turnover of the acquired portion should be considered, applied retrospectively. This was supported by judgments indicating that clarificatory notifications have retrospective effect.

4. Imposition of Penalty under Section 43A of the Act:
The Tribunal focused on whether the penalty under Section 43A was justified. It noted that the CCI had unconditionally approved the transactions, finding no "appreciable adverse effect on competition." The Tribunal referred to the judgment in Eli Lilly and Company vs. CCI, which emphasized that only the relevant assets and turnover of the acquired portion should be considered for the threshold calculation.

Judgment:
The Tribunal concluded that the total turnover of the acquired trademarks was Rs.68.37 crores, below the threshold limit of Rs.750 crores for exemption under the De Minimis Notification. It held that the clarificatory notification dated 27.3.2017 applied retrospectively, exempting the transactions from the notification requirement. Consequently, the penalty imposed by the CCI was set aside, and the appeal was allowed to the extent of the penalty issue. Other issues related to the combination were left open and not decided in this judgment.

Conclusion:
The Tribunal set aside the penalty imposed by the CCI, holding that the transactions were exempt under the De Minimis Notification and that the clarificatory notification applied retrospectively. The appeal was allowed concerning the penalty issue, with no order as to costs.

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