2022 (9) TMI 1613 - HC - Law of Competition

Bombay HC dismisses petition challenging CCI investigation into alleged abuse of dominant position under Section 19(1)(a)

The Bombay HC dismissed a petition challenging CCI's investigation into alleged abuse of dominant position under Section 19(1)(a) of Competition Act 2002. ... Territorial Jurisdiction - Abuse of dominant position - Contravention of the provisions of Section 19(1)(a) of the Competition Act 2002 - alleged discriminatory treatment of MSOs in the State of Kerala - HELD THAT:- The power conferred upon the High Court to issue directions, orders or writs can be exercised by the High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power. The Court exercising power under Article 226 of the Constitution can issue writs detailed under clause 1 to the person or authority situated beyond its territorial jurisdiction provided cause of action wholly or partly arises within the territorial jurisdiction of the court entertaining the Writ Petition. The identification of the relevant geographical market or territoriality is the statutory embodied feature in the Competition Act and is a foundational to any inquiry by the CCI. The relevant geographical market in the present case is within the State of Kerala and not beyond the State of Kerala. In the present case, the impugned investigation has been ordered in respect of the agreements entered into by the present Petitioner with others having its area of operation in the State of Kerala. Hence, if at all, the further orders would have effect, it would be for the area of operation in the State of Kerala. The entire investigation to be conducted is with regard to the agreements entered into by the parties for its operation in the geographical area of Kerala. The complainant in its complaint before the CCI has never alleged that the Petitioners herein have committed anti competitive act with the parties in the State of Maharashtra. The allegations are restricted to the State of Kerala. The scope of complaint of the Respondent / Complainant before the CCI does not include the contracts or the anti competitive acts with any party within the State of Maharashtra. In view of that it cannot be said that the effect and consequences of the impugned order would be felt in the State of Maharashtra. Petition disposed off. Issues Involved:1. Territorial Jurisdiction2. Cause of Action3. Relevant Geographical Market4. Anti-Competitive Conduct5. Discriminatory Pricing6. Denial of Market AccessIssue-wise Detailed Analysis:1. Territorial Jurisdiction:The Respondents raised a preliminary objection regarding the territorial jurisdiction of the Bombay High Court to entertain the Writ Petitions. The abusive conduct pertains to the entire State of Kerala, and no part of the cause of action arises in the State of Maharashtra. The Petitioners argued that part of the cause of action has arisen in Maharashtra, citing that the agreements were negotiated and sanctioned in Maharashtra, and payments were received in bank accounts located in Maharashtra. However, the Court concluded that the geographical market, as defined under the Competition Act, is limited to Kerala, and the cause of action did not arise within the territorial jurisdiction of Maharashtra.2. Cause of Action:The Court examined whether any part of the cause of action arose within the territorial jurisdiction of Maharashtra. The Court noted that the alleged anti-competitive acts pertain to the State of Kerala, and the agreements between the Petitioners and the Respondent complainant were for marketing and advertisement services provided in Kerala. The Court emphasized that the place of residence or business of the Petitioners does not confer jurisdiction unless part of the cause of action arises within the territorial jurisdiction of the Court.3. Relevant Geographical Market:The Court discussed the importance of identifying the relevant geographical market in competition law inquiries. In this case, the relevant geographical market was confined to the State of Kerala. The Court noted that the identification of the relevant geographical market is foundational to any inquiry by the Competition Commission of India (CCI) under Section 4 of the Competition Act, 2002. The Court held that the geographical market in this case is within Kerala and not beyond it.4. Anti-Competitive Conduct:The case involved allegations of anti-competitive conduct by Star India Pvt. Ltd. (SIPL) and others. The informant, Asianet Digital Network Pvt. Ltd. (ADNPL), claimed that SIPL provided broadcasting signals to its competitors at lower prices, resulting in denial of market access and unfair/discriminatory pricing. The CCI directed an investigation into these allegations under Section 26(1) of the Competition Act, 2002.5. Discriminatory Pricing:The Court examined the allegations of discriminatory pricing by SIPL. ADNPL alleged that SIPL provided channels to its competitors at about 30% of the MRP, resulting in a significant discount that circumvented the New Regulatory Framework. This pricing strategy allegedly led to a loss of consumers for ADNPL and an increase in the subscriber base for its competitor, KCCL. The Court noted that the alleged discriminatory conduct resulted in a significant loss in the consumer base of ADNPL, violating Section 4(2)(a)(ii) and Section 4(2)(c) of the Competition Act, 2002.6. Denial of Market Access:ADNPL alleged that SIPL's pricing strategy amounted to a denial of market access, violating Section 4(2)(c) of the Competition Act, 2002. The Court examined the impact of SIPL's conduct on ADNPL's business, noting that ADNPL's subscriber base fell significantly while KCCL's subscriber base increased. The Court concluded that the alleged denial of market access was central to the complaint and the investigation ordered by the CCI.Conclusion:The Bombay High Court dismissed the Writ Petitions on the ground of territorial jurisdiction, concluding that no part of the cause of action arose within the territorial jurisdiction of Maharashtra. The Court emphasized that the relevant geographical market was confined to Kerala, and the alleged anti-competitive conduct pertained to that state. The Petitioners were granted liberty to file appropriate proceedings before the appropriate forum possessing territorial jurisdiction. The interim order was continued for a period of 10 days from the date of the judgment.