The Competition Commission of India(CCI)has imposed a penalty of ₹ 7.68 Lakhs and ₹ 35.16 Thousands(@5% of the average of the turnover for the last 3 financial years)on Indian Jute Mills Association (IJMA) and Gunny Trade Association (GTA) respectively for contravening the provisions of section 3 of the Competition Act, 2002 (‘the Act’).

The final order was passed by CCI on 31.10.2014 on an information jointly filed by Indian Sugar Mills Association, National Federation of Co-operative Sugar Factories Ltd. and All India Flat Tape Manufacturers Association alleging anti-competitive agreement by the members of IJMA and GTA in fixation of sale price of jute packaging material by issuing of Daily Price Bulletin (DPB) by GTA for jute bags for the members of IJMA and the GTA to follow.

The Commission found the impugned acts/conduct of IJMA and GTA to be in contravention of the provisions of section 3(3)(a)/ 3(3)(b) read with section 3(1) of the Act.

Apart from issuing a cease and desist order against the associations and imposing penalties upon them, the Commission also imposed penalties on the persons who were members of the Executive Committee of IJMA and the Executive Committee and the DPB Sub-Committee of GTA @ 5% of the average income of the last three financial years.

The Commission also noted in the order the provisions of the Jute Packaging Materials (Compulsory Use in Packaging Commodities) Act, 1987 placing statutory requirement on the sugar mills to undertake sugar packaging using jute bags only, against the principle of competitive neutrality as the entities manufacturing matching products were denied market access. Such a policy was further noted as not only restricting the choice of customers like sugar mills but was also potentially found to be escalating the cost ultimately borne by the end-consumers. Accordingly, the Commission desired the Government of India to re-assess the current market situation for removing the market distortions arising out of such policy.

The order of the Commission was passed in Case No. 38 of 2011 and a copy thereof has been uploaded on the website of CCI at www.cci.gov.in.

Anti competitive agreement: coordinated price bulletin by trade associations found to restrict competition and prompt sanctions. Coordinated pricing communications via a Daily Price Bulletin by the Gunny Trade Association, followed by members of the Indian Jute Mills Association, were held to constitute a horizontal anti competitive agreement breaching the Act; the Commission directed cease and desist relief and imposed monetary penalties on the associations and responsible executive committee members, and recommended government reassessment of a statutory compulsory jute packaging requirement that distorts market access and raises consumer costs.