The Competition Commission of India(‘Commission’) has found Container Trailer Owners Coordination Committee (CTOCC) and its four participating associations, namely Cochin Container Carrier Owners Welfare Association (CCCOWA), Vallarpadam Trailer Owners Association (VTOA), Kerala Container Carrier Owners Association (KCCOA) and Island Container Carrier Owners Association (ICCOA), to be in contravention of the provisions of the Competition Act, 2002 (‘the Act’). In a reference filed by the Cochin Port Trust, it was brought to the notice of the Commission that these associations, under the garb of ‘Turn System’, have indulged in unilateral fixation of prices. It was alleged that, during the Turn System, the users and container trailers were obliged to book services only through this centrally controlled system and that CTOCC was restraining outside transporters from lifting the containers which was impeding the ability of the users to hire trailers of their choice.

Following a detailed investigation by the Director General (‘DG’), the Commission has found that CTOCC, along with the participating associations (namely, CCCOWA, KCCOWA, ICCOA and VTOA), has resorted to price fixing under the garb of the Turn System. In terms of Section 3(3)(a) read with Section 3(1) of the Act, the presumption arose against the said arrangement leading to AAEC, which was not satisfactorily rebutted by these associations, despite being given ample opportunity. Thus, the Commission held them to be in contravention of the provisions of Section 3(3)(a) read with Section 3(1) of the Act. However, on the allegation pertaining to limiting and restricting the provision of services under Section 3(3)(b) read with Section 3(1) of the Act, the Commission found the evidence to be insufficient to hold CTOCC or any of its participating association responsible.

Through this Order, the Commission has unequivocally clarified that though forming an association for furthering the legitimate trade activities does not fall foul of the Act, transgressing the legitimate boundaries and indulging in anti-competitive activities does. When the trade associations are used as a platform to promote anti-competitive ends, it becomes necessary for the Commission to intervene, for penalising the anti-competitive conduct. Further, the Commission also mentioned in its order that though ‘Turn System’ may have efficiency justification in a particular trade, no such efficiency or redeeming virtue were shown by CTOCC or any of its sub-association in the present case.

The Commission has thus held CTOCC, CCCOWA, KCCOWA, ICCOA and VTOAto be in contravention of the provisions of Section 3(3)(a) read with 3(1) of the Act. Further, the Commission has also found 10 of office bearers of CTOCC, CCCOWA, KCCOWA, ICCOA and VTOA, responsible under Section 48 of the Act, on account of the positions of responsibility held by them in these associations during the period of contravention.

Accordingly, CTOCC, CCCOWA, KCCOWA, ICCOA and VTOA and their office bearers have been directed to desist from indulging in the anti-competitive conduct found to be in contravention of the provisions of the Act. But considering certain mitigating factors, the Commission decided not to impose any monetary penalty on any of the parties.

Detailed order can be seen at the Commission’s website www.cci.gov.in

Price fixing via a centrally controlled booking system deemed an anti competitive horizontal agreement, sanctioning cessation of the conduct. The Commission found that CTOCC and four participating trailer associations used a centrally controlled 'Turn System' to effect unilateral price fixation, creating a presumption of appreciable adverse effect on competition under the horizontal agreement provisions, which was not satisfactorily rebutted, resulting in a contravention of Section 3(3)(a) read with Section 3(1); ten office bearers were held individually responsible under the liability provisions and the associations were directed to cease the anti-competitive conduct, though no monetary penalties were imposed given mitigating factors.