TaxTMI 
TaxTMI 
2015 (3) TMI 1149
X X X X Extracts X X X X
X X X X Extracts X X X X
....ring for the State. 3. The appellant herein is the Tamil Nadu Film Exhibitors Association. It is registered as a society under the Tamil Nadu Societies Registration Act. The second respondent herein is a producer of feature films. On 8.1.2013, the second respondent filed a complaint before the Competition Commission of India (which is the first respondent herein), alleging that by a resolution dated 20.12.2012, the Tamil Nadu Theatre Owners Association decided to ban the screening of films which are released via DTH. It was claimed by the second respondent herein that the resolution would tantamount to an anti-competitive practice, violating Section 3(3)(b) of the Competition Act, 2002. 4. After examining the said complaint, the Competition Commission of India, passed an order on 16.01.2013 in terms of Section 26(1) of the Competition Act, 2002, holding that there existed a prima facie case requiring an investigation by the Director General of the Competition Commission. 5. In the meantime, the second respondent also faced opposition from a small group of intolerant people, who managed to force the Commissioner of Police, Chennai to issue an order on 23.1.2013 under Sectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hereafter, the parties filed a memo praying for the recording of the compromise memo and the disposal of the writ appeals in accordance with the memo. 11. However, the same is being opposed by the learned Senior Counsel appearing for the Competition Commission on the ground that the Director General of Investigation had already filed a report before the Competition Commission, holding that the allegations relating to infringement of the provisions of the Act are found to be true and that therefore, a settlement inter parties cannot be accepted in matters of this nature. 12. In other words, the disputes as between the appellant and the second respondent have culminated in a settlement. But, that settlement has triggered a fresh dispute between the appellant and the Competition Commission. Therefore, it has become necessary to deal with a different set of questions in these appeals than those that were dealt with by the learned single Judge. 13. Before the learned single Judge, the appellant raised several issues including the issue of jurisdiction. But, today, those issues have paled into insignificance, in view of the settlement reached between the appellants and the secon....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in Business Electronics Corp. vs. Sharp Electronics Corp. [485 US 717 (1988)], to mean not merely a particular list of agreements, but also a particular economic consequence that may be produced by different sorts of agreements in varying time and circumstances. 17. Even before the advent of Glasnost and globalisation that started in the early 1990s, India had an Anti-Trust Act that was known as the Monopolies and Restrictive Trade Practices Act, 1969. Interestingly, the preamble to the MRTP Act, 1969 advocated a socialistic philosophy by declaring that the Act was intended to ensure that the operation of the economic system did not result in the concentration of economic power to the common detriment. The Act was intended to control Monopolies and to provide for the prohibition of Monopolistic and Restrictive Trade Practices. 18. But MRTP Act, 1969 was found to be very ineffective due to a variety of reasons, one of which was the frequent shift in the industrial policy of the Government. Chapter-III of the MRTP Act, 1969 conferred power upon the Central Government to regulate the expansion of and the establishment of a new undertaking by any undertaking falling under Chapte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ody performing Adversary and Regulatory functions. In the year 2009, there was yet another amendment. 22. The Act, as it stands today, seeks to cover three Anti-Trust issues namely: (a) Anti-Competitive Agreements by an Enterprise or association of Enterprises or person or association of persons; (2) Abuse of Dominant Position; and (3) Combinations. While Anti-Competitive Agreements are dealt with by Section 3, Abuse of Dominant Position is dealt with by Section 4 and Combination by way of acquisition or merger or amalgamation is dealt with by Sections 5 and 6. Scheme of the Act:- 23. Having seen the historical background that lead to the enactment of the Competition Act, 2002, let us now have a look at the Scheme of the Act. The Act is divided into 9 Chapters, Chapter-I dealing with preliminaries, Chapter-II dealing with Anti-Competitive Agreements, abuse of dominant position and regulation of combinations, Chapter-III dealing with the establishment of the Competition Commission, Chapter-IV dealing with the duties, powers and functions of the Commission, Chapter-V dealing with the duties of Director General, Chapter-VI dealing with penalties, Chapter-VII dealing with Comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... sale or service network of such enterprises; (f) dependence of consumers on the enterprise; (g) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise; (h) entry barriers, including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers; (i) countervailing buying power; (j) market structure and size of market; (k) social obligations and social costs; (l) relative advantage, by way of the contribution to the economic development, by the enterprise enjoying a dominant position having or likely to have appreciable adverse effect on competition; (m) any other factor which the Commission may consider relevant for the inquiry. Similarly, there are certain factors enlisted under Section 20(4) of the Act, in the context of which the Competition Commission may hold an inquiry into combinations. We are not concerned in this case, with combinations and hence, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....procedure. The Commission is not bound to follow the procedure prescribed by the Code of Civil Procedure. But, it should be guided by the principles of natural justice. 32. Therefore, it is clear (1) that the Commission is not really concerned about a private dispute between two individuals, but is concerned about the existence of Anti-Competitive Agreements or abuse of dominant position that has adverse effect on Competition and oppress freedom of trade; and (2) that the Commission has residuary powers under Section 27 to pass such other orders and issue such directions as it may deem fit. 33. Once it is conceded that the Competition Commission has residuary powers and its powers to pass such orders are wide in amplitude, it cannot be contended that the Commission would not have the power to accept a settlement or compromise between parties. Take for instance a case where an enterprise is found guilty of entering into Anti-Competitive Agreements in violation of Section 3(1). Such an agreement, to begin with, may only be between two or three parties. But, by the very nature of its composition, duties, powers and functions, the Competition Commission is not an adjudicatory bod....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6. As we have pointed out earlier, the Competition Act, 2002 was the product of the agreements of the World Trade Organisations to which India became a party. Therefore, the Committee drew inspiration from the parallel legislations in other jurisdictions that related to Anti-Trust issues. Hence, it may be useful to have a look at the position prevailing in the European Union and the United States. (i) Both in the European Union as well as the United States, settlement is permitted in the case of cartels. The cartel settlement procedure under EU rules allows the Commission to settle a cartel case with the companies involved under a streamlined procedure if the parties agree with the Commissions findings on the infringement. This procedure was created in 2008 through an amendment of Commission Regulation 773/2004. Cartel settlement decisions are prohibition decisions based on Articles 7 and 23 of Regulation 1/2003. [COMMISSION REGULATION (EC) No 622/2008 of 30 June 2008 amending Regulation (EC) No 773/2004, as regards the conduct of settlement procedures in cartel cases] (ii) In the United States, plea bargain process can be initiated at any time. The settlement pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er to the first question is that it is possible within the framework and scheme of the Competition Act, 2002, to allow settlements and compromises to be reached between parties, provided the Commission is of the considered view that such settlements and compromises (1) would not lead to the continuance of Anti-Competitive Practices (2) would not allow the abuse of dominant position to continue and (3) would not be prejudicial to the interest of consumers or to the freedom of trade. Question:B:- 38. The second question that arises for consideration is as to whether this court can record a memorandum of settlement just as the one that the parties have reached in this case. 39. Section 62 of the Act declares that the provisions of the Competition Act, 2002 shall be in addition to and not in derogation of the provisions of any other law for the time being in force. Section 61 of the Act excludes the jurisdiction of Civil Courts, in respect of any matter which the Commission or the Appellate Tribunal is empowered by the Act to determine. But, the said bar of jurisdiction, may not apply to the jurisdiction of this Court under Article 226 of the Constitution, as it has been held ....