TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 1818
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....he Government of India. They sell petrol, diesel and allied petroleum products through the retail outlets (petrol pumps), which are run by the dealers after entering into dealership agreement. 3. The appellant filed an information dated 22.11.2013 under Section 19(1)(a) of the Act alleging that they are forced to enter into one-sided agreements by the oil companies and that the latter have issued Marketing Discipline Guidelines, which are amended from time to time without any consultation with the dealers and without giving them an opportunity to question the arbitrary clauses contained therein. Paragraph 10 of the information, which contains various clauses of the agreement indicating the abuse of dominant position by Respondents Nos. 3 to 7 is extracted below: 10. That to elucidate the abuse of the dominant position by the Oil Companies, the following clauses of the said Agreement are extracted hereunder : (i) Clause 3: The Dealer shall, during the continuance of this Agreement confine himself to selling only corporations products at the premises and shall not carry on from the said premises any business other than that of the sale of the products save and except and only to....
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.... Clause 29 : The dealer shall not during the currency of this Agreement sell or be in any way be concerned in selling or distributing the products of any other oil company or producer without the previous consent in writing of the Corporation which consent the Corporation may refuse, vary and withdraw in its absolute discretion at any time or from time to time. (ix) Clause 35 : The Dealer shall not sell, assign, sublet, mortgage, charge or part with or otherwise transfer the premises or any part thereof or his interest in the dealership or any right or interest or benefit conferred by this Agreement or grant any license in connection with the said premises and/or outfit or any part thereof to any person, firm or Company to use the premises under the terms of this Agreement and/or specifically permitted in writing by the Corporation. (x) Clause 41(a) : The Dealer shall, whenever called upon by the Corporation to do so, lodge with the Corporation deposits or such sums of money as may be stipulated by the Corporation from time to time as security for the due fulfilment of his obligations and undertaking hereunder and for securing security payments of all sums due from him to the C....
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....xed assets thereon and thereupon the Dealer shall sell or assign the premises to the corporation or its nominee within three months next after the receipt of such notice at or for the price which shall be computed as follows, that is to say which shall comprise FIRST a sum equivalent to such capital money as the dealer may have paid by way of premium or price as consideration for the acquisition of the site and SECOND, a sum equivalent to such sum as the dealer may himself have expanded in the erection and installation of the site of the said buildings, structures and fixed assets. The aforesaid element of the price shall be reduced by depreciation as such rates as may have been applicable under the taxing statutes in force on the date on which such notice as aforesaid shall have been given by the Corporation. The costs of the sale or assignment excluding only professional legal costs incurred by the dealer shall be borne by the corporation. In the event of the dealer title to the immovable assets being in any way defective in the opinion of the corporation or its lawyers require him to take (but at the corporations expenses) to cure such defects. If such defects cannot, however, b....
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....laid down in the Relevant Market European Commission Notice, is to identify in a systematic way the competitive constraints that the undertakings involved face. The objective of defining a market in both its product and geographic dimension is to identify the actual competitors of the undertakings involved that are capable of constraining their behaviour and preventing them from behaving independently of an effective competitive pressure. It is from this perspective, that the market definition makes it possible, inter alia, to calculate market shares that would convey meaningful information regarding market power for the purpose of assessing dominance or for the purpose of applying Article 102. (Paragraph 2). (ii) The Relevant Market Notice states that the definition of the relevant market in both its product and geographic dimensions often has a decisive influence on the assessment of a competition case (Paragraph 4), and defines the relevant product market as one which comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products; characteristics, their prices and their intended use (Paragraph 7). ....
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....icile, availability of land and finance. A sample of interview call letter by IOCL is as Annexure A-7 to the appeal. (ix) On issuance of the letter of intent the applicant is required to procure the land if not already available and seek approval of the Oil Company. A sample of the letter of intent of IOCL is annexed as Annexure A-8 to the appeal. (x) The conditions that restrict the market to the geographical boundaries of Assam are domicile for the applicant for dealership to be within state of Assam, requirement of land holding within State of Assam (regulatory trade barriers, local specification requirement, adequate regional distribution facility as per section 19(6) of the Act) and from the consumers point of view too it shall be state of Assam since the consumers would satisfy their daily requirements from the petrol pumps within the state of Assam and from a dealer who would speak the local language (local language requirement, consumer preference as per section 19(6) of the Act). (xi) Therefore when the parameters laid out in sections 2(r), (s), (t), 19(5), (6) and (7) are applied then it becomes even more clear that definition of relevant market liable to be applied....
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....ne economic entity. (vi) The pricing was finally deregulated in the year 2010 following the recommendations of the Dr. Kirit Parikh Committee. The government had released a press note through Press Information Bureau of Government of India. A copy of the Press Note is annexed as Annexure A-3 to the appeal. (vii) Despite the deregulation of petrol prices the PSU OMCs fix prices only in consultation with Marketing Division of Respondent No. 2, therefore the three PSUs even after deregulation continue to have uniform prices. The idea of deregulation was to get the prices determined through market forces yet government continues to give a platform to the PSU OMCs for fixing uniform prices in the market. The PSU OMCs do not compete with each other and the market therefore sees no competition between them. Respondent No. 2 and its allied departments and divisions along with three oil companies will not be exempt from the provisions of this Act and are liable to be held accountable for the violation of this Act. (viii) The retail operations are also conducted by the three PSUs in consultation with each other and under a common strategy. The details of the working, which clearly refl....
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....tively, if the legal theory of the appellant of single economic entity is not accepted as applicable in the present case then going strictly by the market shares of the three OMCs IOCL (Respondent No. 3 herein) would emerge as the leader and hence a dominant enterprise. (xv) The breakup of the number of retail outlet market in Assam including Greater Guwahati region is as follows : IOCL 410 Kisan Sewa Kendra 88 (Retail outlet model of IOL for rural areas) HPCL 75 BPCL 80 Greater Guwahati Region IOCL 52 HPCL 13 NRL 20 BPCL 7 Total Retail outlet break up in Assam IOCL 550 HPCL 98 BPCL 87 NRL 20 Total 755 The % market area of different OMCs is as given below: IOCL 72.84% HPCL 12.98% BPCL 11.52 NRL 2.64 (xvi) It is evident from the data above that IOCL is in a super dominant position in Assam region out of the other PSU OMCs and together they hold 100% of the market share. (xvii) On a demurrer even if entire India is the relevant market IOCL would still emerge as a dominant enterprise. 5. The Commission considered the allegations contained in the information, but refused to order an investigation under Section 26(1) by recording following observations : 13. From the Agreement ....
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....ntravention of the provisions of section 3(4) read with section 3(1) of the Act, the impugned clauses of the agreement need to fall inter alia in the categories mentioned in section 3(4)(a)(e) of the Act. The informant appears to be aggrieved by clause 62(a) whereby any dispute arising under the agreement is to be referred to the Director (marketing) of IOCL. Such a stipulation does not appear to fall in any of the aforesaid clauses of section 3(4) of the Act. Even otherwise, nothing unfair or anti-competitive can be gathered therefrom. 20. Furthermore, the informant is specifically aggrieved by clause 42 whereby the Guidelines issued by IOCL are to be observed by the dealers. It appears that the Marketing Discipline Guidelines relate to the following aspects: Procedure for handling of products at Retail Outlets by dealers; Receipt of product; Decanting of product; Stock/ price controls; Quality/ Quantity control measures; Observance of statutory & other regulations; Customer service & general amenities; Industry Guidelines for Sample collection and Testing; Handling of MS/ HSD/ SKO at Companys storage points and Duties of Oil Companies; Quality/ Quantity checks; Sealing/ GPS; Tr....
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....s been covered by any previous information received, then the new information may be clubbed with the previous information. (2) Where on receipt of a reference from the Central Government or a State Government or a statutory authority or information received under section 19, the Commission is of the opinion that there exists no prima facie case, it shall close the matter forthwith and pass such orders as it deems fit and send a copy of its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. 8. A reading of the above-quoted provisions makes it clear that while examining information received under Section 19, the Commission has only to satisfy itself whether or not there exists a prima facie case requiring an investigation. If the Commission finds that the averments contained in the information do not disclose any prima facie case, then only it can order closure of the matter. However, for that purpose the Commission cannot delve deep into the merits of the allegations, rely upon undisclosed material and record a finding on the tenability or otherwise of the allegations.What we wish to emphasise is that wh....